Crowfunding the Public Interest

I originally penned this post for a newsletter of The New Zealand Initiative Think Tank.  In his book, The Great Degeneration, Niall Ferguson describes how the West’s six ‘killer applications’ (competition, science, property rights, medicine, consumerism, and work ethic) are on the decline.

"Our democracies have broken the contract between the generations by heaping IOUs on our children and grandchildren. Our markets are increasingly distorted by over-complex regulations that are in fact the disease of which they purport to be the cure. The rule of law has metamorphosed into the rule of lawyers. And civil society has degenerated into uncivil society, where we lazily expect all our problems to be solved by the state."

The result is slow growth, strained social systems, complacency, and disinterest.

At the same time, the creative industries were shaken by the principle of crowd funding. Privately owned for-profit websites like Kickstarter allow individuals to pool their money to support projects initiated by other people.

Creators set deadlines and a minimum funding goal, and describe risks and challenges associated with the project. Once the project receives funding, the creators are expected to supply regular progress updates.

According to Wikipedia, since Kickstarter's launch nearly five million people have funded more than 50,000 projects. Examples include video games, films and a 3D printer. In fact, in 2012, Kickstarter channelled more money into the US arts scene (US$323.6 million) than the Federal Government (US$146 million).

These numbers raise the question of whether the answer to Western society’s ills could lie in adopting this model.

A small percentage of taxes would go into essential services, and what happens with the rest is for the electorate to decide.

Any tax-funded project must justify itself, and it would need to persuade people, give detailed timelines, manage risks, and show that it has the appropriate staff. Any delays and extra costs would have to be communicated and explained immediately. Lobbyism would become more public as it needs to inform a broader audience.

For example, single mothers could choose not to pay for upper class students to attend university. Tax-funded nanny state tendencies based on vocal special interest groups, solely focused on helping themselves to our wallets and freedoms, can be curbed and a sense of personal responsibility re-instilled.

Theoretically, this would lead to less waste, and lower taxes.

Of course, this approach is not without its problems, the biggest being how to make sure that all projects are equally represented and considered by the electorate.

Still, the idea would make for a much more explicit contract between the state and its people that would make for more engagement by appealing to responsibility, and being able to directly influence outcomes. Maybe the West can crowd fund itself back to glory.