Our lives as consumers are much cooler than they were a decade ago. Yet our lives as citizens continue to be as inefficient and frustrating as they have been for decades. What can each one of us do about this?
It's hard to comprehend everything that's been invented in 10 years. In 2003, blogging was novel. craigslist had only barely started expanding beyond San Francisco. Apple had just released the first iPod. Google was a search engine without a clear business model. Amazon sold books with questionable prospects for success. The iPhone, Facebook, Twitter, Yelp -- none of these even existed. All of these technologies and so many more have empowered us greatly as consumers. We have incredible information and choices available to us with powerful ways to decide between them. If producers provide a bad experience, then we can rapidly band together to force change.
Over the same period of time, or even the past two or three decades, what has really changed in our lives as citizens? While journalism has been completely turned on its head, most of our students still sit in classrooms being talked at by a teacher for eight hours a day. The online retail experience becomes smoother every day, but I complete the same paper forms over and over again every time I go to the doctor.
Moving beyond anecdotes, let's dig into quantitative data on the state of our civic life in America.
According to the OECD, America ranks dead-in-the-middle of major economies in student performance, while we spend more per student than any other country. In comparison, Poland performs about as well as we do, but spends two-thirds less per student. South Korea has the best student performance in the world, but spends half what we do per student. What do our students get for their education? About 54 percent of bachelor's degree holders under the age of 25 are jobless or working in a job that doesn't require a bachelor's degree. Meanwhile, the average student graduates from college with more than $25,000 in student loans.
Despite possessing some of the finest doctors and medical technology in the world, our health care system is the least efficient in the world. According to the same OECD study, America ranks near the bottom of major economies in health outcomes despite spending 50 percent more than the next highest country. Japan has the best health outcomes, but they spend one-third of what we do per person, despite having a more rapidly aging population. And it's not only a question of efficiency. As an example, the French health care system treats lung disease far more effectively than the American system; with levels of severity and fatality three times lower than those in America. Yet the French spend eight times less on treatment per person than we do.
According to a 2009 study by the Lawrence Livermore National Laboratory, around 58 percent of the energy produced in America is wasted due to inefficiencies from power plants, vehicles, and light bulbs. Meanwhile, just 1.2 percent of our total energy production comes from sustainable sources such as solar, wind, and geothermal.
The Federal Information Technology Budget has grown from around $30 billion in 2000 to nearly $80 billion in 2012. Do you feel like your experience as a citizen is almost three times better since 2000?
Estimates in today's dollars of our fiscal gap over the next two generations range between $350,000 and $1.7 million for each household in America. Whatever model you prefer, our fiscal path is unsustainable.
Our country faces severe short- and long-term budgetary pressure. We're underperforming other countries in areas like education and health, despite outspending them. We're both ineffective and inefficient in sectors that account for well more than one third of our economic output. We don't need reform. We need reinvention.
So what can each one of us do to reinvent America?
First, as I've argued in previous posts, this reinvention must come from our entrepreneurs -- with agile start-ups that leverage disruptive technologies and new business models. Our entrepreneurs are the ones who get it and are most attuned to the way in which our world is changing. They are the attackers with a vested interest in change rather than defending a status quo. They're in the business of the creative destruction that we desperately need in the way that we educate our children, manage our health, manage our resources, and the way our government works.
Of course, those of us that are entrepreneurs should focus on the big problems. The massive economic opportunities for our generation won't be about the next incremental improvement in mobile ad targeting or inventing yet another addictive word game. They're in fixing the significant portions of our economy that are deeply broken. The online advertising market is around $70 billion per year, give or take. Meanwhile, we spend around $800 billion per year on education, around $1,000 billion per year on health, and around $1,200 billion per year on energy. Which is more broken at the moment? Where will the next great companies be focusing?
Second, every one of us needs to get involved in supporting our entrepreneurs. Each one of us has a role to play. Come up with an idea. Write a blog. Share your idea. Become an entrepreneur. Join somebody who's already building a company. Be a cheerleader to an entrepreneur. Be a funder. The vast majority of start-ups in America are launched with capital from friends and families. Decide how you can best contribute and get in there!
Third, investors should focus on these big opportunities. There is always a herd mentality to investing. It's easier to take risks when everybody around you is making the same bets. Nobody will fault you at the moment for a failed investing in the next "can't miss" idea for a social mobile local play. If you look at the data though, then you'll see massive markets with obvious inefficiencies about to go through their biggest disruption since World War II. Smart money will make fortunes with the right investments in that reinvention.
Fourth, our corporations need to engage. As Harvard's Clayton Christensen argued recently, our established corporations have become adept at "sustaining" and "efficiency" innovations -- the incremental improvements that keep the profits flowing -- but have lost the taste for "empowering" innovation, the big ideas that create entirely new markets and industries. It's our startup economy that has taken on the role of empowering innovation. As start-up activity increases in areas like education, health, energy, transportation, and government, many corporations will be caught as unaware as Kodak at the advent of digital photography. The smart players, however, will actively seek to engage, partner, invest, and acquire so they can make the leap from one era to the next.
Fifth, what should our policymakers do? They can move beyond think tanks and industry associations and engage directly with start-ups to learn about this new wave of innovation. Policy has a role to play in reinventing America, but it's about unleashing, enabling, and empowering start-ups rather than more bureaucracy and mandates. Policymakers have already made significant steps in this direction with legislation like the JOBS Act and the Startup Act 3.0, which is currently before Congress, but these pieces of legislation need to be fully implemented in ways that unlocks capital, talent, and opportunities for start-ups.
In the same way, a consensus has emerged among the Obama Administration and many in Congress that opening up government data is a win for everyone except those who benefit from obfuscation. More needs to be done though to turn this vision into reality. This isn't about opening up piles of PDFs and Excel files but rather turning government into a platform of web services and open APIs.
Each of us can play a role. And it will take each of us, forging a new community of entrepreneurs, investors, corporate partners, and policymakers to reinvent America.