Saturday, July 11, 2015

Education, Sex, and the New Economy

Much of what has often been referred to as the “sharing economy” consists of a company with a website and software that matches people with a need for a service with people who have the motivation and means to provide that service.  In this way one can procure a ride, rent a car, rent a room, and even borrow a tool.  All of this is provided for a fee.  There is another class of service that can be procured on-line that is best thought of as contingent labor.  In this case the website allows someone with a need and money to spend to propose a task while those with a need for money and a relevant skill can bid for the job.  Taken together these might be thought of as the “new economy” because this is the direction in which innovation seems to be taking us.

One might suspect that such an economy where contingent labor is the new norm would inevitably focus on that most contingent of marketable commodities: sex.  One might also suspect that the sale of sex would be patently illegal and take place surreptitiously or in deep, dark corners of the internet.  An article in The Economist, Paying for college: A teaspoon of sugar, alerts us to the fact that the characteristics of sexual transactions are evolving quickly and moving in surprising directions.  The article begins with this lede:

“A very old solution to a new problem”

The problem referred to is exploding student debt.

“Nearly three-quarters of the graduates now leaving America’s colleges are saddled with debt. On average, they owe $35,051. By comparison, roughly half of all graduates carried debt in 1995 and it averaged less than a third as much, says Edvisors, which tracks student aid…. As the cost of university has risen, so has the number of ‘sugar babies’ who pay for it by selling companionship and sex to wealthy older men. Monthly pay for this is typically about $3,000, though some ‘sugar daddies’ offer much more. According to SeekingArrangement, a firm based in Las Vegas, two-thirds of sugar-baby graduates have no student debt.”

The front page of the SeekingArrangement website is quite clear about what is being offered.

“8 Sugar Babies Per Sugar Daddy”

“The odds are in your favor with thousands of attractive women looking to meet now.”

Included are pictures of presumably typical “sugar babies” in poses designed to illustrate their qualifications for the job.  The website also makes clear to the “sugar babies” what they should expect to gain from any transaction.

“Unpaid bills no longer have to be a concern.”

“Start dating gentlemen who leave the dating games alone.”

“Established Sugar Daddies offer valuable guidance for long-term stability.”

“Indulge in shopping sprees, expensive dinners, and exotic travels.”

The sales pitch seems to be working.  According to the article:

“Students who post profiles on know what they want, so ‘it’s almost like a business partnership’, says Angela Bermudo, a spokesman for the company. The site hosts some 900,000 profiles of sugar babies enrolled in American universities, up from 458,000 two years ago. Their ranks swelled during the recession and are still growing fast, says Brandon Wade, the site’s founder. A year ago nearly 1,200 students with an e-mail account belonging to an American university posted a profile on the site every day; the daily average has risen to about 2,000.”

This is not the fee for services model, but, staying with healthcare analogies, rather more the concierge model.  The goal is the acquisition of a desired lifestyle—for both the buyer and the seller.  Consider the example of one 23-year-old student with the online name of Barbiewithabrain.

“Her college, rent and car expenses have been covered since she was 18 by monthly allowances of $5,000-10,000 from three successive sugar daddies.”

There is more than this one company out there providing a similar service.  The even more explicitly named Sugardaddie is also referenced by the article. 

“The company’s site gets more than 5,000 new profile uploads worldwide every day. A quarter are students.”

So why isn’t all of this illegal?  Isn’t this equivalent to prostitution?  It turns out that prostitution is all a matter of style.  The type of arrangement promised by these websites has been deemed legal in court.  Frustrated critics have discovered that relationships between sugar babies and sugar daddies are uncomfortably close to that of a traditional marriage.

“States that attempt to close that loophole fail, says Scott Cunningham, an economics professor at Baylor University in Texas who has studied prostitution markets. Proposed legislation against the practice might, he says, inadvertently prohibit marriage—which could, after all, be defined as intercourse for financial support.”

There is, of course, little participation by "sugar momas."  Young men must get through college the traditional way.  One wonders how much all this contributes to the higher graduation rates attained by females.

One also has to wonder how all the starve-the-government conservatives who have cut back on support for college education would view this unintended consequence.  Would the conservative free-market enthusiasts welcome this development?

SeekingArrangement claims to have scored its first arrangement in 2006, almost 10 years ago.  It advertises an active membership of 4.5 million and offices in Las Vegas, Ukraine, and Singapore.  Learning of its business model does not, today, generate shock, outrage, or even moral disapproval.  It is merely interesting.  The world is an interesting place and it just keeps getting more so.

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