Monday, July 9, 2012

"Monetizing the Who-You-Know Asset"

More than just another pretty face here's the Dilbert blog:
If you're looking for a job, the best asset at your disposal is who you know. Your personal network of friends, families, alumni, and past work associates is extraordinarily valuable. Those are the people you turn to for your job leads, career advice, and sometimes even start-up funding. Most careers grow out of personal connections. But once you get the career you want, your personal network instantly becomes a semi-stranded asset. It's nice to have it waiting for you if you need it later, but during the dormant time it does you little good. My idea for today involves a way to monetize your personal network and reduce unemployment at the same time.

My key assumption is that the long-term unemployed have relatively ineffective personal networks. This is obviously a gross generalization, but I think it is close enough for my purposes. Stated simply, rich people usually have valuable friends (in economic terms) and unemployed people often don't.

Suppose the federal government creates a plan in which any citizen in a high tax bracket can volunteer to mentor a person who has been unemployed for one year or more. To start, the government would randomly assign a local unemployed person to each mentor. The deal would be that if the mentor can find a job for the unemployed person, the mentor's own taxes would be reduced by the amount of taxes paid by the newly hired person over five years. I'll include payroll taxes in the calculation because many employed people don't pay federal income taxes. Serial mentoring would be allowed too, so one mentor could help find work for multiple unemployed people, one at a time.

We want to keep the government bureaucracy to a minimum, and keep freedom to a maximum, so let's assume the entire program is optional for all participants, and the mentors fill out simple tax forms once a year that list the Social Security number of the unemployed person, a log of what steps were taken to help him/her find work, and the date of employment. It's about the same amount of paperwork you might do to claim a home office deduction. And it would carry the same penalties for lying to the IRS. All the government needs is the Social Security numbers of both the mentor and the newly employed person in order to keep track of taxes paid and tax credits given.

In theory, getting more people working will stimulate the economy enough to compensate the national treasury many times over for the tax benefits given to the mentors. The newly employed will be buying more goods and services and they won't be a drain on unemployment insurance and social services. Everyone wins.

To make this plan work - and this is probably the most important part - you also need some sort of online system where mentors can "trade" their randomly assigned unemployed people with mentors more suited for the task. ...MORE
...[Note to Gawker, Salon, Huffington Post, and Jezebel: The best way to take this idea out of context and turn it into fake news is to claim I am advocating that rich people should buy and sell the unemployed just like modern day slave traders.]
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