Sunday, April 14, 2013

Paging Walter Block: Voluntary Slavery in Action? Paging James Altucher: Why I Am Leaving College

"Sarah" is providing some real world examples of points being emphasized by Walter Block and James Altucher.

James argues that a college education isn't worth much these days and that most should give up on the goal, Sarah is doing just that.

Prof. Block argues that, based on libertarian theory, voluntary slave contracts should be allowed. Sarah has structured something of a voluntary mini-slavery contract to finance herself as she gets started on her own.

It is not a full voluntary slavery contract, she will be free to go and do as she pleases but it is the closest I have seen to an actual voluntary slave contract, in the sense that she is selling an important stream of her income for a significant part of her life. She is, though, limiting the contract to 10 years and 10% of income. But if this is allowed, why can't it be 90 years and 90% of income, and at that point why can't it be life and 100% of income--or full control of a life?

Sarah writes:

My first year is nearly complete and I’m left with one feeling... burdened.

I go to a good school, with good teachers, and have made some good friends but to be $1,000’s in debt to be taught things I already know or things that have no application to the real world… it’s not worth it, not for me.

Yes, a degree is vitally important for some (doctors, lawyers, etc.) but for someone who’s been coding since she was 12, the value isn’t worth the investment.

I can continue to learn and grow independent of a formal institution as I’ve done for the past several years or I can spend a great deal of time and money to go through the process of earning a piece of paper that will likely provide me no more value in the world than what I can accomplish on my own effort.

So how can I justify the cost of college?

I can’t, so even if it’s to the disappointment of my parents, after this term my college career will come to an end.

So what’s next?

Last year I helped my mom find an assisted living home for her mom.

It was an awful experience and one that lead me to create a map based senior living search engine, Senior Living Map.

It’s been a fun free time thing but it's something I want to make it a full time thing.

I want to see what can become of the site if 100% of my time and energy is devoted to it.

How will I pay my bills?

I’ve decided to sell 10% of my (after tax) income for the next 10 years of my life.


I’m realistic enough to know that as a 19 year old female, with no proven track record, I have about a 0% chance of finding someone to invest in Senior Living Map.

So to up the stakes, I’m offering a piece of me.

I can’t guarantee Senior Living Map will be a success but I can guarantee that I will be.

So instead of asking you to “bet” on my first venture, I’m asking you to bet on me.

I’m asking you to bet and believe that in 10 years time, 10% of my income will be your best investment.

Note, Sarah put her income stream up for auction under these terms and the auction has officially closed with the winning bidder agreeing to pay her now $125,000 for 10% of her income over the next 10 years.

(ht Mark Perry)


  1. Great post. Imagine a world where the government is taken out of the picture completely and contracts like this existed. Then we can find out the true value of student loands for instance. Or mortgages. Since the government backs many of these.

    Everyone should be allowed to sell any part of their life income. It will work like a Laffer Curve. 100% is worth nothing and 0% is worth nothing and the highest value is something in the middle.

    If the government wants income, the government can pay up front for 10% of what it will think will be the highest wage earners. The money they make will replace "taxes".

    Btw, the transaction you talk about is very straightforward. But a life should be structured like a business with a capital structure. So I can buy common stock, preferred, convertible debt, AR financing, etc.

    The reason the word "slave" is not quite appropriate is that in all instances in history the slave had to give up 100%, which produced the lowest value for the owner (hence the slave was replaced by the most basic of machines).

    Although I would argue that all employment is a form of slavery between 0-100%.

    1. This is a great insight James and highlights well not only the problem with government simply doling out money for college to anyone who wants it, but how contracts in a free market could replace a lot of governments backed loans and welfare programs.

      Lets say I'm Doogie Howser , only I'm a poor Doogie Howser and I'm dead broke. I live in "Freedomville" - there is no government to give me loans or subsidies to go to Med School, but I've clearly got the smarts,

      So my 14 year old genius self posts up on the "Mind & Labor Market" website. I demonstrate my genius in various ways, and set a minimum bid (presumably the least I would need for tuition/room/board) to give my benefactor 10% of my income for the first ten years I practice medicine.
      The winning bidder pays me $200,000. I go on to open up the best brain surgery practice in the Western Hemisphere. I earn an average of $500K every year for the next decade. My benefactor gets $50k/year for 10 years to talking $500K on his $200k investment. I'm a rich doctor, he makes 250% on his investment (tax free and inflation free in my government-less world!)

      Of course he risks that I get a heroine addiction and spend the rest of my life as a janitor , but that's the market !

  2. The libertarian in me says that any voluntary exchange should be perfectly allowed but I just really want to say who would want to choose this over all the other alternatives?

    1. I certainly know young entrepreneurial programmers who I would buy 10% of their income over the next ten years if the price was right.

    2. I think Michael means why would the young programmer sacrifice 10% for ten years when they can find loans (subsidized or otherwise) that would require a smaller payback amount.

      In some circumstances it would make sense. I want to study art or 17th century French poetry, sure take 10% of not a whole lot.

      The real question is can the contract be breached and at what penalty?

  3. The word "slave" conjures up a whole different image, in which nothing is voluntary. Performance is to avoid punishment, rather than gain reward. While I believe any voluntary contract is fine, the 'slave owner' has no right to expect the state, or whatever policing authority exists, to enforce any "unreasonable" stipulation for him and he can't use violence to enforce it himself.

  4. The idea of Goldman Sachs using algos to trade a future "Person Backed Security" market does not give me a warm fuzzy.