Click each cover for more info and a short review.
Thomas Sowell
The Housing Boom and Bust
I’m only on page 15 but this is an awesome book. It is the clearest explanation of the proximite cause of the current recession I’ve seen so far. One of the most important things I’ve learned is housing prices in California, the hottest real estate market leading up to the housing bust, was driven largely by political restrictions on land use. In San Mateo County for example, half of the land was designated off limits for housing. This artificial, political land shortage drove up the prices of even modest homes to mansion-like levels. Must continue reading.
Mark R. Levin
Liberty and Tyranny: A Conservative Manifesto
This is a good book. I especially like how Mr. Levin ties opposition to growing statism to our founding principles and documents. I was shocked by the description of Mass v. EPA (2007) that declared carbon dioxide a poison to be regulated. Absurd. Statism has imposed unfunded ponze schemes like Medicare, Medicaid, and Social Security.
The weakest chapter was chapter 9 on immigration. I counted 11 paragraphs in this chapter that dealt with the economics of immigration, none of which mentioned the fact of positive net benefits overall of immigration. I posted on this issue on 25 May 2009.
Despite one weak chapter, the book is a must read for anyone interested in an intelligent defense of freedom and prosperity.
Gregory Clark
A Farewell to Alms: A Brief Economic History of the World (Princeton Economic History of the Western
One of the most astounding claims in this fascinating book (though I’m still not convinced the industrial revolution’s take-off is explained by the survival of the richest) is the admission that a key, maybe the key insight in economics is based on faith and reason. Hmmmm…. You see the importance of faith?
The context of the claim is Clark’s description of Robert Solow’s model of growth as based on a simple equation involving four variables: labor, capital, land, and innovation. This last factor plays a decisive role. And yet:
“Note, however, that when we arrive at this final truth as to the nature of modern growth we have lost all ability to empirically test its truth. It is a statement of reason and faith, not an empirical proposition. Physical capital can be measured, as can the share of capital income in all income in the economy. But the generalized spillovers from innovation activities are not in practice measurable.” (p. 204)
I think this insight makes the dismal science much more interesting because now vulgar materialists and simplistic empiricists might actually have to believe in entrepreneurs without knowing exactly how much they contribute! “…we know they’re important; just not how important…”
Russell Roberts
The Invisible Heart: An Economic Romance
This is a wonderful novelized principles textbook. Basic economic concepts are revealed through the dialogues between a high school economics teacher and his English teacher fiancee. When I taught high school economics at Marquette and my wife taught English, I was amazed how closely art resembled life, or was it the other way around?
Barbara Frale
The Templars: The Secret History Revealed
This is a great book. I have a mini-library on the Knights Templar and this is the best of the bunch. Barbara Frahle discovered the Chinon Parchment or trial transcripts of the Templar leadership from the early 1300’s. What I learned from her narrative was that Pope Clement V was not quite the scoundrel as other authors have made him out to be. In fact, he cleared the Templar of heresy, though did find that some of their initiation rites were out of line. In any case, he does not come off like Philip IV who positively salivated at the prospect of expropriating Templar wealth and was willing to use any excuse to enrich himself. May he reflect on all this during his time in Purgatory.
I also learned that the Papacy’s long, long struggle for independence from the monarchical governments of Europe created space within which detailed understandings of human freedom grew. In fact, the divine right of kings may be connected to Philip the (Un)Fair, who made a claim dating back to Clovis that the crowned princes, not the Popes of Rome, had responsibility for protecting the Church on earth. Ominous, most ominous.
Amity Shlaes
The Forgotten Man: A New History of the Great Depression
The quote from William Graham Sumner’s lecture explains the title of this first rate history of the New Deal:
‘As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil and help X. Their law always proposes to determine … what A, B, and C shall do for X.’ But what about C? There was nothing wrong with A and B helping X. What was wrong was the law, and the indenturing of C to the cause. C was the forgotten man, the man who paid, ‘the man who never is thought of.’ (p. 12)
Thomas Sowell
Applied Economics: Thinking Beyond Stage One
My favorite part is Dr. Sowell’s exchange with his teacher, Arthur Smithies of Harvard. Sowell explained his strong feelings in class for a given policy proposal. Dr. Smithies asked, “And then what will happen?” (p. 4) Smithies kept asking this question after each answer, illustrating a key skill of economic analysis in going beyond first stage thinking to consider costs. benefits, and unintended consequences of well-meaning policies like affordable housing, anti-discrimination, or income equalization policies. This is the principle of considering secondary effects.
David Schmidtz
Person, Polis, Planet: Essays in Applied Philosophy
Here is a wonderful quote from p. 176 quote: “In turn, citizens internalize responsibility when they face the world of tangled joint causation as it is, and do not rely on courts to save them from themselves.” Amen. No thanks, Nanny State. Give me personal responsibilty.
Diana Wood
Medieval Economic Thought (Cambridge Medieval Textbooks)
Chapters 7 and 8 contain illuminating dicussion of usury. This from p. 205: “Leo X [1515] canonized the attitude that ‘Usury and trewe interest be thinges as contrary as falshed is to trewth,’ in effect, admitting that the Church had come to terms with economic practice …. Paradoxically it was the Protestants, with their biblically based faith, who kept the usuary debate alive by returning to the traditional scholastic attitudes.”
And this from p. 204: “[Pope Leo X] had undermined most of the foundations of the usury doctrine. By accepting the charging of interest by the montes from the beginning of a loan he had denied that loans were free, and also, by implication, suggested that time could be sold. By suggesting that a profit could be made, provided that it involved labor, cost, or risk, he was sanctioning the main extrinsic titles to interest, and so hinting that barren money could be made fruitful by the application of any of these three.”
And of course, a fascinating few pages on ‘clerical usury’ and papal lending practices and the understandings thereof, beginning on p. 171.
After reading this lesson and being a Catholic, I believe an entrepreneur is a bad person if he or she stunts the progression of creativity, freedom, or distribution of wealth.
I believe this is an important answer John, thank you. I focus on your last three words too, distribution of wealth. Are entrepreneurs bad when they stunt the distribution of wealth? I’m thinking that is a tall moral requirement. I see in your answer the idea that an entrepreneur is bad in so far as he restrains that which is natural to the entrepreneur, someone who uses freedom and creativity to innovate faster, better, or cheaper goods and services. Is the good entrepreneur then responsible for distribution also of these innovations? If it is in the nature of an entrepreneur to risk property freely and creatively, the outcome is not certain. Entrepreneurial ideas may or may not work. In fact, most don’t. Steve Jobs came up with the Apple computer in his garage. Distributing computers to as many customers as possible who value having a computer more than its price may be a desire of Mr. Jobs, but is it also his responsibility?
It seems to me that the reading suggests that entrepreneurs who innovate and cause increases in the well-being of other humans are pure gold. Entrepreneurship is the sum of human freedom and creativity directed at meeting needs in more efficient ways; it is the driving force behind human advancement. Everyone wins from a successful entrepreneur – the entrepreneur gains monetary wealth from his success, and his customers have a better method for completing a task or a better product.
So what makes an entrepreneur a bad person? It basically boils down to the perversion of the idea. Entrepreneur’s who offer bad services are not necessarily bad people, they just end up going out of business. Instead, an entrepreneur can become a bad person when they attempt break the mechanics that drive the spirit of entrepreneurship. If human freedom and creativity results in entrepreneurship, then the corruption of these ideas can equate into an entrepreneur becoming a bad person. Human freedom can be trumped with brute forcing your product to be adapted/taking advantage of people in desperation. Creativity can easily be stolen from others, and resold as your own ideas.
Entrepreneurship itself is a blessing, but the idea can easily be misapplied, leading to entrepreneurs becoming bad people.
Thoughtful answer, Victor, thanks. The bad entrepreneur is one who “breaks the mechanics;” you mention coercion and theft. Perhaps these might be thought of as the temptations of entrepreneurs seeking short cuts.
An entrepreneur is a bad person if they hoard the profit from their company or do any other act that allows them to personally gain. As John said, “distribution of wealth”, they must divide the profits of the company fairly to the deserving people.
Thanks for these thoughts, Andrew. I’m no expert, but from some of the material I’ve read on what makes entrepreneurs do what they do, money and profit is not high on their list of motivations. More important, if survey results can be trusted, are things like recognizing opportunities that few others see, or the excitement of solving a set of intractable problems that cause others to shrink in fear. Also, I suspect Steve Jobs’ wealth in a way comes at the expense of Apple Computer stock holders, certainly “deserving people” of sorts. Should he give it back, or some of it? If so, what would be the justification? What does the wealth of successful entrepreneurs like Steve Jobs, Bill Gates, or James J. Hill signify? One writer described the personal wealth accumulated by entrepreneurs as “certificates of achievement.” What do you think of this description? Is it word play, or does it get closer to the truth of the matter?
I believe that this is a question that has many answers to it. On one hand, and entrepreneur can be a great person for creating innovations in the market place that result in a much more smooth way to do business, as well as creating jobs so that his personal business continues to flourish. On the other hand entrepreneurs can be bad. When they make a certain innovation, it will hurt the other businesses who used to do the job less efficient, therefore resulting in those particular businesses to lay off workers and hurting the community as a whole while they make a quick buck. I believe that a large amount of entrepreneurs are just in it to make a money quick and as a result are bad.
Sean, your point about what Joseph Schumpeter called “creative destruction” is important to bring up. It seems you describe one entrepreneurial function; efficient innovation, but then classify it as good or bad depending on the impact on workers, either in creating or destroying jobs. Entrepreneurs shake things up and, though messy, replacing less efficient producers may be the primary good that they offer the economy, whatever their motivation.
Entrepreneurial activity is inherently good. “Entrepreneurship, then, is an outcome of human freedom and creativity, directed toward meeting needs faster, cheaper, and better.” However ,the pursuit of these ideals, in some cases, results in their corruption. One need look no further than Mexico to find the corruption of these ideals. In an effort to promote industrial development in Northern Mexico, the Mexican government allowed US companies to build factories places like Nogales, Mexico. These factories took advantage of cheap Mexican labor to make products “faster and cheaper” and create wealth. The wealth, however, was concentrated in the hands of the American factory owners and was not distributed to the Mexican workers. “An evil action cannot be justified by reference to a good intention…The end does not justify the means.” When entrepreneur’s accomplish the goal of “faster, cheaper, and better” at the expense of morality they fail to be good entrepreneurs.
Thanks for this nuanced answer, Zach. The example of American managed factories in Mexico clarifies the point. Corporations may be the mature embodiment of the entrepreneurial ideas of individuals long gone from the business administration phase of the enterprise. But this dodges your main point, that entrepreneurial means must be just for the entrepreneur to be good. Was coercion involved in those employment arrangements, or did Mexican workers choose to work in them because they perceived this to be a better alternative? Is offering employment in sweat shops an example of bad means, bad ends, neither, or both?
One way an entrepreneur is a bad person is when they don’t have a respectable commitment to their employees, customers and suppliers. Also, an entrepreneur should be aware of their environmental impact. Without doing the things listed above, they aren’t providing a morally profitable service to the community.
Thanks Katie for your contribution. The good entrepreneur exhibits a commitment to employers and customers, and is aware of their impact on the environment. Sounds like good entrepreneurs have to be responsible as well as creative risk takers. Makes succsessful ones all the more remarkable.
First, I would like to point out that “bad person” is a subjective label of an entrepreneur—or any individual. Who gets to be the judge what behavior is considered “bad” or “good”?
Though, as described in the text, a “good” entrepreneur supposedly “meet[s] human needs—cheaper, faster, or better—and in implementing their ideas they make wealth grow.” Therefore, a “bad” entrepreneur is ethically and/or morally corrupt (like Katie Isales pointed out above). They would achieve their goals through any means necessary, even if it meant using cheap labor and maintaining less than adequate working conditions for those workers (yes, it is ultimately the workers’ choices to continue employment; but is no job better than a job in a derelict environment?); making less safe products in the name of expedience; or, improving an already existing product by, say, contributing to mass pollution of land/air/water. Last, if they attain to maximize their profits, they would underpay works for the sake of their own gain.
Thanks Ryan. The question of who gets to judge good or bad entrepreneurs is interesting, as is the question ‘is no job better than a bad one.’ I saw in the WSJ recently that Spain has a 13.9% unemployment rate. I suspect many unemployed in Spain would opt for what might be called a bad job. A few years ago, the EU was arguing about the desirability of the one euro per hour job. Unions felt low wage jobs were worse than no jobs. Hmmmm. Back to your excellent question, according to who? Who gets to decide?
I enjoyed the article, it brought a new perspective on how to honorably do business. As a Christian studying business I want my work to be successful and to do that I have to find ways to make others benefit from it. Christian ideals are very important to uphold in business. Such as the idea of a loving Creator who works with humans to achieve happiness through obedience to Him. If a person knows and interacts with God in mind it will only make his moves that much more right and pure.
Thanks for this Ryan. Glad you’re studying business, and thinking about both ethics and economics. Wish I’d had a course like this one long ago. It would have helped focus on what is important.
I think that the only time an Entreprenuer can be “bad” person is if there ultimate goal is nothing more than to atain what it is they have in their self-interest. I believe in the boble it even says that the road to sucess is to find a way to service the many. so inorder to be bad you would have to be served instead of trying to serve the people that you are dealing with in your business. if you don’t than you will fail.
Thank you, Miguel for your answer. Service is an important metric, and distance from this goal is one way to assess bad entrepreneur. In fact, though they may not be aware of it, entrepreneurs do well when they effectively and efficiently serve others.
Entrepreneurs can be blessed with the ability to obtain great power. They are “likened to oxygen in the lifeblood of capitalism” and are referenced as a simile to St. Peter, the leader of the Apostles. This pleasant ideal can easily be shattered by the disability to uphold basic morality. The drive for competition to make things “cheaper, faster, better” serves as a breeding ground for corruption and sin. It is far too easy to succumb to the pressures of a “bad entrepreneur.” Sometimes implications of profitability will result in the use of cheap labor and environmentally damaging processes. It is crucial that entrepreneurs do not stifle the freedom of others in their expression of freedom of their creativity.
Thanks Caitlin for your answer. You link competition to the breeding ground of corruption and sin. Is this always so? Sin, in one sense, is a break with God. But is there such a thing as morally neutral or even a positive form of competition? For example, I argue for something called ‘heroic competition’ in a previous post on this blog, in which James J. Hill, the railroad man in the 1800’s, built his lines without government subsidies, but beats his competitors who relied heavily on federal assistance. You also mention cheap labor and environmentally damaging processes. Just one quick point on cheap labor. This is a comparative term and implies a range of possible wages. To compete freely, perhaps even heroically, shouldn’t an entrepreneur, especially when starting out and not really sure whether the business idea will catch on, be able to offer a wage deemed appropriate for the task at hand? Or more generally, how are wage rates determined, and why do they differ?
an entrepreneur is a bad person if that person purposely disrupts the distribution of wealth in his or her own favor and at the expense of the overall community. To be an entrepreneur is to have great power and responsibility. Ann entrepreneur is expected to combine morality productivity and innovation into one effecient package.
Thanks Andrew. A bad entrepreneur seeks wealth at the expense of the community; a good one combines morality, productivity, and innovation.
I believe entrepreneurs are great for society and for the economy of countries. Saying entrepreneurs are bad people is too general, there are some people who go to countries like Mexico to corruptly make millions, but not all. In the end it’s the entrepreneurs morallity and education that will influence whether he is a good or bad person.
I believe that an entrepreneur is good if he/she try’s to seek wealth in any way shape or form that is acceptable to society. This being said, I believe that a bad entrepreneur is one who does not follow by societys laws, as well, does not promote competition in a fair or free market.
After reading this article and combining it with my own ideas of what makes anyone in general a bad person, I believe an entrepreneur is bad when he or she is using immoral means to attain their ends or if their business or service is actually a disservice to the community. For example if an entrepreneur was using children in the work force and paying them next to nothing that would be bad, or if everything about the way your business was run was moral, but your business was selling drugs that would also be bad. On the other hand a good entrepreneur would want to use morally acceptable tactics in order to provide the community with a positive service while making a profit.
First, I really do agree with Ryan that “bad” is such a very subjective thing.
And second, I guess for me it comes down to the point of, what are we really talking about when we say “bad”.
If we are merely looking at the concept of bad as in failure, well its obvious that if the definition of entrepreneur was someone who takes risks in order to solve problems- Then it makes sense that a bad entrepreneur would be someone who either does not takes risks, and if he/she does- they do no achieve the intended action.
If we are only referring to a morally “bad” entrepreneur, then that to me is even a bigger question.
Some people have different moral compasses (if we can dare call them that), so everyone has different opinions about how far a person can push before being labeled “bad”.
To me, a “bad” entrepreneur would be someone who does not take into consideration the employees, the integrity of the business, the integrity of the product itself, and only goes out to achieve his/her own personal agenda.
But then again, “bad” is such a relative thing that I do not think there is a correct/incorrect answer as to what a “bad” entrepreneur is.
Thanks Veronica Q for pointing out that the term ‘bad’ is subjective. I think linking badness to ineffectiveness is promising, and it is related to what entrepreneurs do as entrepreneurs, as you say.
There are examples of entrepreneurs that are fair to their employees and strive to help out their communities and use their power in a positive way, but i think that competition can encourage people to turn away from God and sin. James J. Hill’s decision to surpass the government’s approval might have helped him, but it was still an immoral decision to do so.
Thanks Robert Snead for your ideas. Help me understand why you think James J. Hill’s decision not to accept government subsidies was immoral. Isn’t Hill free to build a railroad the way he thinks is best? The Scholastics in the middle ages thought that monopolies were very bad for the economy. If there was only one approved way to build a transcontinental railroad, or airline, or school system, or any modern day example, wouldn’t that be monopolistic? I think there are some very real moral advantages to vigorous competition in the marketplace.
I think what makes a ‘bad’ entrepreneur would be talking in terms of their moral ethics and what society has to say based upon the actions they take which affect the overall society as a whole whether good or bad. Entrepreneur’s who have greater power have a responsibility to societies whether the choose to accept it or not but if their intentions are bad then that makes them a bad entrepreneur.
Thanks Tashina for your thoughts. I’d be interested in hearing more about what you think are bad intentions. Let’s say for the sake of discussion that you mean selfishness, I’m in it for me and the toys I can accumulate. I certainly wouldn’t begrudge Steve Jobs or Bill Gates having a big pile of toys in exchange for bringing computers into practical use around the world. But I can’t really see either of these entrepreneurs being successful by focusing on the pile of toys they might get rather than building the Apple IIe or figuring out clever computer code.
As far as the question about wages goes (post #20), the
entrepreneur “should” be required to pay a wage
that allows the worker to live, at a minimum,
at a level of comfort and contentedness. Now,
this comfort is relative to the individual’s
and society’s standards. However, at a basic
level, economics teaches us that if a person is
willing and able to work for a given wage, they
will more than likely take the job, unless a
better opportunity arises. Having said that,
the entrepreneur can theoretically pay any amount
for a job because the people who take the job
inherently consider the job their best option
for employment.
Therefore, the question is not “can an entrepreneur
give a ‘low’ wage?”, but “is anyone willing to work
for the ‘low’ wage?” And if someone is willing
to work for the ‘low’ wage, is it right for the
government to force the entrepreneur to raise
the wage?
Thanks to Joe Shauer for sharing thoughts on wages. I actually have a lesson in A&M on wage disparity, the St. Philip Lesson. Catholic social doctrine has lots to say on ‘just wages.’ One of the points I pull out from this body of thought is that the ‘just wage’ is plural; there is not one just wage, but many. Another point in social doctrine is that a wage has to reflect the conditions of the employer and the of the business the employer is in, which seems obvious to economists but is perhaps less so to those who stress the moral dimension. On the more challenging side, though, Catholic social doctrine says that it is wrong to pay an unjust wage even if it is agreed to in a voluntary wage contract between emplyee and employer. This implies there is such a thing as an objective unjust wage that exists outside what employers and employees choose to offer or agree to. That’s challenging. And, your last question is a good one. I’d say no, it is not right for the government to force an entrepreneur to raise wages. Sounds like we’re talking about administered price floors, or minimum wages.
I feel like because entrepeneurs are self made and self motivated, yes, they may be perceived as a bad person but i feel it is quite the opposite. Unless the person has the type of attitude that makes them do anything as long as the ends justify the means because that makes a bad person.
But as i stated before a very self driven person like an entrepeneur is subject to this type of stereotype because they primarily work for their own self interest, but unless they are committing malicious acts for personal gain then they should not be thought of as a bad person
Good points James, thanks. I’m glad you brought up the idea that entrepreneurs are self-driven, which doesn’t mean necessarily “selfish.” This theme comes up in Adam Smith’s Theory of Moral Sentiments, and in an article by Vernon Smith called The Two Faces of Adam Smith, among other sources. Hmmmm, a lot of Smiths referenced here….
To say what makes an entrepreneur a bad person is unfortunately an extremely vague question. I believe the “good” in entrepreneurs far outweighs the “bad” in their business outlooks. In the documentary “What the Bleep do we Know?”, they claim the meaning of life is simply to create. Just as God created humankind, he left us the ability to further create in society. In fact, it is the creators of society that allow it to flourish as it has become to be, and without the creativity of entrepreneurs, humankind could never have advanced to its level it has become today. Entrepreneurship is in general good, because in order for the creator to be successful, he has to have something good to offer customers and clients. Perhaps an entrepreneur can be considered “bad” if he is immoral and unfair to his employees or customers, and some level of this will always exist in the business market. However, a typically successful entrepreneur is typically doing a good deed to society, and I think that is much more important to look at.
It is a vague question, you’re correct Bradford, but your answer helps clarify several important matters. I like to connection you make between creativity and meaning. The “bad” entrepreneur is like the bad lawyer or manual laborer; immoral or unfair in their daily tasks. I think this generalizes away from this or that occupation and focuses on the nature of wrong acts, regardless of the job, or occupation. And, the point you make about the role entrepreneurs can play in human flourishing, is so very important.
I think the reading was very interesting becuase I am not a religious person, but am very interested in how business can be seen in the bible and religion. I think that the entrepeneurs that have an overall benefit to society, which means they increase innovation, creativity and wealth, are good for a market and for all of society, although an entrepreneur can be very negative to a society and this is usually seen in a free entry market becuase they are not there to benefit society, but rather benefit themselves only.
Thanks for this Jeffrey. I’m curious about the second part of your contribution where you describe the negatives. Is it possible for an entrepreneur to come up with a faster, better, cheaper way by focusing entirely on themselves? I think it would be nearly impossible. Here’s a quote that might express this point, if we were to replace “education” with “entrepreneurship:”
“The whole purpose of education is to turn mirrors into windows.” ~Sydney J. Harris
I don’t think an entrepreneur should be considered “bad” because they are gaining wealth. On the other hand I think that they can be considered “bad” because of their business ethics (for example using child labor) to decrease the costs involved with producing the good or service. If the problem that most people see with entrepreneurs is the fact they are making money, then they should also be mad at doctors because they are selfish and charge more money than necessary. The list goes on for jobs like this, in fact money and wealth is the reason why most people go to work in the first place. For example should I be called a “bad person” because I work so I can have money?
Very helpful contribution Andrew, thank you. Catholic social doctrine refers to this as the social role of wealth. Implied in your points too I think is the temptation to envy the success of entrepreneurs. That may explain why entrepreneurs and business leaders in general are portrayed unsympathetically in literature and film.
Id like to comment on the response to Mrs. Thorns answer. I too believe that competition is not the axis of evil and positive results can be attained when properly performed. I do however believe that in todays society, with our population’s mindset, saying competition breeds corruption and sin is all too accurate. Their are not enough followers of christ in the business world to offset the majority of people living in a business vocation. Entrepreneurs are no exception. In your response you reference an act that happened in the 1800’s, and while I’m sure a modern day example can be produced, I would argue that such an example is rare when compared to the myriad number of sleazy or “bad” entrepreneurial ideas. So unless an Entrepreneur is steadfast in his faith, when he enters the free market he will be pushed and prodded to conform to the majority in order to survive, hence the corruption and sin.
Thank you Greg for bringing up this point. In terms of the faith, it matters a great deal what entrepreneus believe or don’t believe. In terms of the free economy, it doesn’t. What I mean is that one of the most liberating insights I’ve had in all my life is that I’m not God and so not in charge. Christians refer to the influence of the Holy Spirit, the God who calls the shots in issuing invitations. I hope everyone goes to heaven ultimately, but I don’t really think about this ultimate hope when I’m looking around for a new laptop computer. What my hope in that context is is that someone figured out a way to offer me an operating system, some cool applications, and sturdy construction together at a price I’m willing to pay. Entrepreneurs, like everyone else, face temptations to do wrong. Spiritually, I hope they resist; economically, I hope they find a better way to offer the product I’m interested in at that moment. How are the two realms related?
I believe that being a bad entrepreneur is all about not caring about anything except your self interest. There are plenty of entrepreneurs out there that do not do everything they can to save the environment or everything they can to employ as many happy people as they can, but at the end of the day they can still be considered a “good” entrepreneur. As long as people are not telling lies, manipulating, or deceiving in order to yield gains in their best interest then they are a good productive entrepreneur in my opinion.
Thanks for the contribution Brennan. And I think you’re right. The main responsibility of a good entrepreneur is to shake things up, to risk trying to improve how things are done and what is offered for sale.
Entrepreneurs aren’t “bad” people. That isn’t to say that they can’t make bad decisions; if an entrepreneur does something for a completely wrong reason then it is a bad decision but, that doesn’t make them a “bad” person. When an entrepreneur comes up with something new they have to weigh the moral and social outcomes of their actions. If they come out with something just so they can earn a financial profit but disregard how many people will be hurt by this then it is most likely a bad idea.
Thanks for this Joshua. In reading your answer it occured to me that the good/bad classification could apply to the personal, interior, for which I’d be illequipped to judge as it is against my religion… : ) or to the market exterior, in which judgments are determined by forces of supply and demand.
After reading this lesson plan, really didn’t think that an entrepreneur was a bad person at all. There can be some arguments made that entrepreneurs hurt businesses that are inefficient or by creating new products (ie people who made typewriters are no longer in business because of pcs.). However, I think that by creating innovative products or by solving problems of inefficiencies entrepreneurs are in fact good people. By doing those things, they fill a gap that is missing in human needs or help the world by finding more efficient ways to allocate resources. I believe that most entrepreneurs know that they have a moral responsibility as well- to create cheaper, better products faster. If they didn’t do that then they wouldn’t be entrepreneuers any more— they would be out of business.
You are right Kayla. Your answer links good/bad to effective/ineffective. Thanks!
Because it is so subjective, it’s hard to define “good” and “bad”. I guess I don’t really have an answer, however the reading seemed to suggest that entrepreneurs were only good if their intentions were to better the community, is it someone’s intentions that makes them good or is it their actual effect on the community?
Good question Julie. St. Peter lesson was to make a connection between spiritual and commercial leadership. But your question, is it motivation that counts, is important. Adam Smith spoke about the invisible hand of the market connecting the work of many, many people in many places. These people spoke different languages, had different customes, and some probably couldn’t stand the others if they ever met one another. But does this matter to the outcomes of successful entrepreneurship? In a way, motivations don’t matter as far as outcomes are concerned. But intentions may help the individual entrepreneur in meeting the challenges of launching a better way of doing things.
An entrepreneur is a bad person in the extreme case where their actions directly lead to the displacement of workers with no other results. Most entrepreneurs develop innovative technology or a new technique to complete a task more efficiently. This will inherently lead to a need for new people to maintain this technology or to effectively operate this technology. The workers that are displaced into the community are only a strictly negative result if they do not motivate themselves to become masters of this new technology. Even though the new technology will certainly displace some percentage of the workforce, if the tech becomes widespread, it will create the need for specialized technicians to work it, which will enable those displaced workers to move back into the job force, and lead to a negligible net change in employment. This leads to the conclusion that an entrepreneur will be portrayed as bad if that change in the workforce is a significant one, and it may not be solely the fault of the entrepreneur.
This is good. Your answer toward the end uses important language; “… an entrepreneur will be portrayed as bad…” We spoke during class about how entrepreneurs are portrayed in film, as either an outright villain or like a family’s weird cousin. Why is that?
I believe that a good entrepreneur would weigh out the effects of his/her goods or services on the community while also providing competitive wages and a safe workplace for his/her employees. The effects on the community can include anything from environmental effects to the effect of placing a strip club down the street from an elementary school. Also, a good entrepreneur would offer competitive prices on his/her goods while keeping the best interest of the producers in mind. So, sweat shops would not be employed. A bad entrepreneur would thus be the opposite of what has been described here.
This is interesting Alyssa, thank you. I like the point about balancing impact on community with concern for employees. It makes me realize how difficult the tasks of effective entrepreneurs must be. perhaps the bad entrepreneur in a way is similar to a bad doctor, or a bad teacher, or bad fill-in-the occupation. Badness is related to ineffectiveness. A bad doctor is one who doesn’t heal, a bad teacher doesn’t add to the knowledge or skills of students. A bad entrepreneur is one who does not take risks, plays it safe, and who does not create wealth.
I believe that an entrepreneur becomes a bad person as soon as they begin treasuring wealth over the betterment of society. A true entrepreneur, though a utopian thought, is one who serves to lead society in a new direction with their new business discovery and future plan. Today that is a difficult situation to picture due to the greed that overcome the majority of people in the business world, but I know there are people out there who are in it for the right reasons. This greed paired with the action of using their communication and rhetoric to launch themselves into the spotlight by persuading others to support them for the wrong reasons or actions along those lines also characterize a “bad entrepreneur” in my eyes.
Thanks Amanda for this answer. I like the idea about a true entrepreneur being one who “serves to lead society in a new direction.” The pairing I think of service and leadership is apt. And I see the concern about greed as motivation, and connected to what makes an entrepreneur bad. I suspect that an entrepreneur who greedily pursued the spotlight for attention would be distracted from service and real leadership.
An entrepreneur is a bad person if that entrepreneur engages in rent-seeking activities that, while incentivized under our current form of government, destroy wealth by crowding out more valuable entrepreneurial activities.
Hi Ainsley, and thank you very much for this comment. It indicates someone knows their way around an economics text or two or twenty. You knit together three concepts: agency problems, perverse government incentives, and crowding out. I understand rent-seeking to be going after a bigger slice of the pie without doing anything to increase the size of the pie. In Burton Folsom’s book on the Myth of the Robber Barons, he mentions Robert Fogel’s argument about capital development in the context of the lavish federal subsidies to transcontinental railroads. Yes, Fogel says, the subsidies were certainly perverse incentives and wasteful, but the capital accumulation that occured overwhelmed the crowding out impact. Do you think Fogel’s point generalizes, or do you think it is even valid?
A bad entrepreneur is someone who hurts another person in the process of running his/her business.
Thanks David Franks for your definition. I’d be interested in finding out what “hurts” means. Seems like a broad term, but I guess there is a value to keepin’ it simple… sometimes.
Re: 59
First, let me say that I have not yet read the book you mention. At the risk of neglecting important information therein, I’ll still offer a response.
You bring up an interesting example—national infrastructure—about which I am still conflicted. Creating valuable infrastructure is frequently deemed a market failure stemming from high transaction and exclusion costs. It is difficult for a group large enough to fund massive infrastructure to get together and come to an agreement about construction, let alone prevent subsequent free-riding. Certainly, the transcontinental railroads allowed for significant growth in commerce. To this extent I think that Fogel’s point is valid.
That being said, I think Fogel’s point draws an inappropriate conclusion from an all-too-convenient example. Rent-seeking is by no means confined to the territory of what might be called market failure. The example that immediately comes to mind is the US agricultural industry, which, instead of investing in wealth-producing activities—activities which, as you say “increase the size of the pie”—invests in lobbying efforts that result in tariffs that put the agricultural sectors in developing economies at a disadvantage, but that benefit US producers that produce a given product at a much higher marginal cost. If we are to take government investment in infrastructure as a given, the real danger lies in giving the nod to subsidies per se as a result of the alleged success of subsidies in a particular area.
Peanuts! is an example of what I think you’re cautioning against. There was a WSJ feature article years ago on the peanut industry in the US I used to use in my economics class. At the time, there were only three states that could legally grow commercial peanuts, one of which was Jimmy Carter family’s Georgia. The depression era, good intentions-bad results legislation limited peanut growers to I think around 40,000 licensed growers or so, and made their peanut farms nontransferable to boot. Congress also distorted things by banning import of cheaper African produced peanuts. My students got furious reading this example. I suspect there are more current examples from more recent Farm Bills. Another problem with this is concentrated benefits-diffused costs. Peanut (or fill in subsidized crop) growers had huge benefits tied to favorable legislation, but the costs to millions of consumers was only perhaps an extra dime per jar of Jiffy. It’s hard to organize a group of outraged peanut butter consumers to demand an end to peanut subsidies with those costs and benefits.
Personally I believe an entrepreneur can be considered bad based on the idea he/she has come up with. I consider freedom as allowing individuals to do not only what is best for themselves but also what is best for society as a whole. So an entrepreneur can be considered bad if he restricts freedom towards others or to himself. Such a entrepreneur could be one who develops new technology for weaponry for the United States. He/she may think they are benefiting society by allowing the United States to have a more powerful armed force. Yet, this invention limits freedom of others in particular those of other countries. In this case the entrepreneur is increasing wealth for our country but destroying it in others and I believe that an entrepreneur in this aspect could be considered not only bad but detrimental to society as a whole because this such invention promotes violence.
Thanks Evan B for this thought. I’d be interested in learning more how new weaponry might limit the freedom of those in other countries. The arms race of the cold war era might be a counter example, and was certainly a risky, high-stakes buiness, but one that might have helped break the Soviet bank, bring down a repressive regime, and increase, for a time, the freedom of the Russian and other peoples (realizing that this view of recent history may or may not be accurate). But I wonder if freedom really is an export-import thing. Perhaps freedom is more home-grown than my counter-example assumes, seated as it is in the hearts and minds and decisions of individuals. In any case, thanks for making me think.