Three Big Ideas #23
Cancelling culture, funding the unfundable, and edging out non-competes
Welcome to our weekly Three Big Ideas roundup, in which we serve up a curated selection of ideas (and our takes on them) in entrepreneurship, innovation, science and technology, handpicked by the team.
🎭 Eamonn Ives, Research Director
On Monday, together with the Jobs Foundation, we hosted a discussion on what can be done to get Britain more excited about business. Unsurprisingly, the question of culture swiftly arose. Some in the room expressed the belief that Brits have developed an almost innate aversion to risk-taking, and that this can explain why countries like America have pulled ahead economically in recent decades.
I’m sympathetic to the line of reasoning. You hardly have to spend long in the US to know that it certainly feels right. But we should hold ourselves to a higher standard than mere gut instinct. A recent blog from Alex Chalmers takes a cooler look at the data, and convincingly argues that while cultural differences exist between our nations, they’re scarcely large enough to plausibly explain the gulf in economic outcomes.
Pleasingly, for someone in the business of influencing policy change, it turns out – surprise, surprise – that legislative choices really do matter. How we regulate employment, how we manage trade with our neighbours, how we govern innovative technologies and how we (dis)incentivise investment will all have more of a bearing on the long-run economic trajectory of a country than any minor population-level differences in attitudes that may exist towards to wealth creation.
On the same day that Alex published his piece, Patrick and John Collison issued their annual Stripe letter. It’s a characteristically insightful read but one part in particular leapt out at me: “The IMF recently measured a 2.5 percentage point annual gap between US and European productivity stemming from differences in allocative efficiency. [...] A 2.5 gap is huge: the difference between 1% and 3.5% GDP growth, for example, amounts to 22% versus 100% growth over just 20 years.” As they then note, disruption caused by new technologies like AI will pose challenges for labour markets all around the world – and those which can’t adapt to it will invariably lose out.
All of this is to say – culture’s important, but, at the margin, policy matters more. I think that should be encouraging, for if we can just tweak a few things here and there, large gains stand to be made.
🤝 Anastasia Bektimirova, Head of Science and Technology
In an interview published last week, Jacob Trefethen, who oversees Open Philanthropy’s science and science policy programmes, explained an overarching criterion behind much of the organisation’s grant-making: funding work in neglected fields to support scientists who would not otherwise receive funding from other sources.
The UK’s Advanced Research and Invention Agency (ARIA) operates with a similar philosophy of funding the work that is unlikely to be backed through other mechanisms – focusing on high-risk, potentially transformative research that traditional funding mechanisms shy away from. This includes, as ARIA’s Precision Neurotechnologies Programme Director Jacques Carolan recently noted, collaborations requiring such diverse expertise that traditional funding mechanisms struggle to support them.
These alternative funding cultures represent an amazing evolution in how we pursue scientific enterprise. Yet, their impact depends on a strong pipeline of ideas in a genre that challenges mainstream thinking – a pipeline our current academic system may not be adequately nurturing. Our academic institutions prioritise training scientists to succeed within conventional funding paradigms. PhD researchers learn to craft proposals that appeal to traditional grant committees, reinforcing the very system these alternative funders seek to complement. How often do early-career scientists receive guidance on pitching to unconventional funders? And perhaps most critically, how might research questions themselves evolve if scientists were trained to consider these alternative pathways from the outset?
Michael Nielsen and Kanjun Qiu captured this dilemma well in their 2022 essay A Vision of Metascience: “Scientists often apply for grants on the basis of what they believe is fundable, rather than with their best ideas. We’ve spoken with scientists who tell us ‘I know I can get funding for many fashionable-but-unimportant projects, but I can’t get funding for the work I think is most important’.” As with many ecosystems, diversity breeds resilience and innovation, while homogeneity and concentration make it difficult for best practices to spread. Our academic training should nurture researchers who can thrive within this increasingly diverse funding landscape.
🚫 Philip Salter, Founder
Over on X, Nando de Freitas has a post arguing for European countries to copy California by banning non-competes. Given the subject matter at hand, it’s clearly an idea worthy of consideration at the highest levels – something Nando evidently agrees with, given he tagged in Presidents and Prime Ministers alike.
As Evan Starr of the Economic Innovation Group reported last year, empirical evidence on the prevalence and harms of non-competes and their enforceability has grown.
The latest evidence suggests that non-compete agreements harm workers, small businesses, and consumers alike. Non-competes seem to suppress wages, reduce job opportunities, and limit competition in the labour market. Startups suffer, as non-compete enforcement reduces new firm entry, stifles innovation, and reinforces the dominance of large, established businesses.
Starr argues that the misallocation of talent, reduced knowledge spillovers, and lower levels of entrepreneurship outweigh any potential benefits. Companies face fewer incentives to innovate or improve efficiency, leading to stagnation in industries that could otherwise thrive.
In 2023, the UK Government consulted on this. Ultimately, the Government decided against mandatory compensation and a complete ban. Instead, they opted for a statutory limit of three months on non-compete clause durations (though this hasn’t really gone anywhere).
This may be a case of the Middle Ground Fallacy. As we argue on university spinouts, sometimes the radical idea is the right one.