Sex Futures

An immodest proposal

May, 2008, Speculator Column, IR magazine

Ian Williams gets excited about the sex trade

Former New York governor Elliot Spitzer always kept abreast of the imagination and invention of the derivatives markets. Some of the creativity he saw there may well have rubbed off.

In his contract negotiations with the now famous Kristen and the Emperor’s Club, the company that represented her, he was – perhaps inadvertently – pioneering sex futures. He was certainly investing in them. How else would you describe putting money down up front for anticipated needs?

There is already a futures market; surely the wizards of Wall Street cannot be far off slicing and dicing sex transactions for tradable options. If we consider domestic consensual copulation as an example of subsistence production and consumption that takes place outside the markets, it’s perfectly possible to differentiate commercial sex as a commodity. And once you accept that sex has moved from a subsistence level to a commodity-trading basis, there are serious market possibilities.

There is a technical hitch in Puritan hangover laws against prostitution, but criminalizing acts between consenting adults simply because there is money involved goes against every trend in our modern world. Today everything from medical care to psychotherapy comes with a price tag; in a free society, the nanny state should butt out of the axiomatically preferable market-based solutions.

Consider the options. If you buy pork belly futures, you don’t actually put your dibs on a particular physical side of bacon. Rather, you are buying a sort of metaphysical abstraction of a slab of pig meat, confident that the actual goods will be there when the time comes to bring home the bacon in the real world. Indeed, most traders in the derivatives chain would not know the snout from the tail of the actual beasts whose bits they are notionally hawking and buying.

After all, a tradable commodity has an abstract life of its own, separate from its physical reality. In the oil market, each barrel is bought and sold numerous times between the wellhead and the refinery, but at no time do any of the traders have the faintest smudge on their well-manicured fingertips as they manipulate their keyboards to churn the abstractions on their screens.

Like many sites in the world of commercial sex made possible by the internet, the Emperor’s Club website showed contractors with fictitious names, no faces and homogenized images posed to represent eroticism rather than real people with individual personalities. It was the transaction, not the parties to it, that had value.

New technology apart, old biological imperatives suggest sex futures could have increasing value. Unless you are stuck on a desert island, in which case your options for trading are somewhat diminished anyway, abstinence from bacon is not likely to boost the value of your future holding. However, as history teaches us, anticipation of sex actually enhances its value. And you can always go long on sex. Never mind the bulls and the bears – invest now in the birds and the bees!