Hair (sic) Brained Ideas

Our Libertarian friends are good at coming up with hair brained ideas for replacing our current institutions. Now I'm no enemy of ideas, hair brained or other, but I do think a bit of rational criticism is called for. Here's one via Alex Tabarrok.

The Unincorporated Man is a science fiction novel in which shares of each person's income stream can be bought and sold. (Initial ownership rights are person 75%, parents 20%, government 5%--there are no other taxes--and people typically sell shares to finance education and other training.)

The hero, Justin Cord a recently unfrozen business person from our time, opposes incorporation but has no good arguments against the system; instead he rants on about "liberty" and how bad the idea of owning and being owned makes him feel. The villain, in contrast, offers reasoned arguments in favor of the system. In this scene he asks Cord to remember the starving poor of Cord's time and how incorporation would have been a vast improvement:

"What if," answered Hektor, without missing a beat, "instead of giving two, three, four dollars a month for a charity's sake, you gave ten dollars a month for a 5 percent share of that kid's future earnings? And you, of course, get nothing if the kid dies. Now you have a real interest in making sure that kid got that pair of shoes you sent. Now it's in your interest to find out if he's going to school and learning to read and write. Now maybe you'll send him that box of old clothes you were thinking of throwing away. Under your system you write a check and forget about the kid, who'll probably starve anyway. Under our system, you're locked into him.

...the real benefit comes about when those 'evil, selfish, horrible corporations' get involved. How long will it take for a business to realize that there's a huge profit to be made in those hundreds of millions of starving children?...Imagine a world where a bank gives a loan to a corporation to build a school, hospital or dormitory. Not because its the right thing to do; who cares! They'd do it because it's the profitable thing to do. And because of that, my system, not in spite of greed and corruption and incorporation, but because of it, will work better than yours in any time period with any technology you choose."

So who do you stand with, JC or Hektor?

Hat tip to Robin Hanson for lending me the book and from whom I cribbed the description of ownership rights. Hanson offers other thoughts on the novel. And here are earlier comments from Reihan Salam.

Of course an SF novel is the perfect place to explore such a notion. I suspect that if it were actually a very good novel, the hero would find better arguments than rants about liberty - and so might the plot.

Is there, in fact, any reason to suspect that corporations, greedy or otherwise, would find it a great idea to make a twenty year investment in starving children in the hope that they would someday become big earners? How would that look in the quarterly earnings? What about the incentive structure? Would parents find it convenient to have bunches of kids just to sell their future earnings? Suppose you sell much of your future earnings - what then would your incentive to work be? What corporation would be willing to buy expensive stakes in an asset without demanding control of it? Wouldn't there be a continuing pressure to more effectively enslave those whose earnings are already owned? Wouldn't those owned have large incentives to work "off the books?" Wouldn't they have an even bigger incentive to throw off the dead hands of their "owners" by election or revolution?

These seem to be the sorts of arguments the ideologically blinded never seem able to see.