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Towards an Empowerment Economy - Santa Fe Institute - August 2, 2017.

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In this talk, I talk about my the notion that our current form of economy (info or platform capitalism) is at a critical point of changing into something else that I call the "Empowerment Economy" - which is about building 21st century capabilities to empower humanity to flourish.

There are three core themes: 1.) New Forms of Finance that "Fund the Unfundable", 2.) New ways of developing/investing in people, 3.) Digital Finance (Fintech and blockchain).

Published in: Economy & Finance
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Towards an Empowerment Economy - Santa Fe Institute - August 2, 2017.

  1. 1. Towards an Empowerment Economy Nick Pinkston
  2. 2. The Problem: Our economy isn’t working for us... Increasing inequality Wage stagnation Lack of meaning in our lives Is Capitalism running out of steam? At a critical inflection point?
  3. 3. Capitalism was good at reducing inequality: Until NeoLiberalism...
  4. 4. Is Capitalism at a state change?
  5. 5. This suggests core problems: - Inadequate Redistribution Policy - Productivity Inequality
  6. 6. Capitalism is no longer solving our biggest problems. We have lots of problems, but no funding to solve them.
  7. 7. Core Problem → How to find solutions? Capitalism is great when value creation (solving a problem) leads to value-capture (profit), but many of our biggest problems today aren’t yet able to capture value. Look for areas with disconnects between value-creation & value capture.
  8. 8. We already have a word for this: Externalities! The next system must solve them!
  9. 9. Economies grow by human empowerment Post-Feudalism: Freedom of Movement/Trade, Broad Markets, Wage labor, Democracy, Constitutionalism / Rule of Law, Property Rights Industrial Revolution: Social safety nets, Public Health, Infrastructure / Utilities, Unions, Public Education The next system will provide us with the next capabilities to further unleash the talents of humanity.
  10. 10. What is this next system? The Empowerment Economy! 1.) Funding the Unfundable: New forms of financing and markets to fund a broader range of projects. 2.) Human Capital Finance: Methods of funding human development. 3.) Digital Finance: How digitalization accelerates all of this.
  11. 11. How do we fund a broader set of projects to allow us to solve more of humanity’s problems? 1.) Funding the Unfundable
  12. 12. Kickstarter: A new method of project finance
  13. 13. Kickstarter • A really risky “futures contract” for a very specific asset (i.e. Smartwatch) • A marketplace to allow: marketing, authentication, and guaranteeing the minimum funding be reached to better ensure success. • A way of turning consumer spending into an angel investment.
  14. 14. Social Impact Bonds Rebecca: Scientist who needs funding for FDA approval of PTSD vaccine. Military: Will “pay for success” - i.e. will link pay-out to a specific agreed metric for PTSD alleviation. Goldman Sachs: Provide Rebecca funding until pay-outs begin.
  15. 15. What’s the world’s biggest uninvested asset class?
  16. 16. PEOPLE! US Personal Income: $16.7T / Year
  17. 17. No one has a direct incentive to improve people’s lives.
  18. 18. How do we create scalable funding sources to invest in people’s future success? 2.) Human Capital Finance
  19. 19. How to we invest in human capital? - Humans as “Assets”: Selling stock in yourself. - Perpetual Income Share: Selling share of all future income. - Income Share Agreements: Loans as % of income → Align incentives. - Human Capital Contract: Selling stock in yourself, but with limits. - Many more that haven’t been created yet...
  20. 20. Startups in US Human Capital Services Sector https://pitchbook.com/news/articles/vcs-ready-to-help-play-job-market-matchmaker
  21. 21. How would a human capital market work? • People / Employees: Trade work to employers for money. • Employers: Trade money to employees for work. • Educators: Improve the productivity of people. • Financiers o Funders: Give people financing (ISAs, HCCs, etc.) o Packagers: Compile instruments together into assets to spread risk. o Money Managers: Fund the originators by buying packaged empowerment assets as normal investments. o Traders: Try to arbitrage empowerment asset classes, providing liquidity. • Employment Agencies: Try to get you new/better work in exchange for money from people, employers, funders, etc. • Personal Information Services: Assess Risk of People, Assets, etc. • Government: May take many of these roles to facilitate / regulate the market.
  22. 22. 3.) Digital Finance Where there is risk and computability, there is finance. The digitalization of everything is improving our understanding of risk and return, allowing new forms of finance and accelerating its metabolism.
  23. 23. Methods of Digital Finance • FinTech: “____ , but on the internet.” (efficiency, speed, service)++ • Prediction Contracts: Allow you to trade on any outcome. • Blockchain: Building a computable financial infrastructure • DAOs: Distributed Autonomous Organizations: Companies for computers
  24. 24. Prediction Markets: Incentivizing creation of new data. New data allows for better finance.
  25. 25. Blockchain, Tokens, Smart Contracts, DAOs, etc. Provide a digital infrastructure for these new forms of finance and increase their metabolism.
  26. 26. What all this looks like in practice: - New classes of projects are possible with new funding types. - A functioning human capital market would continually develop people’s productivity. - Broader range of jobs may emerge because of these new entities doing new things. - This would likely lead to better job fit, agency, and happiness overall.
  27. 27. What doesn’t this solve? Social safety nets: We’ll still need them, but we may be able to better implement them. Non Social-Productive Projects: Some arts, research, etc. may still not be justified as net-positive and will need to rely on patronage, etc. Government: This doesn’t solve corruption, procurement, etc.
  28. 28. Conclusion: “We solve today’s problems with the ideas lying around.” – Milton Friedman - Our economies are broken and aren’t solving a broad range of problems. - New forms of finance are being created to help fund solutions. - This a harbinger of a future economic system emerging from within our current system. - They don’t solve everything, just more tools in the box. - I want to better develop these ideas into a full system. Anyone game?
  29. 29. Bonus Round
  30. 30. The Abstractions of Human Work Toil Control Program Design Select Govern Envision Philosophize Welder CEO Ethicist Web Developer Follow the arrow to see the future of a job
  31. 31. Maslow Components of GDP Is the future of work: Coaching, Education, etc.?
  32. 32. Appendix
  33. 33. Total Factor Productivity Growth % https://medium.com/insurge-intelligence/the-new-economic-science-of-capitalisms-slow-burn-energy-collapse-d07344fab6be

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