Tuesday, August 3, 2010

Share Economy--how it might work.

The third posting here, I proposed share economy. A firm or enterprise or government does not have debts. When it does not have enough cash or fungible product to purchase something it needs, it grants a share of its income. (In this article, I limit myself to discussing shares that last forever.)

It is now 2060. Nurse Joan Smith owns a one percent share in an apartment building. She is free, so she marked on her mobile device that she is available for her investments. She's a night owl--she is up. There is a leak in one of the line B apartments in that building. It is starting to create a flood. The tenant calls the super who is in the apartment now and he video's the situation and clicks the button to contact all share owners for approval. He wants to call the plumber, $200.00 for an emergency house call. Joan along with five other investors gets the call. Their mobile's calculate the cost of this expense based on their share. In Joan's case, it is two dollars. She certainly feels comfortable. Since, it was marked an emergency and not everyone would have an opportunity to weigh in, 80% consent is required under the bylaws. However, Janet, a plumber living 500 miles aways, asks about shutting off the water to the entire line. They discuss that this means that the six tenants in the line won't have water in the morning. However, they decide to do that since Janet won't consent to her share of the expense on an emergency basis. The alternative would be for fourty percent of the group to vote to bother everyone and wake them up, as well as have approval of one employee, in this case the super. (This is all programmed into the bylaws of the corporation and those procedures are automatically enabled.) They all the hold the line while the super makes sure that he really can shut the water off. He does so, and the group do vote to give the plumber fourty dollars for going quickly, shutting the water and helping the tenant mop it up. They also set up the procedure for everyone to be contacted for an eight AM meeting to decide the permanent fix for the leak.

A few days later, unrelatedly, Apartment 2C became vacant. A young medical student presents wanting to rent the apartment. He had no current income but he did offer a one percernt life time share of his medical income in exchange for his rent. He presented his grades from Undergraduate School and recommendations, as well as video record of his study time during his undergraduate days for their perusal. He estimated his medical income from the Bureau of Labor Statistics data, and it certainly would have been attractive. But they won't get any money until he starts practicing, seven or eight years away--depending upon what residency he picks. This was not an emergency, so a random sample of share owners was convened. They each got votes proportional to their share; some on the call to discuss this thus have a higher percentage and some had a lower percentage. Based on the estimate, the bylaw computer estimated for Ms. Jones would get thirteen dollars every year he practiced. However, the others wanted more current income and she was outvoted.

However, Ms. Jones found his prospects attractive, and maybe him as well, so he send him a message that she would talk to some of her friends at the hospital. Several of the other nurses reviewed the records, they all had a surplus of income over expenses that needed to be invested. So they sponsored him, authorizing a share of their current income in exchange for his share of his medical income. With that, he went to an apartment complex down the street and the owners there took a share of the nurses income while he was in medical school and he signed over at the e-notary, one percent of his medical income. (A comment on any subsequent romantic involvement between Ms. Jones and the future doctor is beyond the scope of this posting!)

After the second "Great Recession" in 2025, the United States shifted to a share economy. Ms. Jones' grandfather, a construction worker, joined the team to build the apartment complex above and he got a six percent share but no money since the apartment complex was built on spec. He had rented a house to live in on 1/3 share of his income. So two percent of the apartment complex income went to the original owner of that house. When he passed on, each of his four grand children got one quarter of his assets, he had accumulated several other shares over the years. And so that is how Ms. Jones ended up with one share of the apartment complex.

And as our young doctor went off and practiced, he remembered the help that he got that day and many others. And sometimes a young college student would need medical care, and they would exchange a 0.1 share of their income for his professional practice. And each of our six nurses then ended up with a 0.002% percent share in each of their life incomes.

I talk about corporations and how larger corporations would run in the share economy in August Fifth's Thoughtful Thursday.

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