Archive for March 2009

Stadardized Contracts in Stupid Places

March 21, 2009

Here’s an even stupider idea than my last post about interviews. That one was pretty dumb, so fasten your seatbelt.

People right now are down on the stock market. Sadly, it’s because of a relatively small number of people poisoning the barrel (of money) for everybody. On the whole the stock market has been a thing that workes pretty well for long periods of time. The relative calm and steady growth gets punctuated once in a while with recessions and every, what, century or so with times like now. It’s hard to do much better than that anywhere.

When I was a kid I had a question that no one I knew could answer. Who picks the prices? If INTC is at 14.62 right now, it might go up tomorrow, or down, but who decides. The answer was simple enough, whenever anyone actually bought or sold the stock, that price is the new stock price. Subject to I’m sure a hundred thousand complicating factors, but at it’s core, the price is whatever someone last paid for the privilege of owning it.

In real estate there’s a hard cold fact that is similar to this. There’s a price to where you live. But it’s really hard to know what that price really is, and then you can’t live the anymore, because you sold it so someone else. A real estate agent can tell you your house is worth, say, $200K, but if you can’t find someone to actually pay you $200K then you never really know.

The thing that makes the stock market tick, that makes it possible for a peasant like me to own tiny portions of stock in gigantic companies, is standardization. There’s some kind of agreement and some (apparently out of date) regulations that allow me to exert a tiny amount of control over some business in exchange for some money. It’s a pretty impressive feat.

In the end, the stock certificates for the companies sell so many times a day that we can put a hard value on the company based on actual transactions and watch it change minute to minute. That’s impressive, and it’s all because of a standard contract.

So that leads me to wonder, what if there were standards for other things. I mean the idea of scum like me owning control of business employing more than 10,000 people was probably ludicrous a few hundred years ago. That kind of privilege would have been reserved for the wealthy. But now we’re accustomed to it, so it seems normal.

What else seems stupid to standardize today that could seem perfectly normal in 50 years.

My first guess would be employment.

What if each person could register in a public exchange of employees? I reserve the symbol DTT. Buying stock in DTT gives you a vote in where I have to work or what skills I must train for. Hmm. Not sure.

I have some skills. I can create certain value when working with the right people. For that value I can command some salary. Maybe owning a contract with me means you get some of that salary, like a dividend. I have no idea.

It’s hard to imagine work environments standardized to the point that you could join and leave companies quickly enough to keep a market like that liquid, but if there was money to be made I bet the right circumstances would manage to appear.

Mark Cuban wrote up a proposal for a public housing market.

I wonder what other transactions could benefit from a market based on standard contracts? I wonder what the stupidest ideas imaginable would look like?