Y Combinator wants to build a city. For the first stage of their project they are looking to hire a researcher. I already commented on their project, which I think is awesome. However, they state that they do not want to build a ‘crazy libertarian utopia for techies’ (CLUT). I think they are mistaken. CLUTs can increase the rate of technological innovation, helping all of humanity.
First, however, it is necessary to clarify what a CLUT is. I define it as a city with low taxes, few regulations, and a high concentration of tech companies. Building a new CLUT would require a degree of legal autonomy to lower taxes and eliminate harmful regulations, as well as an urban environment to attract millennials who are typically the core workforce in tech companies. More generally, a CLUT would be designed to appeal to specific type of person, the techie, and as such, be less attractive to wider swaths of the population. CLUTs are inevitably elitist, as the income and taste of tech workers differs from the general population.
Nevertheless, despite the elitism of CLUTs, such cities have the potential to help all of humanity. The purpose of CLUTs is not to attract libertarian techies, but rather to offer a space for technological innovation. Typically, only the wealthy are able to afford technological advances. However, as products mature, costs fall and they become available to wider segments of the population. As such, technology benefits nearly everyone in the long run.
However, technological innovation is more important than that. Technological innovation is the driver of long run economic growth. Technological innovation is responsible for the industrial revolution, increasing incomes by a factor of 30 over 200 years. Increasing growth depends on technological innovation.
Further, it is clear the current regulatory system is depressing innovation. Uber and AirBnB, the two most prominent companies of the sharing economy were both illegal, and to some extent still are. Uber violated taxi regulations in most cities and the majority of properties listed on AirBnB violate the Americans with Disabilities Act. Amazon moved their drone program to Canada because the FAA was too slow in issuing regulations for drones.
Overregulation has also limited tech company’s involvement in health care. 23andMe had to stop providing information on disease prevalence because of the FDA. Alphabet, formerly Google, has limited investment in health care because of overregulation. What unicorns have not been founded, or have failed, because of overregulation?
A single CLUT could immediately save thousands of lives a year. Consider a program that would compensate, which is currently illegal, liver donors. Nearly 5,000 people die annually who are waiting for a new liver. Such a program could be experimented with then perfected in a CLUT, before being rolled out to the rest of the country. Similarly, why not let Alphabet disrupt health care? Our most innovative people and companies are currently constrained by an outdated regulatory system.
Yes, companies and people will make mistakes. There could be another Theranos, or worse. However, that is how innovation happens. The potential downsides will be concentrated only on those who voluntarily choose to live in a CLUT. The benefits will eventually spread throughout mankind. It is for these reasons I urge YC to reconsider, and not dismiss building a crazy libertarian utopia for techies.