David L. Deeds, professor of entrepreneurship at the University of St. Thomas Schulze School of Entrepreneurship, recently discussed with personal finance site WalletHub how to stimulate innovation in a tech-centric society. Here are the tips he shared in response to the questions posed.
How can state policymakers encourage and facilitate innovation?
One simple thing is to end or limit noncompete clauses like California has. Simply allow innovative and creative people to apply their talents unimpeded by multiyear noncompete clauses.
Investing in education, particularly K-12 but also at the university level, it is no accident that innovative ecosystems develop in states with strong education systems and research universities. These institutions build strong, capable modern workforces that attract capital, and jobs and create innovations. The benefits do not happen overnight, in fact, they take years if not decades, but consider what The UCs or the University of Texas at Austin have meant for the development of premier innovative ecosystems.
Stay out of the way – do not try and manage the process. You do not know how to, nor are your cronies likely to actually have winning ideas. The government’s job is to provide the basics, such as an educated workforce, not pick winners.
What can policymakers do to assist those who may lose their jobs or otherwise be displaced by innovation across industries?
I worry a lot about this. Consider the impact self-driving trucks will have on employment. In a majority of states, a truck driver is at or near the top of all employment categories. What happens when we need half of those? I suppose some form of Universal Basic Income, combined with reductions in working hours, and retraining, is a significant and difficult problem.
Consider that when the industrial revolution hit in short order, we removed women and children from the industrial workforce and dropped the workweek from 60 to 40 hours. This had the impact of decreasing the supply of labor by over 50%.
What skills best equip individuals to be competitive in a changing economic landscape?
Problem-solving, and strong reasoning skills, generally gained via mathematics, and also creativity. The software will do the easy stuff; we need a workforce that knows how to ask questions, see problems and think creatively about solutions.
In evaluating the best states for innovation, what are the top five indicators?
- Educational attainment and K-12
- Start-up rates
- Availability of risk capital
- Patenting
- Immigration–motivated, smart immigrants are a real benefit
