Posts tagged with: entrepreneurship

Blog author: jballor
posted by on Tuesday, February 16, 2010

NPR’s Morning Edition had a touching piece the other day that illustrated how great a blessing business can be, and just how terrible things can be when there’s no freedom to innovate, produce, and create wealth. Chana Joffe-Walt and Adam Davidson of Planet Money put together the narrative of George Sassine of Haiti and Fernando Capellan of the Dominican Republic, “Island Of Hispaniola Has Two Varied Economies.”

Both men shared the same dream: to open up a T-shirt factory. Sassine has had to struggle through all kinds of adversity in the attempt to realize his dream. And just as it was about to take off for good, to really get going, the earthquake hit. Says Sassine, “I’ve had a coup d’etats. I’ve had hurricanes. Now, I have an earthquake.” The “simple cut-and-sew factory” that Sassine had managed to put together lies in ruins.

Cappellan, on the contrary, started with a simple cut-and-sew operation, but in the interim has enjoyed great success; “His business now is, as they say, several steps up the value chain from the dream he started with.”

Sassine puts his finger on what differentiates him from Cappellan. It’s not ability, or ingenuity, or diligence. What has really prevented Sassine from doing for Haiti what Cappellan has done for the Dominican Republic?

Sassine asserts assuredly of Cappellan, “fortunately, for him, his country, his government was behind him. Me, I’ve been having governments against me all my life.” Political instability, corruption, and tyranny are what kill dreams like Sassine’s and Cappellan’s.

Blog author: jballor
posted by on Monday, February 1, 2010

Business Weekly, a production of BBC World Service, had an informative feature on Toby Sheta, a Zimbabwean mobile phone trader, who provided insights into the courage and tenacity required of entrepreneurs under Mugabe’s brutal dictatorship (you can download the original Business Daily story in MP3 format here).

During the worst times of the Mugabe regime, Sheta would illegally buy and sell fuel coupons, a profitable enterprise because of the chaos of governmental interference in international trade and domestic fuel markets. Sheta says in the context of survival the “black market actually became the formal market,” the place where products were available. “For us the black market was the real market.”

Sheta says that what he gained as an entrepreneur in the emergency economy translate into more normalized economic conditions: “The skills that were learned and some of the principles that we’re using apply in any situation.” Sheta says, “Zimbabweans overall have gone through a school, a very informal school that was first upon us, in some ways in a positive way for us, to actually think and work for ourselves, work with our hands and see where we can see opportunity.”

Risk is a constant feature of enterprise, and Sheta testifies to the survival of the human spirit of innovation: “What I’ve learned is, even as I think of Haiti right now, as long as you’re human, and you’ve got your two feet, your two hands and your brain is still functioning, you’ll survive.”

“As you go into the problems you also go in terms of our creativity and learn how to survive,” he says.

As put by dairy farmer Brad Morgan, featured in Acton’s The Call of the Entrepreneur, “You put your butt in the corner, you’d be surprised what you can achieve.”

In terms of Zimbabwe’s future, Sheta points to stabilization in 2010 and beyond, in part because of the dollarization of the economy, and he concludes that Zimbabweans have “graduated to another level” from the emergency school of economics under Mugabe, looking forward to “see opportunities where in the past we wouldn’t have seen those opportunities.”

Blog author: rsirico
posted by on Monday, January 18, 2010

Published today on National Review Online:

When I first heard the news from Haiti and watched the horrible stories on television, I had the same impulse I imagine millions around the world experienced: I found myself thinking of catching the next plane to Port-au-Prince to help in whatever way I could.

What was the basis of this impulse? It is our moral intuition, sometimes called the principle of solidarity. This is the recognition of ourselves in the other. We feel pain when others feel pain and joy when they experience joy; we slow down on the freeway when we pass an accident not merely for some macabre or prurient interest, but because we recognize that “there but for the grace of God go I.” We help others who are suffering because we would like to be helped in a similar situation.

And yet I had to ask myself the practical question: What would I actually do when I got off the plane in Haiti? I do not know how to set broken bones. I can’t fix mudslides. I cannot operate on limbs and eyes. Only after all these things were done would I be able to fit into the division of labor to authentically serve people.

I am deeply grateful for those who can do these things, and I am inspired that they are there. In fact, aid workers have been emphatic that the last thing Haiti needs right now is a massive influx of people bringing only their good intentions. Such a run on the country right now would increase the need for food, shelter, transportation, and more.

The impulse to help, to do anything — largely and understandably based on our emotions — is exactly what confuses our thinking about charity and economics. It is the confusion between sentiment and practicality, between emotion and reason, between piety and technique.

On the other hand, it would be a cold and spiritually dead person who sat back without any sense of emotion over this Haitian calamity. If we merely said, “We should just forget this place. It is a poor country, the infrastructure is not in place, they have been unable to accumulate capital . . .” — if we said only these things, we would be callous. And yet, we know that what has compounded the suffering in Haiti is not only the earthquake as such but the poverty that hindered the necessary preparation and at all levels of society.

The practical and the emotional are at war right now.

More generally, the fundamental problem in Haiti is not bad weather or natural disasters. It is a problem of economics. Haiti has suffered from various forms of dictatorship for many decades, which has eviscerated from Haitian culture a general sense of entrepreneurship and enterprise.

This is not to say that Haitians aren’t entrepreneurial. One need only observe Haitian immigrants selling goods on the streets of New York to be convinced of their entrepreneurial spirit. Rather, what has made Haiti as a culture resistant to entrepreneurship has been the inability of Haitians themselves to gain control their own lives by ridding themselves of government policies that have made the country dependent on foreign aid and powerful dictators.

We like to imagine that we could send our favorite things — such as cars, computers, and the best medical equipment — to help. But when there is no electricity and few sources for fuel, and when the roads can’t be used for heavy transportation, all our gizmos and products and conveniences become useless.

Nor is it the case that piles of paper money are going to be a magic cure-all. When there is nothing to buy, and when replacement parts are not available, and the retail- and wholesale-trading sectors cannot support an advanced economy, money alone cannot do much good.

Haiti needs practical help and generous charity right now — implemented intelligently, and with a keen eye for existing conditions. We need to support aid agencies that provide water and medicine. In the long run, we have to look at what Haiti needs to prevent such disasters and minimize their impact. What the country needs is economic development and a culture that can support such development.

We are a very long way from that, and this catastrophe has set Haiti back even further. However, this is an opportunity to build a society that is prosperous, industrious, virtuous, and free. The unromantic truth is that charity does not really ameliorate poverty. Rather, it provides a necessary and temporary fix for an unusual problem. What Haiti needs are the institutions that provide protection and cushioning in cases of emergency. Most of all, it needs to develop economically.

No matter how many of us leave tonight for Haiti, that process will take a very long time, and it can only be carried out by the Haitians themselves.

Buzz Aldrin walks on moonToday marks the 40th Anniversary of the one of the greatest feats of human exploration, courage and innovation: man’s setting foot on the surface of the moon.

Responding heroically to the challenges of the “Space Race” (while its arch-nemesis, the Soviet Union, was clearly in the lead), the United States stood proud to represent the free and enterprising West. To put the challenges of victory into perspective, America was running adrift amid pretty rough waters at the time: two great wars in Asia had taken their tolls on the government’s treasury; cities and communities were torn by civil riots; national inflation was escalating at a record pace; and an irreversible paradigm shift was occurring in its traditional moral values. Sound painstakingly familiar?

Yet, America loved (and still loves) challenges and risks. It excels (and still wants to excel) under pressure. It was the land forged by underdogs, the under-rated, the under-financed, while driven by an ever-zealous entrepreneurial optimism and creativity when facing life’s “insuperable” obstacles.

And all these great values were apparently at stake, as the United States stood boldly united to beat the Russians in a manned-mission to the moon. Americans knew full well that the tides of history would be turned against them had the Hammer and Sickle been raised before the Stars and Stripes on that powdery lunar desert. The American “brand” of innovation and entrepreneurship its citizens had worked so hard to achieve would have received a disgraceful black-eye. (more…)

anatomyentreperneur-1 Is moral enhancement of the entrepreneur possible? That’s the question Michael Severance, operations manager for Istituto Acton (the Acton Institute’s Rome office) recently posed to Dr. Adriana Gini, a neuroradiologist at San Camillo-Forlanini Medical Centre in Rome and an expert bioethicist at the Pontifical Athenaeum Regina Apostolorum. Dr. Gini recently led Istituto Acton’s monthly Campus Martius seminar “Moral Enhancement: Back to the Future” and offers some further insight on her topic. An audio recording of her seminar is available on the Istituto Acton home page.

Michael Severance: Dr. Gini, thank you for taking time to explain your views on the fascinating subject of moral enhancement. Most of us have heard of various forms of “physical” enhancement, as with genetic splicing for disease prevention, pre-selection of human embryos to produce “savior siblings” and mixing chemical cocktails to improve the physical endurance of our organs…In what way are the two types of enhancement – physical and moral – related, if at all? Or is this just a play on words?

Adriana Gini: The association between the word “moral” to the type of life we live, the decisions we make, our efforts and struggles to improve society and ourselves is perfectly natural. In fact, morality depends on our acts and our acts are the expression of what we are as human beings. Our behavior, as moral agents, is quite complex and, no doubt, involves our physicality. Nonetheless, a pure physical/neuronal explanation of morality -with no reference to a more comprehensive knowledge of the human person- is rather hazardous. As such, the term “moral enhancement” does not have an immediate, direct connection to some forms of genetic, pharmacological or biotechnological enhancement, unlike the ones targeted at cognitive enhancement.

MS: From an Acton perspective, it is interesting to know if there is some type of “competition” or “economic” factor driving neurological science in the direction of improving the human moral condition. What is at the bottom of all this? For example, is the real inspiration to improve human action found in creating a competitive edge in intelligence within the marketplace? Some might find it hard to believe that secular science is really interested in fostering moral excellence for its own sake in its laboratories. Much less so in its lab rats and guinea pigs!

AG: According to some authors, as with Julian Savulescu, director of the Oxford Centre for Practical Ethics and head of the Oxford Centre for Neuroethics, contemporary research aimed at enhancing human cognition will result in an economic improvement (cf. Chap. 1.4 of Enhancing Human Capacities edited by Dr. Savulescu). In other words, better people make for better jobs, and in the end, better, more productive societies – in an economic sense. However, Savulescu’s claim is that such enhancement might also lead to a greater world of evil action. For example, we can use drugs or other biotechnological means to improve our mental abilities, but sometimes also to our detriment: smarter terrorists mean fiercer terrorist attacks with the mental enhancement to fabricate more powerful, more intelligent weapons of mass destruction. Therefore, in Savulescu’s opinion, any means to morally enhance the human species in terms of cognitive enhancement should only progress alongside research on moral enhancement. No one really knows, however, how to improve the human species morally by biotechnological means alone, since morality is not purely “biological”…, although there are certainly biological correlations to human moral behavior. (more…)

In today’s Detroit News, Acton Research Director Samuel Gregg talks about the sort of “moral, legal and political environment” that must exist if entrepreneurs are to flourish. He applies these precepts to the very serious economic problems in Michigan, where Acton is located:

… in the midst of this enthusiasm about entrepreneurship, we risk forgetting that entrepreneurship’s capacity to create wealth is heavily determined by the environments in which we live. In many business schools, it’s possible to study entrepreneurship without any reference being made to the role played by factors such as rule of law, property rights and low taxes in stimulating wealth-creating entrepreneurship.

Entrepreneurs gravitate to places where conditions for starting a business are optimal and the infrastructure — financial, legal, and technical — supports new businesses. Here, Michigan has a double-barreled problem: the out-migration of Michigan job seekers — much of it compelled by the steep decline of the auto sector in recent years — and the college graduate “brain drain” from state universities. How many of these people saying goodbye to Michigan are taking their entrepreneurial dreams, and maybe the next Big Thing in the economy, with them?

Read “Entrepreneurs Require More Room to Survive.” An extended version of this essay is slated to run in tomorrow’s Acton News & Commentary. Sign up online for this free email newsletter here.

In “The Real Culture War Is Over Capitalism,” Arthur C. Brooks argues in the Wall Street Journal that the “major cultural schism” in America today divides those who support capitalism and, on the other side, those who favor socialism. He makes a strong case for the moral foundations of free enterprise and entrepreneurship and points to the recent “tea parties” as evidence that Americans still favor the market economy. Brooks, the president of the American Enterprise Institute, says Americans are revolting against “absurdities” like the bailout of General Motors that will be financed with ballooning budget deficits and trillions in new federal debt. He writes:

… the tea parties are not based on the cold wonkery of budget data. They are based on an “ethical populism.” The protesters are homeowners who didn’t walk away from their mortgages, small business owners who don’t want corporate welfare and bankers who kept their heads during the frenzy and don’t need bailouts. They were the people who were doing the important things right — and who are now watching elected politicians reward those who did the important things wrong.

Voices in the media, academia, and the government will dismiss this ethical populism as a fringe movement — maybe even dangerous extremism. In truth, free markets, limited government, and entrepreneurship are still a majoritarian taste. In March 2009, the Pew Research Center asked people if we are better off “in a free market economy even though there may be severe ups and downs from time to time.” Fully 70% agreed, versus 20% who disagreed.

He also points out that the government has been increasingly “exempting” Americans from paying taxes, an intentional strategy to create a larger class of government-dependent citizens.

My colleague Adam Lerrick showed in [the Wall Street Journal] last year that the percentage of American adults who have no federal income-tax liability will rise to 49% from 40% under Mr. Obama’s tax plan. Another 11% will pay less than 5% of their income in federal income taxes and less than $1,000 in total.

To put a modern twist on the old axiom, a man who is not a socialist at 20 has no heart; a man who is still a socialist at 40 either has no head, or pays no taxes. Social Democrats are working to create a society where the majority are net recipients of the “sharing economy.” They are fighting a culture war of attrition with economic tools. Defenders of capitalism risk getting caught flat-footed with increasingly antiquated arguments that free enterprise is a Main Street pocketbook issue. Progressives are working relentlessly to see that it is not.

Read the “The Culture of Charity,” the Spring 2007 interview with Brooks in Acton’s Religion & Liberty. Watch a 16-minute video interview with Brooks recorded at the Acton Grand Rapids office in May 2008

The Summer issue of City Journal features a piece worth reading by Guy Sorman titled “Economics Does Not Lie.” The paper includes weighty arguments favoring a free market economic system and the author does a good job explaining the rationale of those who criticize a free economy. Sorman says:

If economics is finally a science, what, exactly, does it teach? With the help of Columbia University economist Pierre-André Chiappori, I have synthesized its findings into ten propositions. Almost all top economists—those who are recognized as such by their peers and who publish in the leading scientific journals—would endorse them (the exceptions are those like Joseph Stiglitz and Jeffrey Sachs, whose public pronouncements are more political than scientific). The more the public understands and embraces these propositions, the more prosperous the world will become.

These are the ten propositions put forward by Sorman:

1. The market economy is the most efficient of all economic systems.

2. Free trade helps economic development.

3. Good institutions help development. (governments & rule of law)

4. The best measure of a good economy is its growth.

5. Creative destruction is the engine of economic growth.

6. Monetary stability, too, is necessary for growth; inflation is always harmful.

7. Unemployment among unskilled workers is largely determined by how much labor costs.

8. While the welfare state is necessary in some form, it isn’t always effective.

9. The creation of complex financial markets has brought about economic progress.

10. Competition is usually desirable.

Sorman adds:

These ten propositions should guide all economic policymaking, and to an increasing degree they do, worldwide. Does this mean that we’ve reached an “end of history” in economics, to borrow a phrase made famous by Francis Fukuyama, by way of Hegel and Alexandre Kojève? In one sense, perhaps: economic science will never rediscover the virtues of hyperinflation or industrial nationalization. Some critics charge that economics is not a science in the way that, say, physics is—after all, economists can’t make precise predictions, as an exact science can. But this isn’t quite true: economists can predict that certain bad policies will lead necessarily to catastrophe. If economics, a human science, lacks the precision of physics, a natural one, it advances the same way—evolving from one theory to the next, each approximating a reality that eludes our complete grasp.

On a somewhat related note about economic policy, here is a review I wrote about the book Good Capitalism, Bad Capitalism and the Economics of Growth and Prosperity. The review appeared in the Fall 2007 issue of Religion and Liberty.

Sir John TempletonSir John Templeton, the great entrepreneur and philanthropist, passed away on July 8, 2008. Fr. Robert Sirico, president of the Acton Institute, marks his passing with this tribute:

It was with great sadness that I learned today of the passing from this life of one of the twentieth-century’s great stalwarts in the struggle for faith and liberty. Rising from a humble background in Tennessee, John Templeton graduated from Yale and Oxford universities, the latter of which he attended as a Rhodes Scholar. He went on to become one of the most-successful investors of his generation, creating wealth and generating employment for thousands of individuals. Today the very name “Templeton” remains a byword for entrepreneurship, prudent risk-taking, integrity, and innovation in the financial industry in America and around the world.

Read Rev. Robert Sirico’s tribute to Sir John Marks Templeton (1912-2008): A Great Entrepreneur and Philanthropist.

In yesterday’s Wall Street Journal Europe, Alberto Mingardi of Istituto Bruno Leoni (and long-time Acton friend) lists some of the reforms Italy needs to boost economic growth, which is forecast at a measly 0.6 – 0.8 percent for 2008.

Mingardi advocates a number of tax cuts and a more determined privatization of state assets. Some of these issues are being discussed – timidly – in the current election campaign; Mingardi also focuses on de-regulation and de-bureaucratization, issues heretofore neglected by Italian politicians.

Current labor regulations are “so numerous that no one can even give their precise number. No one can comply with rules they don’t even know about.” Mingardi adds that “it’s safe to say at least half the statutes currently in force should be repealed, as their only effect is to create confusion.”

A recent study shows that it takes on average 696 days to dismiss a worker in Italy compared to only 19 in the Netherlands. Critics of de-regulation would argue that Italian workers are therefore better protected. Wrong. Unemployment is 5 per cent in Holland compared to 6 per cent in Italy.

This may seem counter-intuitive but makes economic sense. If I know it will be impossible to fire an unproductive worker, I will be much less likely to take a chance on hiring any worker I don’t personally know. Hence, the Italian model of “family capitalism” and higher levels of unemployment.

Italian bureaucracy also exacts high costs on business creation. According to the World Bank, the cost of opening a business is 18.7 per cent of per capita income compared to only 0.8 per cent in the United Kingdom and 0.3 per cent in the Republic of Ireland. Moreover, an Italian business spends an average of 360 hours per year filing taxes whereas in neighboring Switzerland 63 hours suffice. (Not surprisingly, Switzerland is the economic envy of Europe.)

Workers also pay for onerous regulations. Everyone in Italy nowadays complains about stagnant wages, these are clearly the result of decreasing productivity caused by bureaucratic disincentives for businesses to invest and grow.

An overwhelming bureaucracy undermines both individual liberty and the public interest. It punishes the creative spirit of the entrepreneur by obstructing investment and innovation, and harms society by killing the potential for growth and employment. The irony is that regulation and bureaucracy are often enacted in the name of social values.