Countries like Australia need to invest in its people if they want to stay innovative. A universal basic income for every citizen is the solution – this is why
The lack of innovation in Australian Prime Minister Malcolm Turnbull’s innovation statement recently was as unsurprising as it was ironic. Many in the startup community were disappointed, while others were just excited that innovation is finally getting some attention. There is hope that this is just the first of many steps.
I also hope that there is much more to come down this path because the value of disruptive innovation to a nation is huge. For example, think of what Hollywood has been worth to the U.S. over the last 100 years. As a small insight, its estimated global revenue is around $100 billion each year since 2000.
Then there is Silicon Valley. What would it be worth to Australia if the next Apple was founded here? Apple has three times the revenue of BHP, hires 110,000 people, and doesn’t involve exporting non-renewable resources. It only took Uber five and a half years to surpass the valuation of 107-year-old General Motors. Then there are Microsoft, Google, Facebook, etc.
Successful innovation pays off so much that it is hard to grasp and more importantly, so much that it is actually hard to over invest in it.
Supporting the “big win” innovations
Paul Graham is the founder of the world’s most successful startup accelerator, Y Combinator. From his experience running Y Combinator, he has come to learn that the ‘big win companies’ are so big that they “violate your expectations.” From the more than 400 companies Y Combinator had invested at the time he wrote about this phenomenon, more than three quarters of the ten billion dollars worth of companies they were invested in came from just two companies.
As Paul Graham has said, “The big winners could generate 10,000x returns. That means for each big winner we could pick a thousand companies that returned nothing and still end up 10x ahead.”
Which is fortunate, because the complication is that these “big winners” tend to look like terrible ideas at first.
Picking ‘good companies’ just doesn’t cut it. Getting reliable returns isn’t good enough when the vast majority of startups fail. You need these big wins to compensate for all of the failures.
So the only way to get ahead in the game of early stage seed funding is to cast a net wide enough that you get to catch a lot of these “unpromising-looking outliers” which end up proving everyone wrong and going huge. They then cover the cost of picking all of the other (even successful) startups.
You really should read the whole article if you haven’t yet.
This phenomenon in startup seed funding really points the way for how we need to approach innovation as a nation. We can’t do it tentatively. We need to throw a lot of money at it, make that money available as widely as possible, and then let those seeds grow.
The payoff will be more than worth it.
I appreciate the way Vinay Gupta put it: “To get real progress, what you need is this attitude that we’re just going to shovel the money into the furnace to watch it burn, and once in awhile we’re going to find an enormous lump of gold in there at the end of the alchemical process.”
Fortunately, there is one policy which could fuel this innovation furnace without burning any money: A universal basic income.
Shoveling money into the furnace (and watching it not burn) – how a universal basic income could boost entrepreneurship
A universal basic income is an income unconditionally granted to all on an individual basis, without a means test or work requirement.
So when we look at the cost of implementing a basic income, it should be acknowledged that it will do a lot of good for society and our welfare regardless of its impacts on innovation. Which is great for the furnace analogy above, because that means we get to throw money into the furnace, and still manage to not burn it. The money will do much good.
Would a universal basic income make people become lazy?
There is a common concern that a basic income would disincentivize work. This worry firstly overlooks the welfare trap present in our current welfare system, a trap that a basic income would actually remove since it’s being administered to everyone.
A “mincome” experiment in Manitoba Canada found a slight decrease in work hours, but this decrease was generally associated with an increase in education and more time spent caring for children. The basic income experiment in Namibia showed an increase in employment from 44% to 55% of the working population as more people were able to start their own businesses and then hire more people.
These results demonstrate the key point at hand. A basic income will empower people to pursue their larger personal goals: to return to education; to care for their families; to start their own businesses; and to innovate.
If you empower every single person in the nation with the freedom to choose to reduce their work hours, or in some rare cases, devote themselves entirely to their once in a lifetime idea, then you are unlocking an innovation army which has for so long been oppressed by the need to “turn up” to work, all day, every day. You are opening them up to explore creativity. You are empowering them to return to education where they can “learn powerful things,” as Paul Graham advises young entrepreneurs. You are freeing them to collaborate with one another, and potentially establish whole new industries that will set the tone for the future.
Maybe the next disruptive innovation industry will be DIY Biology? What will it be worth to Australia to become ”CRISPR Island,” home to all of the most innovative and successful companies in the coming biotechnology revolution? Maybe it will be a space related innovation? Maybe it will be a quantum computer innovation? Who knows?
I’d hate to think that the next big idea was right here in Australia, trying to get out of some person’s head, trapped by something as mundane as difficult life circumstances and insufficient time.
Turnbull’s innovation statement seems focused on bringing innovation to market: tax concessions to investors so they invest more; funding returned to large research institutions.
Nowhere does it empower grassroots innovation. Nowhere does it empower the formation of new ideas.
You need to fuel the fire of disruptive innovation before you try to cash in on it.
Implement a basic income. Invest heavily in the people. And get out of their way.
If you would like to learn more about efforts to create a universal basic income in Australia, you can see Shane Greenup speak at a Meetup in Sydney on January 21.
The views expressed are of the author.
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