 And welcome to Nicholas Gruen, we're so pleased to have him. Nicholas is a widely published policy economist, entrepreneur, and commentator, has lots of different publications. You can check out his bio on the website. He was also a member of a major review of Australia's innovation system in 2008, a review of the pharmaceutical patent extensions in 2013. And in 2009, he chaired Australia's acclaimed government 2.0 task force. And he's here to talk to us a little bit more about that tonight, so welcome. OK, thank you. Thanks very much. So the talk consists of two halves, really. And the first half is you could, for an unappetizing word you might call it theory. But I think you'll find it interesting. It's a very general description of the way I see these things, or the way I've come to see these things, looking at the internet as an economist. And so I want to talk to you about public goods. I want to explain to you what a public good is in the thoughts of economists. And then I want to go through those topics and draw out what I see as some of the implications for some of the opportunities that are yet to be grasped from the internet based on that way of looking at the world. So we all have a kind of an informal definition of a public good, something along those lines, that public goods are things that won't be supplied if they're not supplied publicly, if they're not supplied by the government. Economists have asked themselves, what are the technical characteristics of goods that give them that quality, that they are not produced spontaneously by a market? And they tend to say that public goods are types of goods where two characteristics combine. Firstly, the good is a non-rivalrous good. This thing that I'm holding in front of you, this clicker for the presentation, is a rivalrous good. If I've got it, you haven't got it. The slides I'm using are a non-rivalrous good. Even in this room, they're a non-rivalrous good because we can all look at them. And the words I'm using are non-rivalrous goods. And secondly, there's the question of excludability. Inside this room, my words are unexclutable. I can't stop you hearing them. And so if I was to charge a price for giving this talk, I would be wanting to charge the price at the door, at the point where I can exclude you and say, well, do you want to see the show or don't you? And you can see why that is important to setting up a market. And the lighthouse is the, in some ways, somewhat misleading canonical example of that in an economics textbook. As ships go past the lighthouse, they benefit from the light that is cast and you can't stop them benefiting. And therefore, there's a problem in providing lighthouses or so the story goes. And for that reason, economists have regarded public goods as a problem. And if you look upon the, if you look at this axis, excludability axis, you see the free rider problem. If something is non-excludable, you have a free rider problem. Because if somebody has put their money into providing a lighthouse, people can free ride on that investment without contributing to it. You can see that there's a free rider problem. Economists hate free rider problems. And so they say that public goods are a serious problem in human organization. There is another side to this, which is the other axis. And that other axis defines a free rider opportunity. Because if I have funded through my own efforts or if you're asking for money, some words, let's say they're just symbols, E equals MC squared, then there is a huge free rider opportunity. Everyone can take advantage of that thing once it's come into existence. And if it was non-rivalrous, sorry, if it was non-excludable, it's already non-rivalrous. We can use it again and again and again. If it's non-excludable, that might actually be a good thing. So long as it comes into existence, that might be an opportunity, not a problem, not a perspective that economists have been particularly vigorous in exploring. And now we are in a new world because look at these things. These things are public goods. And they didn't get built by the government. Some of them got built for profit. Others did not get built for profit. Wikipedia didn't get built for profit. So public goods are assembling themselves without governments in our new world. And I want to suggest to you that the more I thought about this, the more I realized that it wasn't the whole story. But we have certainly come to think of the internet as a way in which we can create public goods. Here's Efstathia Anatolitas, a friend of mine, who tweets at the Melbourne Writers Festival in 2012 as a public service that there's some good soup available at Beer Deluxe in Melbourne, just $12. She is making a public announcement. She is, that's a public good, non-excluded, non-rival, as anyone can use it. And here's a more exciting, a more spectacular one of Tim McNamara, who sat in Wellington while the Christ Church earthquake occurred and thought, what can I do? Didn't go to Christ Church and join the rescuers, got in touch with Crisis Commons, got the volunteers around the world to pass tweets, to examine tweets for specific, valuable information, typically something with an address and a state of affairs. And that was then put up on an Ushahidi map, which was extremely stable and much better than anything the government rescuers were running. And eventually, although the government people spent most of their time being concerned about whether this information had been verified by the government, the government started using the map themselves and referring other people to it. So this is a new world of public goods. But there is something interesting going on. And what's gone on is that if you look at all of those platforms, every one of them is actually excludable, but a decision has been made not to exclude people. Now, it's easy to understand the decision made by Wikipedia because this was a philanthropic venture. But it turns out that Google and Facebook and Twitter can make more money by simply not excluding people from platforms which are potentially excludable. Google in my back of the envelope calculation would be responsible for around about $1 trillion a year in actual value to the world, and it can manage to make its owners wealthy beyond their wildest dreams, living off a few lousy billion dollars from ads, from the trillion dollars of value that they create. If it wasn't a public good, they couldn't create that amount of value. They couldn't create anything like that amount of value, and so they would make much less money. So this is quite an interesting new world we're going into, or is it? Here's a close personal friend of mine, Adam Smith, the founder of My Discipline, and you will know him no doubt as the author of The Wealth of Nations, published in quite a favorite year for people in this country. And that's a sort of bible of private goods, if you like, a bible of how markets work and what a terrific thing markets were. But 17 years beforehand, Adam wrote books fairly slowly, I thought a lot about them before he put them out. 17 years beforehand, Adam Smith had published The Theory of Moral Sentiments. And The Theory of Moral Sentiments in many ways is the first book of modern psychology, the first book of modern sociology, the first book of modern social psychology. It's really about how do social mores evolve. How was it that I was able to get into a taxi this morning, talk to the taxi driver? The taxi driver took me here. We didn't argue about how much money I should pay him. He didn't lock the door on me. It was all amazingly civilized for people who are supposed to be self-interested and self-seeking individuals. There is a powerful engine by which people create the environment in which they cooperate at close quarters. And those mores, Adam Smith was saying, without using the term, are a public good. They're public property, well, they're public property in the sense that they're nobody's property, and they're highly valuable. I've got a slide in a minute which gives you an idea of what their value is. Now the mechanism by which Smith was saying markets evolve was the same mechanism by which moral sentiments evolve, mores, social mores evolve, which is they evolve spontaneously from individuals and groups living together and making choices and generally speaking seeking to advantage themselves, although that sort of statement could be caricatured somewhat. The other thing that is remarkable is that language is a quintessential public good. I've never seen language referred to as a public good in an economics textbook, but language is the preeminent public good, the thing that makes us what we are, the incredible species that we are. And it didn't get built by the government. It didn't even get built deliberately. It got built in the same way that markets got built and our social mores evolved. And the remarkable thing is that when Adam Smith died, he left instructions that his papers would be burned and he made two exceptions. And one was an essay called The History of Astronomy, which is really quite like Thomas Kern's theory of scientific revolutions. And the other was a treatise on the evolution of language in which he proposed the exact same mechanism of evolution in which people were trying to essentially, well, spontaneous order to which drove the evolution of language, not governments. And in the world today, there's only one country in which governments think they have a major role in protecting the language, France. So let me talk briefly about the way I see the world is that it's not really the private sector makes private goods and the government makes public goods. It's that there is a rich ecology of public and private goods. In fact, as I will go on to suggest to you at every level. But I'll just show you a little bit about the alchemy of public and private goods as Adam Smith wrote about it. Because he has private traders addressing their mutual self-interest, making trades between each other. And then after this happens quite a bit, it starts happening in designated places. People start finding that they can make some money by creating a place in which those trades take place. And then public goods start emerging of their own accord. All of those are public goods that are generated spontaneously within a market, not by the government. A marketplace for meeting, price discovery, this incredible thing which both Adam Smith and Frederick Hayek regarded as a miracle, an incredible miracle. And it is a remarkable thing that this system that comes along, this public knowledge, largely unexclutable knowledge about what price things are trading at, gives everyone in the economy enough information to tell them how to fit their private interests perfectly, given certain assumptions, into the social interest from this emergent public good, the price system. Liquidity in a market, as we found out in 2007 and 2008, is a public good. Lack of liquidity, not so much. And there's Adam Smith explaining that to us. And Hayek turned it into a kind of obsession. If it wasn't spontaneous order, then he kind of wasn't interested. But none of them used the term public good. But that's what the spontaneous order that those two men were talking about is a public good. There were those, I think, they were at their height in the 80s, possibly early 90s, who spoke as if it would be kind of good. The private markets were really so clever at finding ways to provide missing public goods that maybe the world would be better if we didn't have public goods, we didn't have governments. And we actually know something both theoretically. Adam Smith said something theoretically about what the world looks like without public goods. He probably had some experience of it or had read about it. And we see it on our television screens. That's what a world without public goods looks like. And that's what Adam Smith said about it. And so in my world, the ecology of public and private goods is that there are all these private goods. And the motive that Adam Smith called prudence or self-interest is the driving force behind the world of private goods. And then there are all these other public goods, things that don't easily look after themselves. And this is a slide. I suspect this is fairly similar in the United States. But if you're making a donation in Australia to any of those causes, you find that they are tax deductible. So we have a kind of an intuitive sense of this ecology of public and private goods that we want to reward people who make contributions to those things which won't look after themselves because they generate public good benefits beyond private goods. Even though things like health and education can, of course, be sold in a private market. So I think of public and private goods as having a kind of fractal ecology, which is to say they're all over the place at every level. Within a family, there are public goods. And there are private goods that within any human organization there is a sense of the appropriateness of people attending to their own needs in certain regards and a sense in which there is a legitimate group interest and that cooperation is expected. Ethics is the thing, the human technology, if you like, that we came up with to solve the public good problem. And we've been solving it since we've come down from the trees. And we've been solving it in all sorts of different ways. This is one way in which the United States probably leads the world, partly because it trails the world in other respect to public good building. It leads the world in philanthropic and civic-minded public good generation. And there is a great renewal of that on the internet because one person's code is then a global public good, which can be used in every local council everywhere in the world. An incredible thing and something which the United States caught on to faster than anyone else. We're still working on code for Australia. And but one thing I'll go on to just explain is there is an ecology. Usually when you see a successful internet platform, that has created an ecology of public and private goods. Let me show you what Google does. Google makes an offer to you, which is that it will generate private benefit to you. How will it do that by finding the best possible link that you're looking for? To start off with it, then harvests the internet as a public good to find out from the intelligence lying linked and baked into the internet using its algorithm. It works out what are the most prominent sites that you're interested in. But it does something more than that. When you click on a link, you help train Google. You help create the public good, which then feeds back to the next person's private experience and makes it better. That's sort of, if you're going investing in things, you want to look for that little virtuous circle. Because that's what's happening. That's how platforms come to dominate their space. And Google does this with the utility. And Facebook does exactly the same thing with affect. You are interested in what other people click on and say, I like that. So the public and the private are in this ecology, this rich ecology on the platform, each strengthening the other. And this is my favorite platform, my favorite web to platform built by Jamie Haywood after his brother, Stephen, I think, died of Lou Gehrig's disease, a horrible motor neuron disease in the UK, the same disease that the man who wrote the A Brief History of Time, Stephen Hawking, had. And so the idea is that it's not just a sort of, it's not just a sort of support group. All those support groups generate the spontaneous generation of public goods in that way. There is a platform for recording data and that data is your diary, particularly. So if you have one of the diseases that they target and they're expanding them all the time and they've moved into mental illness as well, you record your experiences, you keep a diary and those diaries can then be, generate a lot of data which can then be turned into public goods and you can get information back about whether with your disease people who take a nap after lunch find their lives a lot better than people who don't and so on. A simple idea and it is monetized, you may be shocked to learn by the sales of data to drug companies. So we, I suggest, have a new world of public goods, a new way of thinking about public goods. Here are the old style public goods that sit happily in textbooks and then there are, and they are the public goods that exist because we've overcome the free rider problem and then there are the public goods that exist by virtue of the free rider opportunity, language being preeminent amongst them and Linux, which is this open source software which is now this incredible thing which is the language instinct rendered into executive code. Once you get it down, it's a global public good potentially forever. Extraordinary stuff, which does stuff, which will do calculations for us and rearrange spreadsheets for us and whatever else we ask it to do. Isn't that incredible? And then we have all these public goods that are built once somebody builds a platform. They might build the, building the platform will typically be costly, might take them some time, might take some money, but once it's built, if it's built well, if it's built by people who know what they're doing or they're lucky, like Jimmy Wales probably was, then all these public goods come into existence, Twitter, Google, Facebook, Wikipedia and so on. So this is the space I think that we should be thinking about the internet. I think it's a really exciting and interesting way to think about the new possibilities that are presented to us. The first one is public goods. The old story is public goods is a problem and this is public goods as an opportunity. So this is the question that I, so look, actually I'll go back to the previous slide. Now you can see that these goods here, the goods over on the left-hand side of the diagram they've come up with some trick. Well, I don't know whether you call language a trick, but certainly the platforms are some sort of trick whereby a public good can be brought into existence by private endeavor. That doesn't abolish the potential free rider problem. It just means that the lowest hanging fruit has been picked. If you can make $50 billion revenue a year, as Google can, well it's worth you while spending a few million dollars on the platform. What about all those forms that would generate huge amounts of social benefit but for which we can't quite work out how to fund them? That's this idea that I've got for a public-private partnership. So that's the question that I posed in 2010 in Washington actually in the wake of the government 2.0 task force and I had a whole list of fancy examples and a lot of the principles of government 2.0 of publicly releasing data, making sure that the data is machine readable, open licensed and so on. Those sorts of, I saw those principles as essentially trying to cultivate this space but it seemed to me that we should be thinking much more about what other kinds of things we might be able to do and that's a list which I won't go through now because that's a list of some of the things I'll talk about in the rest of the presentation. Some of these things are now, I'm now gonna start with examples that are sort of fairly old hat for people who know this area and they will get progressively more ambitious until I finish with what I regard as my killer example and I expect applause at that stage. So these are just slides that we were shown at the government 2.0 summit in 2010 by the Massachusetts Bay Area Transport Authority. It only occurred to me as I'm speaking to you now that I've shown these slides around the world. It's kind of nice that they come back home. Anyway, the guy making the presentation said, look, our weather service information is open. Therefore you get your weather information any way you like. Therefore everybody knows about this stuff. It's very easy to get hold of and in 2010, people would be in a lot of trouble trying to figure out when the next bus was coming from because you got that information from the Massachusetts Bay Area Transport Authority and I hope I've got that right. I don't know whether I've got that name right, I hope so. It's kind of more forgivable in other locations. And the Massachusetts Bay Area Transport Authority would treat this as proprietary information and people would say, I want to republish this information and they'd say no. So they came up with this incredible idea that they would publish this information about how to use a public good that they were responsible for providing. And they worried, you see, as organizations do, they worried how will people use this data, will they misuse the data, how will it be made available to people and they didn't need to worry because within a bit more than a month, the data that they'd released on an API was available on six different platforms and the thing took off and that was just data on timetables which was rapidly absorbed into the ecosystem and then they released live data which is data like your bus is five minutes late and within an hour it started appearing on various internet platforms. And so this is a problem that doesn't need solving, you just need to relax and take it easy and it solves itself. Here are some examples, not of release and they will come, they will solve the problem but building, governments building platforms. This is an American example where the government essentially marketed the services of return service men to employers and created a platform which was of advantage to those people. This is an Australian example, the National Library decided to digitize its newspapers. Why do you, what is the really cool thing about digitizing newspapers? They then become searchable, they're not searchable in microfilm and so they digitized them and someone said, well, and the way they digitized them was OCR, Optical Character Recognition and these are 200 year old documents, some of them and so computers make mistakes. No stop walk, no stop work, Wharf is told is translated as woe stop work and you can see there's some kind of logic to it but it's not the kind of logic that we're comfortable with and what we did at the National Library is we turned this, so this text down the left hand side and the picture of the paper on the right hand side and anyone anywhere in the world can click on it and turn it into a wiki and correct it and this thing was going to be launched but it didn't have to be launched, it took off like a rocket basically and it was never launched and the moment it went live it was never, oh it's all gone ahead there, it was never unused. So spontaneously people started doing work on the site and these numbers are quite out of date now, I think the number is there are 70 million lines of text corrected, 20% of the correctors are outside of Australia, very often Australian expats, that means it goes 24 seven and there's Julie Hempenstahl who describes her relationship with the site as preferable to housework, her house seems to be still standing although she's a bit red in the face. Anyway, she was the leader for a long time and then along came the text corrector from hell and Maylee who got ahead of her, there are now, this is still out of date and I think John Hall or John Warren at the head of this list and those people are often flown to, occasionally flown to Canberra and people say thank you to them and this all keeps the ecosystem going. So this was the only other fairly pathetic example that I could come up with in 2010 of governments building platforms that the private sector might not build. This is our national broadcaster building, a site called ABC Open which is a website and a system designed to cultivate and broadcast if you like amateur content or the content of people particularly in the regions who can get access to some training and then if they go out and take their smartphone they can do interviews and create and edit them and create programs and this website then puts them into the broadcasting ecosystem. So an example but hardly something that would convince you that this was a key to a much better world. These are another, this is another basic idea which was pioneered in the UK, Fix My Street. This is the idea that the interface between government and the public might be provided by the public rather than the government and so a not-for-profit group called My Society built Fix My Street where people can register where their pot holes in their street maintenance things for local government and then that goes directly to local government. We ran the first, we ran the first GovHack, we ran a thing called GovHack, the first hacking competition that governments had run anywhere in the world. This was the government 2.0 task force and that's a sort of volunteers turn up for a weekend and get a prize for the best app that they build and this was the Australian Fix My Street, it was only a prototype, it was called It's Buggered, mate, and you put in what's buggered and where and how exactly is it buggered and your email address brackets to track the unbuggering and so on and this is a for-profit version of the same thing which I thought started, I think started in Boston, it's now headquartered in Connecticut, sorry? Yeah, it's now in New Haven, Connecticut. It was always in New Haven, well there you are. So that's one thing that's happening and a sort of a way of understanding that, I think quite a nice thematic way of putting this is to say that in the era of reform when we took government monopolies and tried to unpick what about them might stop becoming a monopoly, the example with the telephone network is that the telephone network itself might have remained in government hands or heavily regulated but the telephone set, it was easy to say that should become a private market and here what we're doing is something very similar. We're shrinking those areas that are regarded as problematic and things that need to be solved by government or regulation but we're saying it's not just private markets that can fill the gap, it's public and for-profit motives but also motives of public spiritedness and volunteering can also be a very useful driver and one of the lessons from this is here's a thing called Open Australia which is a site like this but it's equivalent to Hansard, our congressional record and it sort of works, it's better than and there are ways in which it's better it picks up spelling mistakes more quickly and how the people working at the congressional record at Hansard often check with it to find spelling mistakes and so on you're familiar with these kinds of examples as well. Here's another example of a for-profit interface you know when at schools you have to get permission when kids are going on excursion and every time they do you write down a whole lot of things about their allergies and then they get lost or they're hard to access well this is all done electronically and then when the teacher or the club master is on an excursion they can just press the name of the student and up comes their record obviously hugely beneficial and for that to happen and to happen quickly government institutions if they're schools and so on or government funded institutions have to react supply in their own interests and often they don't. This is a sort of alpha prototype site that we set up called Fix My Budget the idea there is to try and crowdsource micro suggestions for saving money for governments now this has been done unsuccessfully in the United States and Britain because and the reason they were unsuccessful is there wasn't enough structure to them and they essentially turned into sites where people troll and you just slag off and doesn't work the idea here would be to build an expert community at the back of this to actually vet the suggestions and work with them and I guess I'd also like to get the public bureaucracies involved in something like this but that's an example I will, well this is just an, I put this to you as an example of a problem eTasker is an app that somebody is developing in Australia it's designed as a marketplace for skills so the idea it's really the person who designed it was thinking about large consulting companies and people put in their skills and what their timetable looks like and it creates more liquid flow of skill and skill matching inside a large organization he took this to a government organization in Australia and they said this is exactly what we need we can't possibly buy it because we can't specify it in a tender because it doesn't exist yet not a very sensible, another barrier to a sensible public-private partnership in building the value that we need but let me try and suggest to you a few somewhat more ambitious public-private partnerships and I will then conclude with my killer example for which I've already told you I have certain expectations of you so this is Urbain Laverier and what he did was he told people from observations of one planet, Uranus, that there must be another planet and said roughly where it was and I want to suggest to you that's kind of where I've been for a couple of years I've thought this is a big story where's my killer example so I'll get to my killer example but I'll show you a few other examples one is this is a free medical practice kit and it monetizes the assets it monetizes customers by their typically medical doctors and so on whenever they send an SMS that costs the money and whenever they file with a health insurer that costs the money but the service itself is free and if you were a fitness trainer you could use it for nothing or it doesn't have to be medical Australia is trying to computerize its doctors and so it wants doctors to sign up but not necessarily to this one but it wants doctors to get to ensure that their practices have appropriate IT but there's a problem because the doctors don't know which package to get and the government is too scared to say pick this package now what would happen if the government needed to use a package was that the government would design a process which was publicly defensible to instruct it on what package to buy why don't we do this with new technologies why don't we try to create an environment in which which is the sort of environment that eBay has created within eBay where people are actually steered to the best options via reputational mechanisms government's terrified of doing this but of course it can set up and it's rightly terrified of it if the relevant cabinet minister says well I'm a mate of this business and it's a great business and I recommend it to people that's not the basis on which you would do it you would go through some publicly defensible process I think there's a big story to be told slowly disappearing because the private sector is imperfectly stepping into the breach which is to integrate private entrepreneurship with the state apparatus more coercive state apparatus and most particularly the demonstration of ID validation of ID now states have these mechanisms and they should have opened them up so that people can opt into them nothing compulsory about it so that people can opt into them on the internet as it is things like Facebook both Facebook and Google Facebook, Google, Twitter are all moving into this domain but obviously much less successfully because they don't have the capacity to vouchsafe identity to the extent that governments do I use rate my professors my professor because as a professor in this town who's pretty good who seems to get consistently low ratings now some people corrected me and said that's because his lectures aren't very good but other people don't think that's true some of you probably have been to them but one of the reasons he doesn't get very good ratings is because lots of anyone can go on there and say what a terrible man he is and how he's un-American and all that kind of stuff that's Paul Krugman in case you can't read it from the slides so the idea then is to knit together the public and the private sector using opt-in to combine private endeavor and entrepreneurialism with a critical service that governments by default already find themselves providing and here is another example this is an Australian company called Culture Amp and it provides a product called Merma what does Merma do? Merma is a employee survey mechanism for an employee survey mechanism whereby a business can inform itself what its employees think about how engaged they are how well they think career structures are and how family friendly the workplace is and so on you're familiar with the idea my idea here is to say now this company is selling it's sold successfully to Adobe and to but mainly to smaller businesses Adobe, Box and one or two other businesses in Silicon Valley so my idea is for a minister for small business somewhere to say to go to Culture Amp in fact you would do this through a more open process than this but for the purposes of explanation go to Culture Amp and say I would like to pay you how much money do I have to pay you so that every business with fewer than 200 employees in Massachusetts can use this for free that's easy to do it's extremely cheap because it wouldn't be a lot of money and then you so you're already getting a benefit that you wouldn't have got otherwise because you've the cost to you this is non-rival risk a non-rival risk good and you're getting much more use of it and then you get another big benefit which is you get a data set which is consistent amongst all these businesses that are using this and so you can go and look for patterns and say what are the secrets of companies that have got highly engaged employees you know maybe they're more in this suburb than in that suburb maybe you can then track that to some training course that exists here rather than there could be hugely valuable I envisage this as a publicly available data set subject to certain privacy regulations it's not a government owned I'm not suggesting the government's gonna play the key role in doing more than curating the data set and places like Harvard University would then go digging around and finding all sorts of interesting things Sense T is another Australian project which I've been involved with which I think is really exciting it simply it does a very simple thing it takes agricultural sensors currently just around Tasmania and goes on the proposition that if winemakers need sensors and lamb farmers need sensors and salmon farmers need sensors of certain kinds then if we build them all into the same platform then it's likely that we're gonna build a much more powerful capability a platform on which apps will then be able to be built for all sorts of other things so we're trying to that's the sort of thing that's hard to make happen privately with a small amount of government money it could be hugely beneficial we've already lowered the cost of oyster farming by 10 or 20% because we can narrow down the days during which it is unsafe to harvest for reasons of excess water flow and all kinds of stuff like that my killer example so I'm sitting in a health 2.0 conference in San Francisco and there is Anne with Jackie from 23andMe and as she describes her business which is that for many of you will know this and some of you will be customers for 90-dion dollars they send you a kit and you spit into the kit and they then do a partial analysis of your genome now some of you will already also know that the FDA has got the yips with this and I'm happy to talk about that in questions but I'm sort of abstracting from that if it isn't 99 if it isn't 23andMe that's fine it can be some other service provider but you clearly want proper integrity to this process and I'd be more likely to have sort of instinctively support 23andMe against the FDA but the FDA does seem to have bent over backwards to try and get 23andMe to kind of come on board and 23andMe has proceeded to ignore them for six months which is a bit of a pity so these guys get, so you can see the power of this it's currently got 300,000 customers so it's got 300,000 partial genomes it invagals the customer to fill out an elaborate questionnaire to complete as much as they can provide of their phenotype the characteristics of their bodies and lives that have been from their genes that have been expressed that is, so phenotype is a fancy word for do you have back aches do you, how many colds do you get every year how susceptible might you be not that you could answer this in a questionnaire to breast cancer and so on you can see that this is a pretty useful there are some pretty useful possibilities lurking around here so apparently according to Ann Wojecki it costs about $400,000 to do a proper genetic association to tie up a genetic association with a particular phenotype that is to say this gene is associated with breast cancer more than your average gene these guys manage to replicate 180 such associations in a few months basically just get all their data and look for the associations in their phenotype data because also the other things people answer in this data the other things people answer in this questionnaire is what did your mother die of, what did your father die of you're getting a lot of information about what's being expressed from this gene pool the UK has just spent a lot of money I think it's getting 10,000 complete genomes not the partial genome sequencing that 23andMe provides so here's my idea 300,000 patients is pathetic okay this is an incredible thing the more we get on the database the more powerful it is for us all what we've got is one of these public private ecologies and it's crazy in my opinion at least in Australia where we have a national health insurer a government-owned national health insurer as I virtually or many other countries have and the United States is kind of nibbling its way to that destination so with a national health insurer the national health insurer has an interest in our this health system has an interest in lowering health costs now I can't believe that the Australian health system which pays for any important health care needs that I have and a large share of the other health care needs I can't imagine that it isn't worth $99 capital value to that system to know something about my genome with privacy protected of course I get screened I got a parcel in the post for Prostate, no it wasn't Prostate Cancer bowel cancer do it yourself kit it's not much fun to go through the steps I do it yourself kit from the government or from the government health insurer and you would be able to target that and breast cancer screening and Prostate cancer screening more accurately with this kind of data the moment you got the genome you could say right those people should be doing this every six months these people should be doing it every 10 years that's just the beginning of the sort of value that this has the sort of public value that this has but the public sector have all sorts of other advantages so the public sector has the health system if you like has all sorts of networks it can use nudges when you go to the doctor you can have a form say we'll pay the $99 because by now it's sort of $50 given economies of scale on the fact that you don't have to market and so on we'll pay it's completely free if you don't want to do it that's fine sign here and in two weeks time you'll get an email and you'll have your own page on 23andMe or a similar provider for now that cost often the non-obstruction is important when we think of the FDA and 23andMe although I'm not taking sides on that particular one at the moment and financially internalizing the cost the $99 or the $50 or whatever the total cost turns out to be can easily be covered by the social insurer because it generates that much value to the social insurer and then there are all sorts of additional benefits because you then have a much more powerful database on which you can go searching for these relationships doesn't have to be Australia so this is the landscape that I've been talking about and each of these PPPs each of these public-private partnerships I guess I should justify this word impresario the reason I call this government as impresario is that it's not government as coercer it's not government as funder which are the two big or regulator it's the government as an organization that makes things happen out of resources that lie dormant in the environment that's the idea that I'm suggesting and also the idea of the multiplicity of possibilities that the many different routines that can be used to make these two sectors these two aspects of our being integrate better together and each public-private partnership generates services as a public and or private goods it generates data as a public good and it will it will it has old-fashioned industry development appeal these are some of the routines that I've referred to and I won't spend any time on that any more time on that except as perhaps during questions I can come back to that slide if you want to ask more questions there are some examples I haven't even talked about there but that's government as impresario and then finally I want to talk about the art of the public-private partnership because it's very easy there was a book many of you may remember called Reinventing Government was that what it was called it was about 20 years old now it was awful it was full of great examples and then the author said why can't governments be like the private sector? well they're not the private sector they're better than the private sector in some ways and they're worse than the private sector in other ways and anyway a lot of this literature has a huge bias which is survivor bias which is you pick the best examples and the examples that have survived and you say well why can't this necessarily monolithic government there is just one of them why can't it be like the very best company in this private industry? well it's not very likely that it will be that so it seems to me that the task is a deeper one than that the task is to solve the problems that modern liberal democratic government has had to solve for 200 years which is to build institutions which create public goods in ways that dovetail properly not just technically not just economically but politically with private goods that's been the great achievement of modern liberal democratic government and so here the task is not to say gee why doesn't the government build more platforms like the private sector does although sometimes that will be a useful thing to do but to come up with the appropriate terms of engagement between the two sectors that play to their strengths not their weaknesses both Britain and Australia have just been through two decades of these things called public-private partnerships which were used to fund government what were essentially government assets and they were as a result much more expensive because it cost the private sector more money to borrow it's much higher bearing a much higher rate of interest a much higher capital cost than governments so we managed to invent this whole new we had public-private partnerships before the way we delineated the public and the private was that the public sector said where a road went and then got went and funded the project and got private contractors in to build the road that's perfect that works well that plays to the strengths of the two sectors we messed that up and called it public-private partnerships and got the private sector to fund the roads and they were supposed to take the risk and they don't really take the risk properly and also because the public can't do without their road if it goes wrong and the cost of the capital is much they did this stuff in Greece to push debt off government books that's roughly what it was all about it was a dodgy system so that's the sort of the provenance of the expression public-private partnership and yet it is so full of potential I think it needs to play to each other each sector's strengths that includes cultural economic norms and imperatives and you can see that when governments do things successfully they can answer questions like is there undue favouritism here is there due process the kinds of things that are small beer in the private sector because the private sector is competitive and this has to be done within the hard-won traditions of modern liberal democratic government so my final kind of wish is that in thinking about data PPPs thinking about data public-private partnerships some of the ways we can do things as for instance with that website murmur that's a very clean thing for a government to do. That argument that some privately provided services has much lower marginal cost than fixed costs is a very old argument in economics and was very big in the 1920s and 1930s leading a lot of economists to argue that the state should subsidize private railroad railroads subsidize their fixed costs to allow passengers and freight to travel at marginal cost so that the autonomous model tells them is the right price, the most efficient price the problem is it's extremely difficult to build a political and technical system that will deliver that that isn't the case with a website where you just say we'll pay you money and all the people with this postcode get it for free is that okay with you so new things become possible new ways of interpreting old ideas become possible but by doing that we might even find that these ideas that I'm trying to develop in data are about the integration of public and private sectors the interface between them could then come back to the interface between the public and private sector between government and other collective institutions and private endeavor in all sorts of other areas thank you I'm happy to answer any questions Amar was going to say that you were free to interrupt at any stage and I forgot to tell you that but you were does a private partnership with one of these organizations how do they go about picking the right one and not being sort of the king maker in there why should they pick 23 and me instead of some more competitors typically I mean there is a bit of a dilemma if a particular company has been particularly innovative but typically the safe answer is you get the idea then you go tender it and the advantage that 23 and me will have from being more innovative is that it's in a better position to respond to the tender but you absolutely have to go through a process which is publicly defensible no question about it yeah what about the European private partnerships such as the future internet which was an idea to make a large public cloud not particularly I'm a little bit I mean I sort of come to big European public projects with some skepticism but you know it's clearly the right line of inquiry I think review board and our largest problem what the public private partnerships that we tried to fund was that generally it was the tender that was always be captured by organizations who were viewed by the governments as conservative and also a very good professional grant writers so for example a lot of almost all of the future internet funding went to the large telcos and you know I told the commission basically they never built anything that worked and it was basically a huge waste of public money you got to take in the money put it in a bucket and lit it on fire that's about as much of effect the future internet project had despite the fact that actually a public cloud probably would be a great idea so I agree with everything theoretically what you said but I think the devil really is in the details of the tender and also how do you almost every successful 1.2.0 platform has not been built with public money absolutely I mean I don't know of any single one that has so my question is how can you make I'm actually interested how can you make that happen I think it must be possible but somehow in Europe try to play this game they wasted billions of euros you would expect them to screw it up because you got a big government which I'm not too down on government well remember that list of platforms I put up Google, Twitter and so on when I in 2009 I used to talk about those things and I said these are technically public goods not one of them was built by a government well the other thing I noticed a couple of months later was not one of them was built by an existing organization of any size whatsoever so this was at a time you know the late 90's early 2000's when Microsoft had 20, 30 billion dollars in the bank looking for the next big thing couldn't even find these things so I agree I mean I that's why I was talking about my skepticism I'm not actually talking about publicly funded platforms necessarily the example I've given is a genuine public-private partnership with something like 23andMe or some other private some other private organization I agree with you that the devil's in the detail I played it safe when I answered that first question by saying have a tender and I think once you do that you are you do become aware of some of the problems of tenders another thing you can do is have prizes there are plenty of problems with prizes another thing you can do is when you were talking about all that money and setting a light to it I thought you were going to say we'll have all that money and we'll kind of give it away to good bets in the private market there are lots of there is a wide repertoire that you can dip into and I'm not suggesting that it's going to necessarily bring home the bacon but I agree with you that just the old organizations doing this according to the old ways is likely to be a waste of time all the web 2.0 platforms were built on open standards on open standards developed by consensus driven communities developing public goods these bodies are not clearly things that were for public private partnerships in the way that let's say Google or Facebook are not companies but these bodies are also traditionally underfunded traditionally underfunded yeah yeah but I think what you might be doing it would be an easy thing to do would be to imagine that I am suggesting that we build well easily recognizable platforms you know here's the public private partnership since T is an example of that from my presentation a platform I guess what I'm thinking about is I certainly think about these things in the way that I think you do which is that it's the underfunded and the people who need to make use of other open source stuff that's around and do lots of sharing that's the way it's like that's the way success is likely to come so the public private partnership needs to be to try and ginger up and resource that process not to be high where from the government this is what we're building so you can imagine the example of 23 and me you can imagine a government doing something fairly simple which is to which is again like the example I had with murmur which is to say to announce that it has an interest in this project it has an interest in there being more if it's an Australian if it's Medicare that it has an interest in a larger database than the 10,000 Australian customers of 23 and me and it will be you know will look at funding it will start to talk about what it can do to help this asset build and to be useful to the system so that's not a perfect answer but it's it's in the same spirit as the question in the sense that I think we sort of have to work at this and not allow the logic of large organizations to take over because they'll screw it up we know that what about it well I mean it's sort of a public-private partnership the government takes while there is yeah well that's a sort of very different model than European well if I understand you correctly it's a traditional you can imagine that sort of thing being written about in the 30s you know like the idea that business and business assets are simply things that you build you fund and you build and there's the asset and you have engineers building it and we kind of know that that isn't very good anymore so I am speaking in a way that is that comes from that place but it does but that that robs me of the opportunities to just the opportunity to just say you've got problem T1 here's the module T1 that's the solution go away and don't bother me anymore yes I was going to ask about the perspective of government as an investor when you make an impresario or a publisher publishers often make bets on books that materialize having worked in government I know it's really tough for government to ever like put out money and get it back I was working on a challenge where we had grants and we also had loan money but getting the loan money out was almost impossible so I'm wondering have you seen organizations that inspire you inside government to do this kind of thing yeah I think the answer is sort of yes but I'm not sure that I can give you one example but I'm not sure that I can give you specific examples but the art of this is in the framing of the problem you have a government saying as it did with Selindra well no I don't know whether you did with Selindra but the politics didn't work out with Selindra but if you have a government saying we need to invest more in research and development on renewable energy here is a whole pile of money we expect 70% of these projects not to work that's the way this the total amount does work it's there to take risks so expect some of these things to fail politicians then are warned that they don't go and anchor their credibility to the success of this project it isn't like a bridge it's an experiment so I was I'm the chairman of a small organization in Adelaide in Australia called the Australian Centre for Social Innovation and we funded 10 projects with grants and I was there giving a speech next to the premier and I said I hope some of these projects fail and that shocked a few people and I explained what I meant and so that's how to present it is it totally easy no doubly so in this country but you know we have been able to build sophisticated institutions in government that don't seem to don't seem to instantly default to Voxpop but that's the task the task is to build them and you can't just build them with a hero project because the hero project then is brought into the logic that you're actually trying to undermine but it's about building institutions and building public institutional capacity and I think that can be done yeah limitations to the sector in which this can work so some examples of healthcare some examples of crowd sourcing opinions around policy but are there limitations to what areas the government should outsource to what areas the government should rely on a kind of neoliberal solution to public problems or I guess the more direct question is are there areas in which the public should be protected as a thing and not be extended out into the partnership well I guess the answer sort of is yes but it's you know that joke where the punchline is it's turtles all the way down that who's I mean the NSA is a public organization to protect the public do you feel protected so all of these forms are subject to human imperfection but you know I don't believe in mercenaries for instance I think I'm not very keen on public on privately funded prisons but usually usually when you look at that you're often missing what matters more which is how you set up the environment in which they work because you actually want to try and minimize recidivism you want to get them trying to do that and it isn't actually terribly beneficial to have a big ideological argument about it but yes you name some things that you think should be done by government I can't see private courts for instance being very helpful so yes there are core government things no question about it they're kind of are shadow of that and it is valuable to think of the private analog often simply to double back on asking well what do we actually want out of the government institution we don't particularly want it to be a government institution we want it to be true to a certain spirit so there's always value in that and there's a value in sort of trying to think through this thing without saying and we're just in this conversation we're sort of getting a bit sidetracked I mean I've presented some ideas that are in an area that are very where those ideas I think are very propitious are they as propitious for building roads well I don't think they are but but I'm still wanting to make sure that the ideas go backwards and forwards yes in many of the cases you described the government would end up choosing as you said with a tender among various alternatives and also the areas you described are full of innovation and are still emerging for example with a lighthouse it's pretty clear you know that's what you want you to do you can put the new technology up in the that technology is fairly well settled so you don't want to freeze innovation but from what I understood you're saying that it's useful for the government to choose one for example a certain set of software for collecting these employee ratings because then you have comparable data sets is that right not entirely right but I mean you're on to a very important question well that was one of the reasons but then what I'm trying to figure out is how you balance the two so for example 23andMe there was a big story in the New York Times a couple of weeks ago about somebody who spat into three different boxes from three different companies and completely separate results because if that technology still has some evolving to do until it gets to the lighthouse stage how do you balance those two the way you I think what you're looking for and this is why it's so much better in something like data than in freeways is that there are all sorts of ways in which you can build the essentially the portabilities that you need into the new system so you say to 23andMe if they win the tender all your standards have to be open if you don't win the tender that we run in five years time all of your everything you've done is portable and so on and so forth so there are a lot of opportunities to address that problem like everything else it won't fully address it in which case you have a dilemma and you have to balance that in the question of murmur the employee survey there will just the literal questions that are asked become an important because another company might say our technology is better because the questions are more predictive of the things that we want to predict but what you can do with murmur is say well you've now lost the tender we get all the data and so it's reasonably that issue I think is reasonably well dealt with and the other thing is that the government doesn't always have to choose anything because you've got an opt-in operating a lot of the time and in the example that I gave you of that website health kit all the government was doing was running a process whereby a doctor looking at the market could say as they say in eBay this one looks more or trip advisor to take an example that's close to my heart right now as a traveler can get information about what other people's experiences and we have a protocol in government to say well to do anything like that would be to pick winners and would be is not to be encouraged well my argument is it is to be encouraged what has to be addressed is the probity issues and then you can have the best of both worlds so I believe Nicholas is going to stick around I'm happy to stick around for anyone who wants to but please join me in thanking him thank you