Money for nothing. Miran Rijavec / Flickr.com | CC BY 2.0

A basic income (Giving money to everyone without expecting anything in return) will boost entrepreneurship dramatically. It will allow societies and communities to boost their creativity and unleash the human potential needed to help solve the biggest challenges humanity is facing today. But isn’t entrepreneurship all about creating value and getting some cash in return? So why would handing out free cash help? Let me explain.

The concept of an unconditional basic income is old. First concepts originate in the late 18th century, but recently the idea has gained significant momentum. Finland is planning to start a trial in handing out free cash to its citizens. The Dutch City of Utrecht plans to introduce it. The debates, especially in Europe and specifically in Germany are increasingly getting heard. Even Silicon Valley is talking about it with the likes of Sam Altman, Peter Diamandis and investor Marc Andreessen supporting the idea, or at least liking it. Just recently YCombinator published a request for research, offering funding to researchers who want to conduct studies on unconditional basic income.

As much as the concept might at first sound like the wet dream of every communist, there is much more to it and even the most liberal capitalist-minded people should support it (In fact many of them do & did).

Let’s ignore all the arguments for social justice, the moral aspects and the fact that a basic income will substantially eradicate social systems’ bureaucracy. Instead, let me bring forward four key points why a basic income is great for entrepreneurship.

People won’t need to take jobs to just survive, so they will use their time to create the things they truly care about

Trials of handing out free cash as a basic income have shown that people are born to create. While some may take the first few weeks to chill-out and do nothing, most people will eventually start to do the things that matter deeply to them: Start that business, take more care of your children, realize this dream that always seemed impossible. 80% of people hate their job. They go to work to put food on the table, not because it inspires them. Imagine a world where we could flip these numbers, where 80% of the people would enjoy what they do because they are no longer forced to stay in their jobs, because they gain the freedom to create. This means that accelerated creation will also lead to higher number of companies being founded. Companies that allow their creators to live their dreams.

Co-founders will be able to live off their basic income until their company can afford to pay salaries.

Co-founders usually can’t afford to pay themselves salaries for at least the first few months. So what should you do? If you don’t have big savings or that wealthy family that takes care of you, you are almost doomed. A basic income would remove this threat to entrepreneurs. Co-founders would be able to live off their basic income without depleting their venture of the scarce resource of cash. This will drive the cost of starting a company down which means that one of the most basic economics principles comes into effect: low cost, high demand: The lower the cost of starting a company, the more people will actually do it.

There are too many great people in average jobs. A basic income will leave no reason for them to stay.

This will suddenly set free a vast human potential to be recruited by the tech sector or that can afford to pursue their entrepreneurial ambitions themselves. While many people will still stay in their jobs because they pay very well (and most definitely much better than any feasible basic income), the true entrepreneurs will be able to live a decent life with their basic income without the social stigma and bureaucratic hassle & terror connected to many countries’ social systems (If they exist at all).

Failure will not be a financial disaster anymore. The worst case gets much less scary.

What if I fail? This is the question even the most risk-taking entrepreneurs will ask themselves one day. In many countries with no or very limited social systems it means financial disaster. And even if social systems cater for the basic needs receiving government handouts is often connected to stigma. So what is different about a basic income? Everybody receives it. Billionaire to homeless person. It will be the most normal case to make use of the money and the worst thing at can happen that one has to live of only the basic income for a while, after the business fails.

Now, there are many more arguments besides the boost for entrepreneurship. I won’t list them here, but you might want to check out these pieces for further reading:

Rutger Bregman at TEDx Maastricht on why we should give “free money to everyone”

Discussions, facts & news on the basic income on reddit

German billionaire and entrepreneur Götz Werner on the concept

The Huffington Post lists the arguments against it, and responds with the facts that show they are most likely not true

The original post was published on my blog realchangers. Follow me there to read the latest thoughts on entrepreneurship and how it changes our world. Any thoughts on this? Drop me an email: maiko@realchangers.com