Improving capitalism: the promise of a basic income guarantee

Roderick Benns recently interviewed Michael Schmidt, a Canadian entrepreneur, chemist and engineer. He was previously the founder and CEO of Listn, a mobile music startup based in Los Angeles California before its multimillion dollar acquisition by Robert Sillerman’s SFX Entertainment. He is now the CEO of Dovetale.com, a partner at PurifAid, a board member of K-Swiss and a member of the Canadian Leadership Committee for the G20. 

Benns: From your perspective as an entrepreneur, why is the concept of a basic income guarantee useful to society?

Schmidt: Basic income is all about voice. Some people want more while some people want less. By guaranteeing everyone has the absolute minimum you can guarantee, as a nation that the basic needs of life are met. It’s a win-win for the market and those who are in the market. It’s a fundamental improvement on capitalism and even democracy, because everyone now has a minimum amount of voice.

As an entrepreneur basic income could come to reflect a new society. The people that want more can create more without as much risk. There will always be sizable risk when you’re innovating. It wouldn’t be called innovation if there wasn’t. Here’s the thing; people will always want to live their dreams. Basic income removes the minimum requirements to live. As a serial entrepreneur you’re worried about so many things, but imagine if you have to worry about putting food on the table or paying your rent at the same time, I think these are distractions that inhibit some of the greatest creative minds.

Benns: Do you see automation as a real threat to traditional jobs? If so – and more and more people end up having difficulty finding work — how can we still find a way to make a difference in society? What might still need doing?

Schmidt: Of course, jobs that are less cognitively complex and more physically laborious are disappearing. That’s a fact and they will continue to disappear. Just to be clear, I think it’s a great thing. Automation makes us happier, we just need to make sure our economy catches up. Basic income is a step in the right direction because it allows society to become more creative. Some of society’s best work is done in our free time and comprises the things we love to do, like contributing to Wikipedia or answering questions on Stack Overflow. Lots of disbelievers feel like society will become lazy with a universal basic income. I think the economy will become more efficient. If people are only given the bare minimum some will want more and some will be comfortable with just enough — and that’s okay.

Enhanced capitalism, or capitalism 2.0 in my view, will be based on a more democratized economy. Things like the multiplier effect will have a monumental impact on a nation’s bottom line. The Institute for Policy Studies reported that:

“Every extra dollar going into the pockets of low-wage workers, standard economic multiplier models tell us, adds about $1.21 to the national economy. Every extra dollar going into the pockets of a high-income American, by contrast, only adds about 39 cents to the GDP.”

Fundamentally, this means that dispersion of wealth makes our economy stronger and laziness is not what we should be focused on.

Benns: In the U.S., Robert Reich believes there should be a patent tax. He wonders if giving every citizen a share of the profits from all patents and trademarks that government protects for an extended time (say 20 years) might help fund a basic minimum income for everyone. They still benefit from the protection length of time and people benefit from this new way we could redistribute profits. As an entrepreneur, what are your thoughts on this?

Schmidt: There are lots of creative ways to distribute wealth. This is one of the many ideas that seem promising or at least worth a shot, but at the end of the day we need to start experimenting. As a quick retort, I think companies should pay the people instead of politicians to keep things out of the public domain. That just seems like the right thing to do. While I don’t think this is the only solution it’s definitely a potential source for a resource-based wealth fund.

Benns: What’s the big picture take-away about basic income, in your mind?

Schmidt: My perspective is simple. I believe that we are moving toward an entrepreneurial society as a whole. Big and small businesses flourish the best in neutral economic climates. I think things like basic income slightly de-risk starting a business for some people and can overall increase a nation’s economic prosperity. This is mostly fueled by my optimism in the people. The strongest retort I’ve heard concerning basic income is that it promotes laziness. I think there will be people that abuse any system, but if the right stipend for the right locality can be found it can be beneficial on many levels.

I feel like as a nation Canada is extremely progressive. Areas like Waterloo, Toronto, Montreal and Vancouver have created innovation hubs and the next major innovation (as a society) is in public policy that increases a nation’s ‘happiness.’ This is giving the people more so they can build more.