Entrepreneurism and free markets work. Johann Norberg from Sweden at Cato institute says entrepreneur is a hero. A hero makes the world better for people. That’s what entrepreneurs need. They need freedom to create and freedom for consumers to choose. There are obstacles to that. Corruption is the biggest obstacle in many countries. Because we eliminated more obstacles than anyone else, we led the world in prosperity. For my lifetime, half the world was free, half was socialist.
During my life, many people thought that planning could create more wealth than freedom and free market. But over time it became clear by looking at all the data and all the comparisons, that central planning doesn’t work as well. Look at North Korea vs. South Korea at night. Half is lighted. Half is not.
Free markets still face challenges from interventions of all sorts, cronyism, corruption. We’ve always had some elements of this. In the past 13 months they’ve gotten pretty painful here. Bailouts, TARP, Health care takeover. Frenzy of special interest lobbying. Obama complained to George Stephanopolous on TV a couple weeks ago that some people think he’s taking over the whole economy. He’s not. Just health care, finance, education, automotive, etc, etc.
This what is Nobel prize winner Hayek called “the fatal conceit.” The idea that smart people can make better decisions than consumers in the market.
I don’t think Obama really wants to nationalize the means of production. He just wants to use government money and regulations to expand political control over the economy. The more this happens, the more lobbying will occur. It won’t surprise anyone that lobbying expenditures are rising. All of this investment in lobbying reflects what Willy Sutton said when asked why he robbed banks, “that’s where the money is.” Why do companies lobby Washington, “because that’s where the money is.”
Ralph Nader organization: “the amount spent on lobbying reflects how much the government intervenes in the economy.”
Hayek explained this in “The Road to Serfdom”:
As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of this directing ….
If you want money flowing to the companies that have powerful lobbyists and good congresssmen, maybe this is a good idea, but we must realize that politicians rather than consumers will pick winners and losers.
The $700 billion TARP was mostly cooked up in secret, but no sooner was it out than lobbyists flooded the hill. By the time it passed it included provisions for Puerto Rico’s rum producers, makers of children’s wooden arrows, things in Nancy’s Pelosi’s district, all kinds of pork projects. Official story is always that every project that is funded goes through a federal procurement process, but that isn’t true.
The truth is that when you lay out a picnic, you get ants. And this is the biggest picnic ever laid out.
The Washington Post is doing a pretty good job of telling us what is happening. For example, at JP Morgan Chase [I missed what he said about them.] Citigroup’s general counsel is now working in DC, not in New York. Chairman of Blackrock used to talk to federal officials a couple times a month. Now he talks to them everday.
The problem is not just wasteful spenidng. It’s the intrustion of politics into business decisions. This is what has wrecked economies all over the world.
What do you get? The President firing the CEO of GM. Members of Congress pressuring GM to keep inefficient dealers open. Every CEO has a board, plus 536 bosses in Washington.
This creeping hand didn’t start in the past year. The biggest entrepreneurial success in the country may have been Microsoft. But in our modern politicized economy, some call it the parasite economy, no good deed goes unpunished for long. The government started launching investigations of monopoly, some competitors joined the attack. I don’t like how the govt lured Microsoft into this. Washington people started to threaten Microsoft that they had to play the Washington game. So in 1995 Microsoft hired a lobbying firm, hired a PR firm, got involved in trade associations. In 1998, Bill Gates wrote, “it’s been a year since I’ve been in DC. I think I’m going to making the trip a lot more.” I think that is a tragedy. Our most important asset is human talent. And now some portion of the brains at Microsoft is spent, not on pleasing consumers, but on getting on the right side of Washington.
Same story with Google. Again, some nerdy brililant engineers invented a product that revolutionized our lives. I can’t imagine doing research without Google. I couldn’t do my job with Google Desktop search. And some of us appreciate it. And others don’t like to see a company becoming indispensable. Google got the same kind of treatment Microsoft did. Now both companies have to compete in courts, halls of congress, halls of Federal Trade Commission and Justice Department.
Two hunters in the woods see a bear coming. One starts putting on tennis shoes. “You can’t outrun a bear.” “I don’t have to, I just have to outrun you.”
We are not yet at the level of Russia. “Because the government plays such an immense role in their economy litle can be done without bribing officials.”
I did wince when I saw that Mr. Gao (sic) from China said that the US doesn’t have a Chinese version of socialism, but “socialism with American characteristics.”
Sales of Atlas Shrugged and Road To Serfdom have been soaring.
Maybe mine is an anti-keynote addreess. I see titles here like “Tapping The Trillions”. I wish the March of Entrepreneurs to Washington was to ask the Federal Government to stop doing all that they are doing.
There are “Political entrepreneurs” who make money by gaining influence in Washington. There are “Market entrepreneurs” who make money by selling products in the consumer marketplace.
Market entrepreneurs are the good guys. Too many people come to DC to become political enterprenreurs.
He said the term Laissez Faire originated in like 1680 in a conversation between Colbert (sic) and Ms. Lejandre (sic), the mercantilist minister asked how the French state could be of assistance to them. The entrepreneur basically said, “Leave us alone.” If government leaves entrepreneurs alone, they will raise the standard of living 8 times in the next century.
My keynote message is this: farm the great plains, not the capital. Network with computers, not politicians. Invent new ways for consumers, not to get influence in Washington.
Ask government to cut corporate tax rates, remove regulatory obstacles.
Ask them to stop centralizing everything.
Audience member asked a question about how to balance government involvement and the private sector. David said the government should do much less. He mentioned the entrepeneur who invented shipping containers. The containerization of shipping drops shipping costs by 97%. Government is going to do procurement, I think it should do a lot less regulation. We know about our unsustainable commitments to entitlements and deficits. Even if you are aware of this problem, it’s even harder to detect the cost of having the government involved in doing everything.
Another audience member asked a question about long term vs. short term. David answered by saying the investors generally take a longer term view than governments. Governments usually take at a short-term view–based on the next election. When the prescription drug benefit was passed, did Pres. Bush care about the fact that it would cost a trillion in the next decade? No, he wanted to do something for the seniors before the next election. Capital markets are much better at long term investments.
When you get drunk, you will get a hangover. We have made a lot of bad decisions, there is no easy answer to solve this. Reducing corporate taxes will create more jobs. When you make it more difficult to fire workers, people become more reluctant to hire. Even if my plan were implemented today, unemployment would go to more than 10%, but I do believe it would come down more quickly after that.
Another audience member said she thought Google did a good job working with Washington on the spectrum auction. David said, I think Microsoft initially came to Washington for defensive reasons because they were being assaulted. But once they get here and hire a lobbyist, there is a danger of getting sucked in, when a lobbyist says, “if we can get this comma changed in the tax law, then that company will pay instead of you.” Maybe the answer is don’t make your lobbyist a senior vice president, make him a junior vice president.
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