Entrepreneurs Are the Heroes of the World Entrepreneurs Are the

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					A Quarterly
on Liberty
Winter 2007
Volume 5
Number 1

Entrepreneurs Are
the Heroes of the World

        think of a paragraph in Ludwig von Mises’ book Human
        Action, where he says that the market economy does not
        need apologists or propagandists. The best argument for
        the market economy can be found in the epitaph of Sir
Christopher Wren, the architect who built and is buried in St.
                                                                      Johan Norberg is the author of
Paul’s Cathedral: “si monumentum requiris, circumspice” (if you       several books on human rights,
                                                                      economic freedom and the his-
are looking for a monument, look around you). Look at what he         tory of liberalism. His book In
built. Look at his vision. You are standing in it right now.          Defense of Global Capitalism
                                                                      (Cato, 2003) received the gold
   That, I think, is the best defense that the market economy can     medal from the German Hayek
                                                                      Foundation and the Anthony
ever hope for—that people look around and ponder the amazing          Fisher Memorial Award from
                                                                      the Atlas Foundation. Norberg
things and opportunities that entrepreneurs and businesses            is a senior fellow at the Centre
                                                                      for the New Europe. He gave
have given the world during the last 200 years. Just look around      this keynote speech at the Cato
                                                                      Club 200 Retreat in 2006.
at the health, the wealth, the technologies, the opportunities, and
the food on your plates. Could any of that have been possible for
a king or a queen 200 years ago?
                              he amazing fact is that entre-   reaching retirement age than children
                              preneurs and innovators and      in all previous eras had of experienc-
                              businesses have turned luxu-     ing their first birthday.
                    ries that not even kings could afford
                    into low-priced everyday items at your     Global Spread
                    local store. That is the best defense  In the last few decades of globaliza-
                    of capitalism.                      tion, when new opportunities, tech-
                                                        nologies, and means of communicat-
                        In a very short time, the world has
                    experienced an extreme makeover.    ing and producing have spread across
                    And that is what my recent book,    the world, we have witnessed an
                                                        amazing phenomenon: developing
                    When Man Created the World, is about.
                                                        countries are growing faster than the
                    The interesting thing is that history
                    shows us that freedom works. During richest countries on the planet. It
                    1,000 years of absolute monarchy,   took us something like 40 years to
                    feudalism, and slavery, mankind’s   double our average income. It takes
                    average income increased by about   10 to 15 years today for China, India,
                                                        Bangladesh, and Vietnam to do the
                    50 percent. In the 180 years since 1820,
                    mankind’s average income has in-    same thing. They can use the ideas
                    creased by almost 1,000 percent.    and technologies that it took us gen-
                                                        erations to develop right away. That is
                        During the last 100 years, we have
                    created more wealth, reduced povertywhy poverty in the world has been cut
                    more, and increased life expectancy in half in the last 20 years.
                    more than in the previous 100,000      Every minute I speak, 13 children
                    years. And that happened because    go from work, toil, and sweat on
                    of people like you—entrepreneurs,   farms or in factories into schools for
                    thinkers, creators, innovators—who  education, to have a better life later on
                    had new ideas, who traveled geo-    and to increase their opportunities.
                    graphical distances and, more impor-   And every minute I speak, your life
                    tant, mental distances to create newexpectancy is increasing by about 15
                    things and who saw to it that old tra-
                                                        seconds because of the increase of
                    ditions, which would have stopped   wealth and new medical technologies.
                    new creations, would not stop them     All of this is dependent on innova-
                    for long.                           tors and entrepreneurs. The entrepre-
                                                                     neur is an explorer who

                                                                     travels into uncharted ter-
                                                                     ritory and opens up new
        During the last 100 years, we have created                   routes along which we will
        more wealth, reduced poverty more, and                       all be traveling pretty soon.
        increased life expectancy more than in the                       Nothing has existed
        previous 100,000 years. That happened be-
        cause of entrepreneurs, thinkers, creators
        and innovators.
                                                                     “from the beginning.” Not
                                                                     even natural resources are
                                                                     natural in any meaningful
                                                                     sense— something that a
                                                                     lot of governments have
                                                                     realized when they have
                   That is why we have all this wealth. nationalized oil and gas resources and
                That is why our son, who will be born   other things. They had failed to un-
                in January, has a greater chance of     derstand that we also need the entre-

2   •   Cato’s Letter WINTER 2007
to see how to use a resource
and how to invest in it in a
preneurial spirit—the ability
                                      Entrepreneurs are the heroes of our
                                      world. Despite the risks, the hard work,
                                      the hostility from society, the envy from
                                      neighbors, and state regulations, they
positive way to make sure
that it is used efficiently.
    The OPEC countries grew
by about 4 percent every year
                                      keep on creating, they keep on pro-
                                      ducing and trading. Without them,
                                      nothing would be there.
because of their oil resources
until 1973, when most of
them had nationalized their oil indus-          But technology is not enough. We
tries. Since then, they have grown          also need freedom for new technology.
poorer by about 1 percent every year.       Unless governments step out of the
    Fifty years ago a North Carolinian      way and allow entrepreneurs to do
truck driver, Malcolm McLean,               their thing, none of this will happen.
thought that there must be a more           We know that, because there are places
efficient way of transporting goods         where modern technologies are not
and components all over the world.          used because of regulations, corrup-
Back then, people would take their          tion, and government intervention.
trucks down to the harbor. The boat             If you are sending one truckload of
would sit there for a week or so while      fruit from South Africa to Zimbabwe,
the unionized work force slowly and         it costs you more in time, bribes, fees
steadily loaded every single piece of       to the government, and taxes than it
cargo on the boat. The reverse would        would cost to send the same truck-
happen in the destination harbor.           load of fruit from South Africa all the
    McLean thought, “What if I use          way to the United States.
wheel-less boxes and just put all the
goods in the boxes and hoist them           Our Heroes
onto the trucks, drive down to the             There is a classic work by Joseph
harbor, and then just put the un-           Campbell, a book on cultural history
opened boxes on the ship?”                  called The Hero with a Thousand Faces,
    In one night, McLean created            about heroes in different cultures.
modern container traffic. He reduced        Because Campbell traveled the world
the cost of sending goods and compo-        by reading books from other conti-
nents across the oceans by something        nents, he could see that there are he-
like 97 percent. It is possible for us to   roes in all cultures, in all books, in all
have a particular kind of computer,         eras. We need heroes, because they say
with components from all major con-         something about what our values are,
tinents on the planet, the clothes we       what is good, what is great, what is
wear, the food on our plates because        bad, what we should strive for, and
of one man and his dream and a cul-         what we should try to avoid.
ture that did not try to stop him but          He saw a common pattern. He
instead encouraged his dreams and           thought that in most cultures and in
his visions. And developing countries       most eras the same kinds of things are
all around the world suddenly have          seen as heroic.
use for their talent and their hard            Something big happens, and our
work—to produce what they can pro-          hero is forced to go on a journey to
duce best, put it into containers, and      fight hostile enemies against all odds
send it somewhere else.                     with a lack of knowledge of what to

                                                                        WINTER 2007 Cato’s Letter • 3
                    do and when and how. But along the             Some anti-globalists and people
                    way he makes some friends who help         opposed to free trade are now well-
                    him along and give him the knowl-          paid consultants who sit on the
                    edge and the inspiration to do what        boards of big companies and tell them
                    is right.                                  that what they do is really a bad thing
                        Think about that heroic journey        and that they must accept much more
                    once again, and think of the persons I     corporate social responsibility. In their
                    just talked about—people like you,         terms, corporate social responsibility
                    thinkers, innovators, entrepreneurs.       means that what you have done so far
                    What makes it possible for us to buy       is not social. It is not enough to create
                    equipment and goods from the other         goods, services, and technologies that
                    side of the world? Entrepreneurs           increase our life expectancies and save
                    face ancient traditions, political ob-     the lives of our children. No, you need
                    stacles, taxes, and regulations, but       to do something more. After making
                    they also have friends—people with         your profit, you need to give some-
                    access to capital, to knowledge, to        thing back to society.
                    other businesses.                                                     Give something
                    If they are lucky,                                                back to society?
                    entrepreneurs suc-                                                As if the entrepre-
                    ceed. If not, they                                                neurs and capi-
                    learn something                                                   talists had stolen
                    new, make it even                                                 something that
                    better the next                                                   belonged to socie-
                    time, and bring                                                   ty that they have
                    to the communi-                                                   to give back!
                    ty something new                                                      Profit is not
                    that changes lives                                                something that we
                    forever.                                                          have to apologize
                        That is the hero-                                             for. Profit is proof
                    ic epic. The entrepreneur is the hero of   that the capitalist has given some-
                    our world. We do not really need the       thing to society that it cherishes more
                    Frodos, the Luke Skywalkers, or the        than the material wealth it has given
                    Buffy the Vampire Slayers. We have         to the businessman.
                    the Malcolm McLeans of the world.              I must emphasize that entrepre-
                        But as you all know, that is not       neurs should never be grateful for a
                    really what popular culture thinks         society that gives them license to act,
                    of capitalists and entrepreneurs to-       to dream, to innovate, and to create.
                    day. If you go to an average Holly-        I think that we, the society, should
                    wood movie, the hero is someone            be grateful to the entrepreneur and
                    quite different.                           to the businessman for what they
                        The scientist and the capitalist are   do. Entrepreneurs are the heroes of
                    the enemies in most Hollywood pro-         our world—that despite the risks,
                    ductions. That is a bit ironic, because    the hard work, the hostility from soci-
                    we would not have film technology if       ety, the envy from neighbors, and
                    there were no scientists, and we would     state regulations, they keep on creat-
                    not have a film industry if it were not    ing, they keep on producing and trad-
                    for the capitalists. But they are pre-     ing. Without them, nothing would
                    sented as villains.                        be there.

4   •   Cato’s Letter WINTER 2007
Magic Is Alive
    Max Weber, the German
sociologist, thought that
the modern world experi-
                             “          That is why we work and that is
                                        why we fight—to remind people of
                                        the well of freedom and of individ-
                                        ualism, to keep that well from run-
enced a demystification that            ning dry, and to remind people of
was very problematic. There
was no magic left in the
world, with science explain-
                                        the reasons more people live longer
                                        lives and richer lives than ever, in
                                        countries that are freer than ever.
ing everything—life, nature,
    Excuse me very much. No magic?           every good, in every service, and in
That is nonsense. I flew here. In            every technology that we use every
1901 we heard from a very insightful         day. And we are just barely getting
commentator who said that that was           started. We have more scientists alive
impossible. We could not fly. We             today than existed in all previous
wouldn’t be able do something like           eras combined.
that for at least the next 50 years. That       Imagine what free individuals and
commentator was Wilbur Wright,               creators can do with the new break-
one of the two Wright brothers, who          throughs in nanotechnology, biotech-
two years later took the first flight, be-   nology, and robotics. I am sure it will
cause he wanted to explore. He took          surprise us just as much as flight and
that risk and made it all happen. That       computers would have surprised our
is magic.                                    forefathers. If people take these things
    I have in my computer more power         for granted, it is only because our
of calculation than existed in most          everyday lives have become fantastic.
countries 40 years ago. My thoughts
are being turned into ones and zeroes        Well of Freedom
that are transmitted through fiber               You know the old proverb, “He
optics, optic cables of glass, thin as       that has satisfied his thirst turns his
a hair, and they come to the other           back to the well.” Well, that is why we
side of the planet a tenth of a second       meet and that is why we share lunch.
later. And by the click of the mouse,        That is why we work and that is why
I can order just about any kind of           we fight—to remind people of that
knowledge that exists anywhere in            well of freedom and of individualism,
the world.                                   to keep that well from running dry,
    Above us there are satellites that       and to remind people of the reasons
guide our navigation. And beneath us         more people live longer lives and rich-
we have robots that mine metal from          er lives than ever, in countries that are
rock. We have traveled out in space,         freer than ever.
and we have read the genetic code                It is customary at the end of a talk
within us. We have conquered hunger          to say thank you to signal that it is the
and disease. So I will say to you: we        end of the talk. I do it when I speak to
live in an enchanted world, in a magic       anti-globalist and Marxists and so on.
world, and it is even more enchanted         But this time I really mean it.
because the creators and the innova-             I must say thank you for creating
tors make it so.                             this fantastic world. And thank you so
    There is vision. There are intelli-      very much for your support for the
gence, ingenuity, and hard work in           ideas that make it possible.

                                                                        WINTER 2007 Cato’s Letter • 5
                           Cato Scholar Profile:
                           SALLIE JAMES
                           Sallie James is a policy analyst with Cato’s Center for Trade Policy Studies.
                           James writes and speaks on a variety of trade topics, with a research ephasis
                           on agricultural trade policy. James holds a Ph.D. in agricultural economics
                           from the University of Western Australia in Perth.

What drew you to Cato from the land                     How will your work focus on the upcoming
down under?                                             farm bill debate?
The sort of serendipitous event that makes              Dan Griswold and I released studies on
life wonderful. I was not actively looking for          specific commodity policies late last year,
a new job when I found out that the Center              and soon this year we will unveil our ideas
for Trade Policy Studies was seeking a policy           for a new farm bill. The current farm bill ex-
analyst. After exchanging a few e-mails and             pires in September, and we’re hoping that by
telephone calls with Dan Griswold, the job              exposing the costs of current U.S. agricultur-
just sounded better and better. I had heard             al policies and the benefits to the country as
of Cato before, because I am a long-time                a whole by reforming them, that we will see
devotee of P. J. O’Rourke and because I had             farm policy shift in a new, more market-ori-
attended, as a student, a conference held by            ented direction. U.S. agricultural policies are
the Centre for Independent Studies, a Syd-              partly responsible for the failure so far to
ney-based libertarian think-tank. So I knew             reach an agreement on the current round of
I was coming to a place where there is a seri-          World Trade Organization talks, which of
ous commitment to scholarship, and to                   course has much broader implications than
sound principles. I miss my family and                  just for agriculture.
friends, of course, but I love America and I
love working at Cato.                                   Are there any good prospects for reform of
                                                        the U.S. farm subsidy program?
How will the recent dramatic changes in                 I think we can expect to see a move away from
Congress affect trade policy?                           the most trade-distorting policies, those that
It is a little difficult to tell at this point. Cer-    link payments to the production of certain
tainly we heard ominously protectionist                 commodities, for example, or government in-
rhetoric during some individual campaigns,              terventions that artificially inflate prices. The
particularly from the Democratic side, but              United States simply cannot afford to contin-
one has to hope that it was partly campaign             ue the farm welfare programs as we know
bluster and that good sense will prevail when           them today. They are hugely expensive, both
the votes are cast. I do think that we can ex-          in budgetary terms—over $20 billion in
pect stronger language on labor and environ-            2005—and for the damage that they do to the
mental standards in future trade agreements,            broader interests of the United States. Con-
and that may make some trade partners re-               sumers and food processors frequently pay
luctant to sign those agreements with the               above-market prices for some commodities,
United States. We at Cato will be making all            and the support given to U.S. farmers is a real
possible efforts to remind policy-makers,               offense to the rest of the world, particularly
whatever their party affiliation, of the bene-          developing countries. We’re encouraged,
fits of freer trade and the costs to the United         though, by the extent and breadth of the op-
States of trade restrictions.                           position out there to the current system.

6   •   Cato’s Letter WINTER 2007
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                                                                    WINTER 2007 Cato’s Letter • 7
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