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Entrepreneurship

6 min read

Part of Markets and money.

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Every episode (4)

Who argued it

Adam Thierer · Michael Strong · Joe Quirk · John Chisholm · Alex Nowrasteh

Innovation · COVID-19 · Public Policy · Competitive Governance · Seasteading · Economic Freedom · Regulatory Capture · Rent Seeking

Background

Definitions and the entrepreneurial temperament

Bob Zadek opened a 2015 episode by calling entrepreneurship “the lifeblood of American business,” crediting entrepreneurs with making lives happier, more prosperous and healthier John Chisholm’s Advice for Unleashing Your Inner Company (2015). Guest John Chisholm, described by Zadek as a serial entrepreneur and Silicon Valley investor, defined an entrepreneur as somebody who starts their own business from scratch, recognizes a customer need, figures out a way to satisfy it, delivers it, and turns that into a business. Zadek framed the distinction from ordinary employment as one of design: an entrepreneur gets to design the goals of the business rather than fulfill somebody else’s, enjoying almost total freedom in the mini-universe of the business being created. Chisholm added that initiative and creativity matter even more in entrepreneurship than in a well-established company, because the entrepreneur is building something from scratch and may be devising a brand new solution to a need that has not been satisfied before.

Chisholm identified two things needed to get started: passion and perseverance, which reinforce each other. A person deeply engaged in a field, he said, will bump up against the boundaries of currently available products and services before other people do, and so recognize customer needs earlier; perseverance supplies a way through the roadblocks that follow. On risk, Chisholm disputed that entrepreneurs are inherently more willing to take risks than others. Because they examine the customer need from many angles, what looks like a very risky proposition to other people does not look that risky to the entrepreneur. Zadek characterized starting a business as an adventure with an adrenaline rush, and argued its satisfaction is irreplaceable because the entrepreneur has enriched others’ lives as well as their own.

Entrepreneurship as freedom, and its enemies

Luigi Zingales, a professor at the University of Chicago’s Booth School of Business, told Zadek that crony capitalism amounts to companies controlling the government, the reverse of socialism’s government controlling companies, with the same result: no freedom and no entrepreneurship, because the market cannot search for the best solutions when solutions are imposed from above Obama Nationalizes General Electric (2011). Zadek described government allocating tax credits, cheap loans and regulations that keep out competition — tools for selecting winners and losers rather than letting the marketplace vote with dollars. Zingales agreed that this was an accurate description.

Dr. Jeffrey Singer, interviewed in 2013, described the vanishing physician entrepreneur by way of two family doctors: Zadek’s Dr. Siegel, who made house calls for $10, and Singer’s Dr. Heinrich, who practiced out of the first floor of his house, kept a transparent price list, adjusted prices to patients’ circumstances, and sometimes accepted payment in trade, such as shelves built in his garage Will Americans Accept Second Class Medicine? (2013). Singer placed professions like medicine and law in a subcategory of entrepreneurs bound by an ethical credo — for doctors, putting the interests of the individual patient paramount — and said that credo was being tremendously threatened and damaged. Zadek’s framing was that the days of entrepreneurship in medicine are gone.

Trust, small business and job creation

Kevin Vallier told Zadek in 2020 that he knew of no measures looking explicitly at social trust and entrepreneurship levels, calling it a cool idea for papers, but offered a reason to expect a deep connection Mandatory PPE (2020). Social trust reduces economic growth in part because people exchange less, and lower trust reduces labor productivity by impairing the ability to form closely-knit economic organizations. Since innovation occurs in moments of exchange — that is how startup money is raised and flexible, creative workers are hired — a less trusting society engages in less exchange and has more corruption, so opportunities for innovation decrease. Vallier said we are seeing less entrepreneurship.

Robert C. Wright, interviewed in 2020, called small business the engine of job creation and independence, noting that every big business in America started small, including Amazon and Walmart The Decline of American Independence (2020). He defended competition against the epithet “cutthroat,” describing it as businesses fighting for the right to give us what we want at a low price. His book Little Business on the Prairie studied entrepreneurship in South Dakota over several centuries; he described a tortoise economy with unemployment generally well below 2% that sailed through the financial crisis, an entrepreneurial climate in which losing your job means making your own employment, and business plans taught in schools. He attributed South Dakota’s decision not to lock down during the COVID-19 panic partly to pressure from its proprietor class, and said the state allowed people with the most information and incentive — business owners — to decide for themselves.

Carol Roth’s The War on Small Business was presented by Zadek as a clarion call about what is happening to America’s free-market system, a system of voluntary, uncoerced trade Carol Roth on the War on Small Business (2021). Zadek noted Roth had earlier authored Entrepreneur Equation, evaluating the realities, risks and rewards of having your own business, and called her the best spokesman one could want for the free market and for entrepreneurship. Roth replied that she loved Zadek’s emphasis on the word “free” in free market, calling it the crux of everything under discussion.

Across episodes

Entrepreneurship surfaces in the Zingales, Singer, Chisholm, Nowrasteh, Wright, Vallier and Roth episodes, but the episodes show no development of a single argument across them: the 2015 Chisholm episodes supply the definitional core, while later episodes treat entrepreneurship chiefly as what crony capitalism, professional regulation, declining trust and pandemic mandates suppress.

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