Policy Frameworks for the Intangibles Economy: Nurturing Innovation, Ensuring Equity, and Adapting Macroeconomic Tools

This podcast episode delves into the critical policy adjustments required to navigate an economy increasingly dominated by intangibles and intellectual property (IP). It begins by advocating for innovative public procurement strategies, moving beyond lowest-bid models to foster iterative co-development with local firms, thereby nurturing indigenous high-tech sectors. The discussion extends to unlocking university-housed IP through standardized licensing agreements and the establishment of national technology transfer offices, alongside the strategic use of patent collectives for both defensive purposes and active IP enhancement. The episode also introduces the concept of data trusts and explores new models of IP creation and dissemination, such as the open science approach exemplified by initiatives like CGI and CERN, challenging the assumption that IP must always be proprietary and exclusionary.

The analysis then shifts to macroeconomic policy, highlighting how the intangibles economy complicates traditional tools. It argues that the exchange rate, while still vital, must be augmented by robust foreign investment review mechanisms to prevent the acquisition of strategically important domestic assets, citing the DeepMind case as a prime example. Monetary policy faces challenges due to underreported intangible sector size, intangibles not being accepted as collateral, and near-zero marginal costs distorting price signals. Furthermore, the episode suggests a fundamental shift in taxation, moving away from income and consumption taxes towards profits and wealth taxes, given that wealth in the intangibles era increasingly manifests as economic rent.

Social policy is re-evaluated to become person-centered rather than job-centered, acknowledging the reality of multiple careers and rapid skills obsolescence. This includes advocating for portable benefits and exploring universal basic income (UBI) or public provision of basic services, financed by the proposed wealth and profits taxes. A crucial distinction is made between distribution and "predistribution," which focuses on democratizing opportunities to participate in the intangibles economy. This involves a radical rethinking of pedagogy, moving from front-loaded education to lifelong learning models with integrated digital literacy from an early age.

Finally, the episode emphasizes curriculum development beyond STEM, stressing the importance of humanities and social sciences for fostering interdisciplinary adaptive skills, entrepreneurial mindsets, and market navigation in an era of constant change. It suggests public platforms for gig labor to ensure transparency and fairer outcomes, contrasting them with private, profit-driven algorithms. The overarching goal is to establish "universal basic capital" or "universal basic human capital" – the foundational prerequisites for all citizens to successfully participate in and benefit from the evolving intangibles economy.

Public procurement tends to be one of the largest single sets of spending in most countries and it amounts to about 12% of global GDP.

The United States Small Business Innovation Research Program and there are similar models in Japan, Netherlands, and the UK serves as an example of how a country can use its public spending to nurture a domestic industry.

The core of this would be for universities to use licensing agreements where university IP is then used by private sector firms to create wealth.

Often the purpose of a patent collective is defensive. It is to create a club in which firms pull their patents and help each other out if there is litigation in seeking out wealth opportunities in providing the capital that's needed.

The moral of the story is not to stop using the exchange rate as a policy tool, but it is to augment it with something that has fallen by the wayside, but something that is increasingly being brought back in play, and that is foreign investment review.

With hindsight, would it not have been better for the UK government to block this acquisition and help keep it independent?

It is possible that we want to move away from income and consumption taxes more towards wealth taxes so that we create minimum standards of living for people who can then participate fruitfully in the economy.

It would be a big mistake to equate new technologies and intangibles with only the STEM science, technology, engineering, and mathematics.