5 ms·

At what point does this come close to breaking antislavery laws? Where do you cross the line into indentured servitude? At 51% of salary, 100%, where?

gnicholas 14y ago
51% seems intuitively appealing, but salary isn't like voting stock--it doesn't give control. My guess is there's no clean answer to this one, but you'd have to factor in both earnings percentage and duration. It's not that big a deal if I agree to give you 99% of my earnings for the next 10 minutes.
ryusage 14y ago
That seems a little over dramatic... If anything, this is a decent-sized loan, with a very safe, variable repayment amount that is defined to always be a small amount of her income, and the collateral is a company that may or may not succeed. More than that, the investor only even takes the company if she's dishonest. There's almost no downside for her here. If you want to be concerned for someone, I'd be concerned about the investor.
- jacalata 14y ago
  He doesn't say 'this is slavery'. So, which of the points listed would have to fail for you to consider this concerning? If she was only getting $10,000? If the variable repayment was 50% or 90% of her salary, or a fixed small or large amount per year? If the investor got the company if the 10% over 10 years did not meet some minimum amount? Never?
- seanalltogether 14y ago
  The point is to take legal scenarios like this and see how far they can be pushed. What if her parents were the ones auctioning her potential earnings off and using the money to pay of a mortgage. What if the following year they did it again for another 10%? Things get really sketchy when you draw up these kinds of contracts that revolve solely around an individual.
  - ryusage 14y ago
    Okay, so you're suggesting this seems to set a dangerous legal precedent with slippery slope potential? I still say it's just a loan. To your argument here, can her parents legally take out loans in her name? I don't actually know the law there, but I don't think a lawyer would have a hard time answering that. To your earlier question about 51% or 100% of her salary, if an investor loans me $500,000 at 0% interest to pay back in 10 years, and I only make $50,000/yr, that would suck, but I'm not becoming a slave to that investor. I can't afford to pay that back, so I'm going to default on my loan. There's a huge difference between that and literally being owned by someone.
patrickmay 14y ago
That's a great question to pose to your elected representatives who vote for tax increases.
- manicdee 14y ago
  That is a great question to pose to the people who maintain the infrastructure you rely on for health and hygiene. Thank goodness sewage and water are public utilities, rather than corporate entities striving to make greater profits.
speeder 14y ago
I would prefer deals like this, than my current deal: huge sudent debts that I must pay monthly, no assets, bachelor degree don't helped me at all, and thus leave me with little choice... I MUST have certain jobs (ie: jobs that allow me to pay my food and the debt... and where I live those are few).
michaelochurch 14y ago
At 100% it's a brilliant scam because you can collect the EV of your income, then not do any work. Or do open-source work and build your career, or price yourself extremely low as a consultant and build a network, then improve your rate once the window is open. There are some weird nonlinearities to this problem. For example, if 1% of a typical top-25 college STEM major's (lifetime) income is worth $50,000, then my estimation is that 10 percent is actually worth $1-2 million (20 to 40 times more). Why? Because, with that money and the cushion, he'll be able to take more risks and have a better career. But then at 50-100%, you get a Laffer-curve effect. So the value of N-percent of someone's income is: (a) faster-than-linearly increasing for a while (career benefits) until it peaks and plummets (Laffer effect). (b) not necessarily well-defined, because the infusion of capital has career-building effects that mean it might be better to give more money (for equivalent percentage).

gnicholas 14y ago

51% seems intuitively appealing, but salary isn't like voting stock--it doesn't give control. My guess is there's no clean answer to this one, but you'd have to factor in both earnings percentage and duration. It's not that big a deal if I agree to give you 99% of my earnings for the next 10 minutes.

ryusage 14y ago

That seems a little over dramatic... If anything, this is a decent-sized loan, with a very safe, variable repayment amount that is defined to always be a small amount of her income, and the collateral is a company that may or may not succeed. More than that, the investor only even takes the company if she's dishonest. There's almost no downside for her here. If you want to be concerned for someone, I'd be concerned about the investor.

jacalata 14y ago
He doesn't say 'this is slavery'. So, which of the points listed would have to fail for you to consider this concerning? If she was only getting $10,000? If the variable repayment was 50% or 90% of her salary, or a fixed small or large amount per year? If the investor got the company if the 10% over 10 years did not meet some minimum amount? Never?
seanalltogether 14y ago
The point is to take legal scenarios like this and see how far they can be pushed. What if her parents were the ones auctioning her potential earnings off and using the money to pay of a mortgage. What if the following year they did it again for another 10%? Things get really sketchy when you draw up these kinds of contracts that revolve solely around an individual.
- ryusage 14y ago
  Okay, so you're suggesting this seems to set a dangerous legal precedent with slippery slope potential? I still say it's just a loan. To your argument here, can her parents legally take out loans in her name? I don't actually know the law there, but I don't think a lawyer would have a hard time answering that. To your earlier question about 51% or 100% of her salary, if an investor loans me $500,000 at 0% interest to pay back in 10 years, and I only make $50,000/yr, that would suck, but I'm not becoming a slave to that investor. I can't afford to pay that back, so I'm going to default on my loan. There's a huge difference between that and literally being owned by someone.

patrickmay 14y ago

That's a great question to pose to your elected representatives who vote for tax increases.

manicdee 14y ago
That is a great question to pose to the people who maintain the infrastructure you rely on for health and hygiene. Thank goodness sewage and water are public utilities, rather than corporate entities striving to make greater profits.

speeder 14y ago

I would prefer deals like this, than my current deal: huge sudent debts that I must pay monthly, no assets, bachelor degree don't helped me at all, and thus leave me with little choice... I MUST have certain jobs (ie: jobs that allow me to pay my food and the debt... and where I live those are few).

michaelochurch 14y ago

At 100% it's a brilliant scam because you can collect the EV of your income, then not do any work. Or do open-source work and build your career, or price yourself extremely low as a consultant and build a network, then improve your rate once the window is open. There are some weird nonlinearities to this problem. For example, if 1% of a typical top-25 college STEM major's (lifetime) income is worth $50,000, then my estimation is that 10 percent is actually worth $1-2 million (20 to 40 times more). Why? Because, with that money and the cushion, he'll be able to take more risks and have a better career. But then at 50-100%, you get a Laffer-curve effect. So the value of N-percent of someone's income is: (a) faster-than-linearly increasing for a while (career benefits) until it peaks and plummets (Laffer effect). (b) not necessarily well-defined, because the infusion of capital has career-building effects that mean it might be better to give more money (for equivalent percentage).