Thought experiment: who can buy the most shares of others? And if they buy "well", how does the distribution of wealth shift?
Second thought experiment: what if your stock is valueless on the market? What does it mean to sell shares when you get pennies for them? You sell all your shares because you need to eat, does someone now own your output for the rest of your life?
It shifts to the sellers, not the buyers. That's because buyers are competing with each other which drives the expected return close to the general market rate.
Assume there's a magical oracle that tells you: this kid will generate $100M of wealth over their lifetime - to not get bogged down into discounted future value, lets say the risk free rate is 0% - but needs $500k for education and resources early. Without any investment the kid will become stuck in a local maximum in a shitty environment and generate $100k instead.
Market competition will bring the total sale amount close to 0.5%. Lets say it's 1%, although that's very high. Funds bought shares that are 'fairly' worth $1M for $500k, for a profit of $500k - not bad. The person gained $99M. Total distribution of wealth becomes more fair, not less.
why not just organize society to educate everyone, and thus enable everyone? it seems like that would maximize outcomes. nobody has a magical oracle, as you've proposed.
Because it was tried and it's a massive failure. The entire western education system is geared to help slowest learners at the expense of everyone else. It's actively harmful for those that are exceptional. Only those from rich families can escape it.
And that's only inside developed countries. The reality in rest of the world is much worse.
>nobody has a magical oracle
Yes, no perfect oracle exists, but it's enough to have something that's substantially better than random, like intelligence tests. A direct economic incentive would lead to development of more reliable predictors.
Or, what happens if he/she works really hard, but never makes it, and their investor decides to sue for their money back? Often times, legal representation costs 10s, even 100s of thousands.
You’re really just legalizing either fraud or indentured servitude here. In real life, magic oracles don’t exist.
Ideally there would be an implant that records their entire life - which can be used to determine if they slacked off in breach of the purchase agreement.