Tuesday, June 9, 2009

Share Economy Part Two

In The Share Economy: Reduction Ad Absurdum , I showed a share economy

  1. prevents layoffs. Each employee shares the revenue of the firm.
  2. eliminates bankruptcies and financial squeezes. Now, when an airline cannot pay its bond holders or those from who it has leased its aircraft, it goes bankrupt. Here, all share the good times and the bad times for the airline.

But what about for the worker. Their payments are a share of their income, too! My monthly rent is $225.00 and my monthly gross salary is about nine thousand. Thus, instead, I would pay 2.5 percent of my income as rent. This would apply to car payments, payments to credit card com panies, insurance, etc.

Workers won't be squeezed when the company for whom they work has financial difficulties. Their money for day to day expenses goes down. Those at the lower end of the economic spectrum might eat rice and beans instead of meat and have no money for Christmas presents. But they do not lose their home, have their car reposessed, etc.

This leads to another principle of the share economy:

Contracts do not have arbitrary expiration dates. Thus, one does not sign a lease for one or two years, or agree to pay back a loan within three years.

Payments can be based upon meaningful economic events related to the purpose. Thus, my landlord might say my lease terminates when I leave the employment of the University or am fired. (Of course, in a share economy, employees would not be laid off.)

At that point I have no particular reason to stay in that place and he might have made his investment decision by looking at the income of the University.

In the case of one buying a car, one should keep paying the income as long as the car functions. What a weopon against planned obscolecense and to ensure that the automobile dealer continues good repairs. And if one purchases a house from the builder, the payments should continue as long as the house stands!

I will talk later about selling that house or car.

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