Entrepreneurship vs. politics

From Arnold Kling’s Fantasy Despot Syndrome*:

Consider the story of Kemmons Wilson, which can be found in David Halberstam’s historical retrospective, The Fifties:

Some motels, Wilson later recalled, were godawful; some were very pleasant. The only way you could tell which was which was to see for yourself … Wilson was enraged to find that every motel charged extra for children. The fee was usually $2 per child, even though his children had brought their own bedrolls … Even worse, there was rarely a place to eat nearby, and so he and his family would have to pile back into the car and hunt for a decent family restaurant.

Day by day on the trip, Wilson became more irritated until he finally turned to his wife, Dorothy, and announced that he was going to go into the motel business … “How many of these motels are you going to build?” she asked nervously. He felt she was laughing at him. “Oh, about four hundred,” he answered. “That ought to cover the country.” “And,” he added, “if I never do anything else worth remembering in my life, children are going to stay free at my motels.”

Wilson did not call for a regulatory agency to ensure that all motels were pleasant for families. He did not seek legislation requiring that children sleep free in motels. Instead, he created Holiday Inn, the first national motel chain.

*Fantasy Despot Syndrome defined (also from Kling’s article):

“Wherever people discover that money is being spent, either privately or by public officials, they commonly develop opinions on how it ought to be spent … each person thus becomes his own fantasy despot, disposing of others and their resources as he or she thinks desirable.”  — Kenneth Minogue, The Servile Mind

Ah, but it’s so much easier to talk about it than to do something.

A doodle

I found this doodle in my notebook.    The caption on the the first doodle is “Entrepreneur” (though I spelled it wrong in the doodle).

In the second, “Politician”.

I thought it was a good graphic representation of some of the topics from my recent post, What is wealth and where does it come from?

See below the fold if you need help interpreting.

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Fail and fail again

Jessica Simpson holds a Maxim Magazine with he...

Image via Wikipedia

I enjoyed The Mogul’s Maxim from the latest Forbes and the additional online material that didn’t make it to the magazine article.  In it, Jeff Bercovici interviews Felix Dennis, who launched Maxim magazine.  They discuss Dennis’ new book The Narrow Road, which is “a collection of lessons for would-be entrepreneurs”.

Should you start a business?

Felix Dennis: This is a very difficult subject because the vast majority of people should not try this. You’re just going to wreck your life. The percentage of people who actually get rich is very small, and the collateral damage to your life is very high.

JB: But you also say anyone can succeed using your principles.

FD:As long as they’re prepared to fail again and again first. Anyone of reasonable intelligence can succeed and make substantial sums of money if they’re prepared to make the sacrifices. Anyone.

Felix on taxes:

I pay my taxes. I know I’m the last idiot left on the planet who does. I think we’re taxed far too much and taxed in the wrong way. I’m firmly of the belief, after my experiences in Hong Kong, in a 15% flat tax with an $18,000 exemption. If you want the most money, it’s real simple, brother. You just have a flat tax on absolutely everything, and all those guys at Deloitte & Touche–they can start digging ditches.

It would be nice to live in a world where digging ditches was more valuable than tax gymnastics.

It’s always reassuring when I find I agree with someone who has experienced a good measure of success.  The willingness and perseverance to try and fail and try and fail and try again is something I’ve observed in successful people — not just entrepreneurs.  Ask successful actors, writers, professional athletes about their failures.

That lesson isn’t taught well in K-12 education.  Failure doesn’t end your life.  It happens.  It’s common.  You can learn from it. And try again.  Life is trial and error.

I plan to read Dennis’ book.

Entrepreneurship creates jobs

I enjoyed Carl Schramm’s first Forbes column, The Messy Path to Creating Jobs.

He wonders why policy makers haven’t learned until recently that new companies create jobs (though I’m not sure all policy makers have learned this).

My answer is that policy making and government planning are usually done with a view to controlling events, and the “controller” mindset doesn’t take easily to the world of start-ups. With myriad new firms always emerging, failing, or changing directions as they grow, this world appears highly unpredictable and, well, messy. But though it is unpredictable in its details — it’s very hard to pick the winners from any batch of new firms — overall, the messiness works.

That is why my column, which debuts with this entry, is titled “Messy Capitalism.” We should keep reminding ourselves that throughout American history, messy capitalism has always propelled economic growth, while periods of heavy-handed state intervention, such as the 1970s, have suppressed it.

It is hard for some people to grasp how unpredictable it is and it’s even tougher for them to be okay with it being unpredictable.   They don’t like a mess and they fail to recognize the progress that comes out of it.

I also like what Scrhamm recognition that business planning.

…returning to the universities, the teaching of entrepreneurship has to change. The current approach has multiple shortcomings. For instance, a great deal of course content consists of learning “about” entrepreneurship rather than how to do it: Activities such as reading case studies or listening to guest entrepreneurs tell their war stories don’t give students practical skills they can apply. Much of the how-to work is then focused on how to write a business plan and raise venture capital, which is bizarre given that (a) many successful entrepreneurs do neither, and (b) the business plan, despite its totemic status in academe, is far from the end of the entrepreneurial process and will probably change utterly during that process.