Basic Income in a Nation of Start-ups?

Let’s explore something a little nutty.  It’s worth exploring, as this Economist article points out, because we’re increasingly becoming a nation of start-ups.

It’s called the basic income.  Essentially, every citizen would receive a sum of money every month unconditionally.

It’s an idea that has been rattling around in the socialist/libertarian discussion groups for some time now.  From what I’ve read, socialists see it as a way to permanently eliminate poverty.  Libertarians see it as a way to reduce the overhead/expense of administering a plethora of social programs already being run.

However, neither of these “intellectual arguments” have made any headway against the widely revered American work ethic.  Simply, to most people, programs that would reward everyone for doing nothing are unethical.  It would undermine any incentive to contribute, impoverishing us all in the process.  Up until recently, the resistance to this idea made sense.  In the old system, wealth distribution was more akin to a normal curve and the value generated by work corresponded to the number of hours/effort you put in.

That’s simply not true anymore.

Increasingly, the companies and projects that are worth the most money don’t grow linearly.  They grow exponentially (we’ve even seen this in income distributions — income is a power law), and the value created by these companies, isn’t correlated with hours put into it, or the effort expended, or even the educational level of the people involved.  It’s derived from a creative spark that’s been nurtured in a supportive environment.  It can either flicker out or explode or anything in between.  Further, the companies that emerge from this bolt of lightning are usually so leveraged, they don’t need to employ many people.

That method of wealth creation is a completely at odds with the traditional economy.  It also makes the idea of basic income interesting for a different reason.

Here’s some blue sky thinking on this.

In an economy driven by bursts of innovation, the goal is to generate and support as many innovative sparks as possible.  The best model we have for that today is how venture capital and incubators work in today’s environment.  Essentially, this is being done by “giving” a little money around to lots of potential innovators in the hope that they zoom (the payback to the investors is equity, which makes it different from those onerous micro-debt ventures getting so much hype).  Apparently, this wide and thin investment strategy is working in both software and hardware ventures, since there have been so many successes doing it.

So, what does this suggest for the rest of society?

Still sound nutty?

JR

PS: How long before start-ups generate almost all of our wealth?  It may be sooner than later.

24. January 2014 by John RobbCategories: Ideas | 4 comments

http://www.homefreeamerica.us/basic-income-or-incubate-everybody/