Albert Wenger – Managing Parter at Union Square Ventures
All of our economic theory, all of our business practice, all of our public policy, they were all developed during an era of scarcity. Scarcity means that when you want more of something, there is an additional cost to be paid. And that was always true for physical products, but it is no longer true for digital information. That extra view of the funny cat video on YouTube, it basically costs Google nothing. And it is that zero marginal cost of digital information that is turning everything upside down.
It used to be, for instance, that we would select first, then edit, and then publish. Now we can publish many, many things, select a few, and edit those. It used to be that people had to go to investors, raise money, then make a product and hope that people would buy it. Now you can present your vision for your product to thousands of people, have them contribute, use the money to make a product that you know people want.
It used to be that people were very guarded about how something worked. Now we have open-sourced software, hardware, and even biotech. These are all inversions, things that are being turned upside down, and they are being turned upside down because the zero marginal cost of digital information. And we are just at the beginning of these.
Traditional big publishers still dominate music, movies; crowdfunding is tiny; open-sourced biotech is in its infancy. But if you take these trends and kind of extrapolate them out a little bit, what you’ll get is a kind of digital abundance. A world in which we can learn anything we want to online for free. A world in which all the world’s medical know-how is available to anybody, anywhere in the world for free. Where you can listen to music, enjoy art, read books online for free. And we can even see how, eventually, that digital abundance could help us reduce the amount of physical scarcity. How?
For instance, by 3D printing only products that people actually want. Also by taking existing things like cars, buildings, lab equipment and sharing them much more efficiently than we’ve ever been able to do. So this is a world that I am very, very excited about; but we are not going to get to this world simply through more technology. We are not going to get to this world simply through some businesses doing innovative things online. We are also going to need to invert our public policies.
I am going to speak about two examples of such public policy inversions today. The first is a Basic Income Guarantee, or “BIG”; and the second is the right to be represented by a bot. I’ll explain what those two are. And as I talk about them, you may think these are crazy, far-out ideas. The goal here isn’t to say, “Hey Congress, we need these as national laws in the US tomorrow.” The goal is simply to say, “These are interesting ideas that we should be discussing.”
And more importantly, we should be experimenting with them to see whether they have merit. Let me start with the Basic Income Guarantee. Quite a simple idea. The idea that the government should pay everybody above a certain age, say 16, some amount of money every month or week. It is called basic because it is supposed to cover your basic needs: food, clothing, shelter. It is called guaranteed because it is supposed to be paid to you no matter what, no matter your gender, no matter your marital status, no matter your wealth and, most importantly, no matter what you do.
So whether or not you work. And that is the inversion in this idea. The inversion is that it used to be that you had to work first in order to get paid; under Basic Income Guarantee you get paid first and then you choose what to work on. It doesn’t do away with the labor market at all. You can still work in a job where you get paid more. It simply puts a floor under everybody’s income.
Now you might say, “Why would we want that?” Well, because it would let us embrace automation instead of being afraid of it. I have been around computers for 30 plus years, and for many decades we’ve had these promises of artificial intelligence. And they have been false promises. But we now actually have major breakthroughs. And we have machines that can do many of the things that humans currently do for work and as a source of income. Let me give you two examples.
About 4 million people in the US make a living driving a truck, a taxi, or a bus. But we also know we have self-driving cars now. So it is not a question of “if” any more, it is just a question of “when” some of these jobs will be replaced by machines.
On the other hand, we have about a million people working in legal professions. But we now have machines that can very efficiently read through reams and reams of legal documents, and even write some of them. Again it is not a question of “if” anymore; it is just a question of “when.”
Now you might say, “Why do we want to embrace automation?” And the answer is: Because it gives us time! And time is great in the world of digital abundance. It is the time you have to watch TED videos. It is the time you have to make TED videos. So in a world of digital abundance, we want people to have time, we want people feel they have the time and the resources to learn new things, we want people to have the time and the resources to contribute to those things, and make them free.
And Basic Income Guarantee, BIG, helps with that in a second way. It helps with that because it creates a much broader base of people who can participate in crowdfunding. So instead of saying we need these pay walls around content that keep people out, we can say no, let’s put out free content and then let’s fund it on Kickstarter, Indiegogo, Patreon, or Experiment.com for science, or BaconReader for journalism.
There are many other benefits about basic income that I won’t have chance to really go into detail. For instance, they deal much better with situations of abuse. Whether it is an abusive employer or abusive partner, basic income gives you a walkaway option for many different situations. There are lots of objections too.
Before I talk about some of the objections, let me point out one more thing, which is, this is not a traditionally left or right political idea. It is not a traditionally left idea because it says, in order to finance this you have to do away with programs like food stamps, means tested programs, and you have to believe in individual agency. It is also not a traditionally right idea because it wholeheartedly embraces re-distribution. It says, let’s tax people who make a lot of money, let’s tax corporations, and then let’s give this basic income to everyone.
And as a VC, I kind of like the fact that a lot of the political establishment is sort of ignoring or dismissing this idea. Because what we see in startups is that the most powerful, innovative ideas are the ones that are truly dismissed by the incumbents.
So what are some of the objections? The first objection that people have is: We simply can’t afford this. Some of the proposals that people have floated, like paying people several thousand dollars every month, in fact do add up to more than the federal and the state households combined. And we do still want some things from the State, right? We want federal defense. We want roads. We want water. We want broadband. So there are some things that we want the government to do.
The interesting thing though is, I believe it will take much less money. It’ll take much less money because we need to take a dynamic view. We don’t need to ask how much money do you need today. We need to ask how much money will you need in this world of advanced technology and of Basic Income Guarantee. When we ask that question, what we see is that we already live in a world of technological deflation and the Basic Income Guarantee will accelerate that. So roughly since the mid-1990’s, in the US, the cost of consumer durables has already been declining. The things that have been getting more expensive are primarily services, and, within that, primarily education and health care.