The Entrepreneur’s Miracle Ingredient for Success in a Free Market.
‘Fail to succeed’ and ‘fail fast’ are phrases familiar to entrepreneurs.
It simply means, if you’ve got a good idea, get on with it and try to make it work.
If it works, you may find yourself joining the ranks of Bill Gates, Steve Jobs, and Mark Zuckerberg. If it doesn’t work, don’t worry; you’ve failed, but so have millions of other entrepreneurs.
And besides, Gates, Jobs, and Zuckerberg didn’t get it right first time either. The point is, they didn’t stop at their first failure. They accepted it, adapted, and moved on.
But experiencing failure isn’t the only key to success. There’s one more ingredient. And unless you’ve got it, entrepreneurs will never achieve success…
What is this miracle ingredient?
Simple, it’s individualism.
Or you could call it self-interest or selfishness. But it doesn’t matter what you call it, without it an economy can’t progress.
Now, we know what you’ll say, ‘What about China, it’s successful, yet it’s centrally planned?’
Well, we’ll agree that those who achieve success in China also act in self-interest. The bureaucrats fattening their pockets, and businessmen currying favour with the government to win contracts.
But that’s the dark side of individualism. They’re not real entrepreneurs. Those people are who Thomas DiLorenzo calls ‘political entrepreneurs’.
In How Capitalism Saved America: The Untold History of Our Country, from the Pilgrims to the Present, DiLorenzo explains the difference between ‘market entrepreneurs’ and ‘political entrepreneurs’:
‘A pure market entrepreneur, or capitalist, succeeds financially by selling a newer, better, or less expensive product on the free market without any government subsidies, direct or indirect. The key to his success as a capitalist is his ability to please the consumer, for in a capitalist society the consumer ultimately calls the economic shots. By contrast, a political entrepreneur succeeds primarily by influencing government to subsidize his business or industry, or to enact legislation or regulation that harms his competitors.’
Or in China’s case, jailing, beating up, or even killing their competition.
Therefore, when we talk about individualism, we’re talking about the good guys…market entrepreneurs. We’re not talking about the corrupt political entrepreneurs who profit from government favours.
But still, some people just don’t get it. Or they don’t want to get it.
Instead of Entrepreneurs and the Free Market
Yesterday, we read the latest report from the Australian Climate Commission. It’s titled, The Critical Decade: International Action on Climate Change.
The most amusing section was the timeline printed on page 25 of the 75 page report:
The first climate conference was in 1979. The new agreement is due to start in 2020. That means it will take national governments 41 years to come to a deal on what to do about climate change.
Even by pen-pushing bureaucracy standards, 41 years is a long time. Clearly ‘failing fast’ isn’t in their dictionary.
And as you’d expect, there’s still no guarantee the agreement will achieve anything.
As we say, the document is 75 pages long. And yet, in all the talk about solutions to climate change, it doesn’t once suggest allowing individuals and the free market to find a solution. Instead, you get this kind of central planning claptrap:
‘One way to reduce emissions is to set an explicit price on emissions, for example, through emissions trading schemes or a carbon tax. There are other ways to promote emission reductions without putting a direct price on emissions. These include regulation, subsidies and direct government expenditure.’
That paragraph brought to mind a quote from former US president, Ronald Reagan. Rupert, an Australian Small-Cap Investigatorsubscriber sent it to us:
‘Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.’
Reagan made the comment at the White House Conference on Small Business on 15 August, 1986.
That’s how governments think about everything. And that includes climate change.
And that’s why it will take 41 years (if ever) to implement a climate change policy. Imagine if governments had gotten involved at the early stages of car industry. What would have happened?
Well, we don’t need to imagine, we can show you…
Instead of Entrepreneurs and the Free Market
In the free market United States, between 1896 and 1930 there were over 1,800 car makers. Not all of them survived of course. But that’s what happens in a free market. Ideas come and go…and the ideas that best serve the consumer tend to win.
Innovation, capitalism, and competition spur new ideas and technological change. In the end, the consumer gets a better product.
Compare that to the Soviet Union, where there was no auto industry to speak of. Why? Because central planners decided what was good for the comrades. But because a central planner can’t know what consumers want, their ideas are doomed to fail.
In a free market, failure happens fast and success outweighs failure. But in a centrally planned economy, failure leads to more failure.
That’s because the bureaucrats decide the idea wasn’t bad, but rather that the government didn’t spend enough money on it. Sound familiar?
That’s why governments must stay out of the market. And why they shouldn’t subsidise political entrepreneurs. This will give market entrepreneurs the space to test and refine their ideas to meet real consumer demand.
The same principle applies to solving climate change (if climate change exists). Let the free market and individuals fix it.
Of course, some suggest the government has to spend, regulate, and subsidise the green industry, or else nothing will happen. But that’s not true. In Australia about three-quarters of people believe in climate change.
And in Canada, 86% of people polled believe climate change is either man-made or a mix of man-made and natural causes.
It’s proof that people would like to do something about it. But due to high taxes, government intervention, and the government insisting on a centrally planned solution, most people end up doing nothing.
In short, it’s proven that free markets and individualism work better than central planning. Not just for consumer products and services, but for everything…including the environment.
Unfortunately, the vested interests want to spend your tax dollars (and keep their government-funded jobs). And politicians want to lay down their own legacy.
That means the chances of them allowing the market to provide a fix are very slim indeed.
This article is contributed by Money Morning. Click Here to Subscribe to their free newsletter.