Entrepreneurs are Heroes

I’m old enough to remember when all bicycles were expensive. I can remember, as a boy growing up in the Bronx, my excitement over receiving my first two-wheel bicycle. We took the subway to a warehouse downtown that specialized in bicycles. My first bicycle had no gears and cost around $35; a bike with gears was simply beyond the reach of my family’s income. In today’s depreciated currency, $35 is about $260. My father worked two jobs to help make ends meet, and even $35 at the time was an enormous sum of money; my parents had to save for a long time to buy me that bicycle.

Today $260 will buy a fairly decent bike and even $35 will buy an entry-level bike. What happened in the interim? Technological advancements driven by entrepreneurs helped to reduce prices. Innovations in retailing and superstores like Walmart drove prices down further. Mutually beneficial trade with countries like China drove prices down even more. But still, with all that progress, $35 is still too much money for much of the world’s poor in the developing nations.

To the rescue of those in dire poverty, Izhar Gafni, an Israeli inventor and entrepreneur, has invented a $9 durable cardboard bicycle. When production begins next year, the effects are likely to be revolutionary:  “Like Henry Ford who made the car available to anybody, this bike is going to be cheap and available to any child in the world, including children in Africa who walk dozens of miles to school every day.”

Gafni’s Bicycle

A durable cardboard bicycle? Who would’ve thought it? Every day entrepreneurs notice what is hidden in plain sight. They notice resources that are not being put to their highest valued use. They see what others don’t see; and by doing so, they improve the human condition.

Did you know that, as Candace Allen reports in her delightful essay “The Entrepreneur as Hero,” “As late as 1966, only 138 simultaneous calls could take place between Europe and all of North America, as compared with more than 1.5 million simultaneous calls between North America and Europe today.” I was astonished when I read that little fact, especially since Allen wrote her essay in 1997; today’s numbers are far greater. Allen puts innovation in context when she writes, “It has been estimated that if we had made the same progress in automobiles that we have made in computers over the last 30 years, the best Mercedes-Benz on the road today would cost about a $1.19 and get more than 4 million miles per gallon.”

No wonder Allen considers the entrepreneur to be a hero! What about profits? Allen writes:

The more profit that is generated, the greater the value of wealth produced. Profits are the reward for increasing benefits to individuals in society, and serving in the capacity as wealth creator, the entrepreneur becomes a social benefactor. The heroic entrepreneur will continue to anticipate what the future will demand of him. He is no ordinary businessperson, whose main priorities are simply to turn its profits, or avoid losses, or seek to maintain his market share. Nor does he seek government subsidy or monopoly status. For him, the quest is to venture forth again and again into the unknown to create and bring back that which individuals and society value.

In industry after industry, entrepreneurs have improved our lives. I am astonished by how many educated individuals believe that government is the source of their material progress. Let’s be clear, governments are not the source of material progress—no more in the United States than in North Korea. It only seems possible to Americans that government can improve their position, since in free markets, led by entrepreneurs, so much wealth is produced. Government, on the other hand, produces nothing; it can only redistribute wealth; and governments do this at great cost to human well-being.

Frédéric Bastiat, the great 19th century French economist, asked these provocative questions: “Whence does [the State] draw those resources that it is urged to dispense by way of benefits to individuals? Is it not from the individuals themselves? How, then, can these resources be increased by passing through the hands of a parasitic and voracious intermediary?”

Politicians pass themselves off as heroic individuals, tireless champions of the public interest. Of course there are exceptions, but by and by, politicians work for their own interests and the special interests of those who curry favor with them.

In contrast, an entrepreneur must solve an important need of the consuming public. Entrepreneurs are constantly in competition with other entrepreneurs for the votes of consumers. And consumers are constantly going to the ballot box where they are free to shift their allegiance from one entrepreneur to another. Entrepreneurs are, indeed, the real heroes.


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4 Responses to Entrepreneurs are Heroes

  1. Jim D. says:

    People believe that gov’t can be the source of wealth because of 2 reasons. First is the military-industrial complex Eisenhower warned us about in his farewell address. The US gov’t is the largest purchaser of goods in whatever market it deems to need supplies from. Second, is that so many people are employed by the gov’t…military, police, fire, bureaucrats, social workers, prisons, courts, etc, not to mention all the people who work for the suppliers and contractors the gov’t buys from. Which is where Bastiat’s quote becomes so poignant, because most people do not realize that all gov’t can do is sponge off the people. Everything the gov’t buys is paid for by you and I through every form of tax we pay on almost every product we consume. And it usually pays a steep premium for it.

  2. I love this blog post Barry and how true! I think entrepreneurship will be what western society can offer to others in the world who have struggles and challenges far greater than our own. I see so many people practicing social entrepreneurship at a grassroots level and making some huge impact in the world. We always have to remember that we have so much control with our wallets – we can buy fair trade products or original works of art from Guatemalan artists etc. rather than mass produced, “throw away” items. I saw some other designers working with cardboard for household chairs etc. but I love the creation of something as functional as a bicycle! Now if only we could get someone to make a stand in our big cities and get rid of car travel and rely on bicycles, feet and public transport! I was in Chicago this past weekend visiting my sister and was reminded of just how congested our cities are! There were so many cars, many just travelling short distances. Wouldn’t it just be so great for our cities and our health and well being if we all practiced alternatives to cars? I know, I can dream though, can’t I??

    • Barry Brownstein says:

      Thanks Sherri.

      Having grown up in New York City I’m afraid my views of public transportation are more jaundiced than yours :-). And having ridden a bicycle in Baltimore for many years, I can only say: “thank God I survived.” Many motorists are downright hostile to bicyclists. And as you say many people don’t like to walk.

      But for me the key is voluntary action rather than coercion. If cities/towns without cars are undesirable, the market will produce planned dense communities where that is possible. I believe there are a few out there but I haven’t studied the issue.

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