Social Capitalism and Increasing Your Net Worth!

"You only have what your word is worth." - David Shanks, CEO of Penguin USA

It was an interesting speech. There were times when some of the eyes drifted, potentially rolled, or slightly lowered. This statement, however, appeared to have the rapt attention of the room.

It's interesting how things like one's word remain important even years after the invention of contracts, an absurdly complicated system of law, and all the dressings with it. Once upon a time there was a concept of honor, one's reputation hung in a delicate balance with every action. Credit was given without the promise of assets, like real estate or equipment. It was all about "good faith". Lending a friend $500 because you know "they're good for it". Agreeing to get married without a prenup(gasp!).

Now, people have background checks and googling before first dates. Companies have entire departments dedicated to researching potential clients - every last scrap off a 10K and then some, before an investment decision. Trust is backed by due diligence...AND extensive contract language the average person would need an interpreter for.

But what about non-financial transactions? Simple promises, swears, commitments - where do these fall into play? Are they judged the same as the financial? Should they be?

The statement struck me particularly because I have had issues with commitments in the past. Some my doing, some others. To think now how easy it was to cast aside a meeting for a club or a meet-up with a friend, if something were to have come up. Of course, remedies were made, rain checks were held through.

Yet, there are those who refuse to be held accountable. Where would they lie on Mr. Shank's value scale? And does it matter? Particularly when these individuals are perfectly content with having shoddy credit, less honor to one's name: does it matter? Maybe it is just a means of avoiding these individuals, or rather, refusing to do business with them. But really, how does one conduct due diligence on a potential study partner? A means of past history like for any company, sure, but that requires just the *slightest* bit more stalking than society/facebook would typically allow.

People like this may have assets, they may be "good for it", but their word is worth BP's stock. Though, unlike with companies, there is no record of the confidence people have had in these individuals; it cannot be calculated or leveraged in numerical terms. Individuals are not ranked based on the expected success of them keeping their commitments. There isn't a single comparative instrument in society for the stock value - except for, perhaps, the association of "FLAKE," which would presumably lower one's, ah, social capital. (Though I suppose one could also compare an IPO to a debutante ball.)

I am no longer willing to invest in the high risk, despite the security of certain assets and what-have-you. Contracts can be broken, agreements can be leveraged - all leaving one with a big, fat, headache. From now on, my primary concern with the word of the individual with whom I am making the transaction(that sounds dirty? please excuse). I'm no longer dipping my toes in the subprime lending pool, just to have another client.

At the end of the day, it's a matter of principle.