On Thu, 15 Aug 2002, Misha Gambarian wrote: > Here you assume that all GDP income is distributed as dividents - > doesn't look probable. If people assume that their normal income is > dividents this still doesn't work, because of income inequality.
Not assuming that at all. Just trying to get a handle on the break-up value of the country for purposes of assigning some minimum valuation. The break-up value shouldn't be less than the value of the assets in the country, and the value of the assets in the country should be reflected in the current earnings stream (GDP) generated thereby. > Bahamas. I think share price will absolutely never be so high - I think > we can speak about 50-100,000 as top estimation. If price is 50000, then . The valuation I used assumed that any single owner could appropriate the entire earnings flow of the country. If the corporate charter of the United States prevents the enslaving of people in the country who aren't shareholders, then my numbers would be a rather high upper-bound and the actual price would be lower. How restrictive do we expect the corporate charter to be? And who will enforce it? The Constitution was supposed to have been some kind of binding document, but the Constitution now seems to just increase the costs for government to engage in certain types of activities rather than preventing them altogether. Hmmmm. > For example, in Russian Voucher program it was expected that Voucher > (for which was sold very substantial part of Russian industrial property > would cost about $10,000 - but actually they cost about $10. Well, the official estimates of the value of industrial property was rather too high in that case, no? > First, what happens with people who sell their shares. > a) They can be effectively expelled from USA. It will probbaly lead to > USA without underclass, with much less crime and slightly higher cost of > living. Doesn't look very probable, through. (INS and border quard look > uncapable to achieve this). > b) They will be expelled, but unefficiently (more or less like mexican > illegal immigrants now). It will lead to larger underclass than now > without rights, probably more crime. > c) They can just lose their voting rights, but still have right to work > and live in USA. In this case I expect price of share to be very small, > probably less than $10,000 - and in this case Gates can buy 6,000,000 > votes and more or less make USA presidents (No president will be able to > ignore him). I this case we will come to oligarchy pretty quickly. If there are 240 million shares, Gates would need an order of magnitude higher number of shares to be able to get a controlling interest. Six million out of 240 million is still pretty small potatoes. > Second question, what will happen if somebody sells his share and then > dies? Or just dies ? does his share dissapear? It doesn't look just if > somebody bought share, come to live in USA, and then was suddenly > expelled when previous owner died. On the other side, if shares stay, > there becomes constant supply of shares from old persons, and we cannot > expect shares price to be high. (people will spend retirement in Mexico > instead of Florida, in cheaper coutry and having substantially more money.) Presumably the estate would hold the share, and then sell it to the highest bidder. If the only source of new shares is from the sale of current shares (either through emigration or death), the price of shares would be quite high. The sum of people wanting to move to the United States plus people being born in the United States is much higher than the current mortality numbers. > As I tried to argue above, we can expect share price to be much lower > than $700,000 (at the least at the start), and possibility of oligopoly > can be much higher that you think. Valuation will depend on the nature of the corporate charter and, critically, on whether that charter can be made self-enforcing. If a majority shareholder is not bound by the corporate charter, then we can quickly become his slaves and he can appropriate all revenue, unless the total amount of extraction from a slave state is lower than the maximal taxation from a free state. In either case, the total valuation has to reflect the PDV of the maximum amount that can be appropriated by a single majority owner. > > Mikhail Gambarian > Major of Economics, Erasmus University >
