The Corporatization of Personhood

Abstract

This Article explores the burgeoning practice of investing in people as if they were corporations. Sometimes pitched as a way to pay-off student loans or fund a business idea, people now have the opportunity to sell shares of their future income to investors in exchange for cash today. Such transactions create a financial relationship closely analogous to that of a corporation and its shareholders. This Article considers how existing law applies to this new practice and whether today’s rules are responsive to the unique challenges these arrangements present. I argue that, despite raising both constitutional and public-policy concerns, these transactions should be permitted. Rather than outlaw such dealings, the nature of the financial relationships at issue means that they should be subject to securities regulation. Securities law alone, though, is insufficient. It is solely focused on protecting investors, leaving the broader social concerns raised by investing in people unaddressed and the more vulnerable parties to these transactions — those selling shares of themselves — without protection. To respond to these issues, I set forth a complementary regulatory template that would, among other things, require certain disclosures and set certain boundaries on these novel financial relationships.

Keywords: Pave, Upstart, Income Share Agreements, commodification, securities law, public policy, Friedman, slavery, involuntary servitude, equity, debt, coercion

JEL Classification: K22