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What I’ve Learned in Business

January 26, 2013

Years ago I began work on an MBA. It wasn’t really a bad degree, but I pursued it because I thought it would help me advance in my career. When I first start in business for myself I thought it would help there, too. I was correct about the first and grossly incorrect about the second. I came to realize that what many of my business friends said. In most cases the primary value of an MBA is that it qualifies you to look after another person’s money. The problem is, I know of no one who goes into business with the goal of looking after others’ money. That is just one of the many things I’ve learned so far as a small business owner.

Is greed good?
It all depends on what you mean by greed. If by greed you mean a drive to get ahead at any cost, a willingness to lie, cheat, back stab, deceive and steal, then the answer is most emphatically “no”. On the other hand, if you mean a desire to work really hard to achieve a dream, to be willing to pour all of your energy, creativity, drive and passion into creating something that provides for you and yours, then the answer is an equally emphatic “yes”. Other than greed, we can call this “enlightened self-interest” if you wish. It is enlightened in the sense that success in a free market economy requires service to others.

Free market capitalism
We hear a lot about the evils of capitalism from some folks. It is blamed for everything from global climate change to the existence of poverty. While I won’t discuss climate change in this article I will discuss poverty. The truth is, poverty and struggle to eke out a meager existence has been the norm for the vast majority of people throughout the history of the world. The amazing thing about capitalism, especially in the West, is that it has produced a standard of living and a degree of luxury for the vast majority of people that was unheard of in the past. This is not to declare that poverty does not exist, even in a capitalistic society. It does. On the other hand, in most cases, it is not the poverty of the past or of those regimes that repress free markets. In the US for instance, the vast majority of the poor have more than the poor of the past and more than those in third world countries.

Why does capitalism work? Because of the above mentioned “enlightened self-interest”. In a truly free market, the only way to succeed in business is by serving others. It is this service to others, this provision of goods and or services that others want, that leads to success. Find a way to produce and deliver it faster, better and for less money and you are well on your way…as long as the “it” you’re delivering is something people actually need and want. There’s a tendency for some to suggest people should just do this for the common good, for the good of society as a whole if you will. That’s been tried. It doesn’t work. People will do more, put forth more effort for an extended period of time for themselves than they will for society as a whole. Adam Smith may have put it best when he noted that “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest”. The butcher, brewer and baker may well be concerned about the well being of their fellow man, but that concern will not motivate them to succeed as much as the desire to build and possess something of their own…which of course, puts them in a much better position to see to the needs of the poor.

Free market capitalism isn’t…
Many of the complaints about free market capitalism arise, I think, from a failure to understand just what that is. Government handouts, special treatment, preferred contracts, artificial manipulation of markets and the like are not free market capitalism. They can be called “corporatism”, “crony capitalism” or any number of things, but they are most certainly not an example of a free market. Some business people engage in this sort of business because they have, at some point, run into a hard fact about a free market. It is ruthless. I didn’t say the people were ruthless. Most of the truly successful business people I know are very concerned about their fellow man. The free market, though, is cold and uncaring. You will either produce and deliver what people want and need quickly, efficiently and at a price they are willing to pay or you will fail. You will pay your bills and your employees or you will fail. You will do what you say you will do or you will fail. The free market has no compassion. The free market has no good will (of course, it has no ill will, either). And so, we have some people in business who find they cannot or will not do what a free market requires…find out what others want and deliver it quicker, more efficiently and for a lower cost. Instead, they opt for the modern equivalent of the way people accumulated wealth in the past…by lying, cheating, plundering, stealing and enslaving. They are vile, vicious scummy examples of humanity, but they are not free market capitalists.

There are also those who have never been in business, who have never truly striven in the free market, who dislike it. They seek, often for what they perceive as the best of reasons, to restrict the ability of individuals to compete in a truly free market. Some are in politics, some in academia, some in media and some spent weeks sleeping on the ground while occupying Wall Street. Whether they think of themselves as smarter than the rest of us, wiser than we are or just entitled to what another person produces they share a common belief. In each case, there seems to be a tendency to believe that if someone were to control the market, if there were only more central planning, then everyone would be happily sharing the wealth that can only be produced by the free market they seek to destroy. The fact that this has never worked is irrelevant. This time, we’re told, it’ll be different. No, it won’t. If it continues then we can anticipate looking back fondly at the lives we used to live back when the market was free.

Business is hard
That sums up what I’ve learned since I’ve been running my own small business. It’s hard. It’s all consuming at times. I think about it all day. I dream about it at night. It causes headaches, stomach upset and incredible tension. When I’m not actively working with clients I’m planning how to get more clients or taking classes to improve my skills so I can better serve my clients. I remember how much more I earned working for someone else. And every time I have a client thank me, I tend to grin. Every time I earn a single dollar, I value it more than I ever valued what I earned as an employee. It is both the hardest and most rewarding thing I have ever done. It is the free market that has allowed me to work on my dream and it is the free market that will provide freedom for me, my family and anyone else who wants it.

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