Why business matters: Entrepreneurial Capitalism in the age of omniscient government
Townhall – Carl Schramm – 7/22/2013
Fascinating speech given to graduating class of UC Davis to entrepreneurs:
To understand why business is so important to the American saga we should start at the beginning. The Declaration of Independence announced that freedom was at the heart of the incomprehensible daring of those who started a revolution in a weak, loosely affiliated group of colonies against the strongest empire on Earth. They wrote, “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the Pursuit of Happiness.” It is clear that as the founders saw liberty it involved the freedom to determine how anyone could apply himself or herself to making a living, trading, making things, and inventing new products and ideas. In many ways it was this quest for the freedom of individuals to advance their economic condition as they saw fit that required inventing a new country!
The protection of “business freedom” was even more important eleven years later when the Constitution was ratified. Recall that the father of economics, Adam Smith, had written The Wealth of Nations in 1776, the same year as the Declaration. Hamilton and Franklin understood Smith’s powerful argument that countries prosper when individuals operate in their own self-interest. They saw, unlike Jefferson who believed that America’s experiment with democracy would only succeed if it formed itself as an agrarian utopia, that the idea of self-governance could succeed only if it showed that it produced expanding economic welfare for its citizens. In its pre-constitutional years, the United States were flourishing because a diverse economic base was emerging that already revealed that freedom had unleashed new levels of human inventiveness. That the Constitution reflected the innovative potential of the new nation’s commercial life is evident in its unprecedented and explicit protection of new ideas as a form of individual property in its patent clause.
The emergence of revolutionary new businesses in the United States has had an enormous worldwide impact, raising living standards for billions. The global impact of our innovations in computers, telecom, medicine and air conditioning, have had such unmitigated benefits that America should rightly think of itself in the terms President Clinton’s Secretary of State, Madeline Albright, urged when she called ours “the indispensable nation.” American innovations such as the World Wide Web just might lead to the spread of participatory democracy itself. FREE MARKETS REALLY DO BIRTH FREEDOM.
I want to emphasize that this is not a partisan observation on my part – it is entirely descriptive. The reason I raise this question is my concern that when government intrudes upon our privacy, for whatever reason including security in an age of terrorism, there are economic consequences. American capitalism depends of individual freedom. With individual freedom comes the liberty to think “crazy” new thoughts about goods and services that have never been thought about before. Hamilton and Franklin saw the importance of keeping government small in just this context.
In the end, the most disruptive part of entrepreneurship is the innovations that it begets. It is precisely these disruptions that drive economic expansion, including the creation of most new jobs! But for innovation to happen there must be unbridled individual freedom.
one of the glories of free-market capitalism is its vital ambiguity, its unpredictable nature, which will permit each of you and millions more like you to bring your quest for making something new or making something better or cheaper into a reality, a new product or service, a new company, that will benefit humankind. But this freedom of action is inexorably linked to freedom of thought! It is always going to be threatened by government advancing the idea that it can control the future and make it predictable, planned and free of economic danger.
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