A Little Extra is the Essence of Free Enterprise

"I'm putting in a double receptacle with its own 20amp circuit.  This is the front desk and they will probably need the extra coverage.  And I want them to feel like they are getting a little more for their money than they expected."

The Electrician Guy

A doctor friend of mine asked me to stop by and have a look at his new office as construction was still going on.  I did it as a favor.

The electrician was working on another receptacle but the circuitry had already been finished and wired.

When I asked him if he was putting in something previously forgotten he said, "Oh no.  This is extra and the plans don't call for it.  It just struck me that they might really need this here.  The doctor will appreciate it when I explain what this is for."

This is a small businessman, with a small company and doing what small business does best.  The company is composed of himself and his brother.  This is their bread and butter.  They want to do an exceptional job.

Why?

Because, like Adam Smith's butcher, baker and beer maker, they are operating out of self interest.  They want future business through referrals from their clients and people like me.

These brothers are their own capital, offering a service, and wanting to provide the best they can. 

They have probably not read it, but they are operating exactly as Adam Smith suggests in his 1776 book The Wealth of Nations, and in a former blog of mine.  Click here.  

The Electrician Guy doesn't need to worry about what is said about him on the consumer websites because if he does his best they will reflect it.

The Electrician Guy doesn't need to worry about being paid because if he does his best the money will come.

The Electrician Guy doesn't need to worry about schmoozing his client because he knows that what he is doing will be appreciated.

And The Electrician Guy understands that when clients feel like they are getting a little more for their money than they expected they will come back, and send others to him.

The Electrician Guy is operating out of self interest and the desire for profit.  He is a capitalist!  He is a free enterprise businessman!

I assure you that not every business I come into contact with in my business (home and commercial inspections) understands or practices what The Electrician Guy understands and practices.

How did this come out?  I returned to the doctor's office to have a look at the final product.  I asked those at the front desk about the extra receptacle there.  They loved it and were using it!  You can see in the photo that it is full of plugs.  It is convenient and, they said, they have never "blown a fuse."

Fortunately The Electrician Guy is representative of small businesses all over the place.  Those businesses that are trying hard to provide a good product, a memorable service and a great customer attitude are out there.  We need more of them!

And what did I do with The Electrician Guy?  I got his card!  And have referred him ever since. 

He did a little extra.  The very essence of free enterprise.

To Be The Highest Mountain

 

“I am here for a purpose and that purpose is to grow into a mountain, not to shrink to a grain of sand. Henceforth will I apply ALL my efforts to become the highest mountain of all and I will strain my potential until it cries for mercy. ”

Og Mandino (1923 - 1996)

From The Greatest Salesman In the World,
"The Scroll Marked IV"

The thinking in this quote should be the focus of every individual, student, employee - everybody!

It is certainly the underlying thinking of every free market, free enterprise capitalist.  It must be.

If it is not strived for by every entrepreneur, small and large business owner, or corporate executive, then, as the rain will eventually come the competition will grind that person out.

Rest assured that someone, somewhere in your business, is desiring to become the highest mountain through strained potential and end up as the biggest kid on the block.

I understand why dictatorships must squelch that kind of thinking and tear it down.  But why do gubments in "free market" economies do so?

Why do gubments pick sides, stultifying one business in favor of another?
Why do gubments regulate one business while allowing another to slide?
Why do gubments "invest" (meaning divert your money and mine) more into one industry and less into another?

The key word in free enterprise is FREE!

But doesn't that mean that ugly, greasy, unfair capitalists will grind down the poor and take advantage of "the masses," using them and bleeding them until there is nothing left to give?

Get real.

The FREE MARKET will grind out such businesses.
The FREE MARKET will police itself better and more efficiently than any regulation or law any bureaucrat can create.
The FREE MARKET will divert resources more cheaply, more quickly, and more productively than any bureaucrat can regulate.
The FREE MARKET will produce goods and services that are more responsive, thoughtful and desirable than any bureaucrat can pick sides.

How does the FREE MARKET do that?

Through profits!  The fabled better mouse trap!

Profit is merely the money in the market responding to what good or service a business has to offer.  Money and interest flow toward what satisfies need.  The market, any market, has needs.  Goods and services proliferate and thrive because the market needs them.

Can you name a ubiquitous free-market good or service that exists without the need for it?

If one business does not satisfy those needs, or does so in a way that is unkind, scamming or unfair, the market for it, any market, will go elsewhere.  Sure, some might get injured in the short run, but NEVER in the long run.  The free market grinds those parasites out.

And the business good or service that tries to strain its potential to satisfy those needs in the most efficient and inexpensive way possible (thus garnering more market money and profit)

WILL BECOME THE HIGHEST MOUNTAIN OF ALL AND THE BIGGEST KID ON THE BLOCK!

The FREE MARKET does not discriminate between patrons - it says to come one and come all.

Let's encourage that, in every aspect of our economy.

The "Free" Lunch Is Not Natural

"The necessity for struggle is one of the clever devices through which nature forces individuals to expand, develop, progress and become strong through resistance.  We are forced to recognize that this great universal necessity for struggle must have a definite and useful purpose.  That purpose is to force the individual to sharpen his wits, arouse his enthusiasm, build up his spirit of faith, gain definiteness of purpose, develop his power of will, and inspire his faculty of imagination to give him new uses for old ideas and concepts."

Napoleon Hill (1893 - 1970)

There are a couple of words that stand out there as regards this idea of struggle.

One word is NECESSITY.  The other is NATURE.

What he is saying is that it is natural for mankind to struggle and that we actually have the need to do so!

If we do not, if we are allowed to lay around and not provide for ourselves, rely on others for our keep, or encouraged to act in any way contrary to the NATURAL NEED to be the opposite, then we will not, as Mr. Hill says, "expand, develop, progress and become strong."

He says that this NATURAL NEED helps us toward a useful purpose.

What is the useful purpose to be encouraged, by gubment, parents, friends, or society in general toward anything opposite that NATURAL NEED? 

The phrase that abuts the quote above very well, a fraternal twin in some ways, is this:

THERE IS NO SUCH THING AS A FREE LUNCH!

If what appears to be a "free" lunch is always provided, rest assured it is not free.  It must be paid for somehow.

If what appears to be a "free" lunch is always provided, rest assured it is not in your best interest.

If what appears to be a "free" lunch is always provided, rest assured it was taken from somebody else first.

If what appears to be a "free" lunch is always provided, rest assured it will not provide the nutrition needed to, as Mr. Hill says, "expand, develop, progress and become strong through resistance."  It does not "inspire the faculty of imagination." 

Why?

BECAUSE A "FREE"LUNCH IS NOT NATURAL!  THE "FREE" LUNCH DOES NOT SATISFY THE NATURAL NEED TO STRUGGLE!  THE "FREE" LUNCH DOES NOT HELP ANYONE TO PROGRESS!

We Will Have To Work For It, However

"You are never given a wish without also being given the power to make it come true.  You may have to work for it, however."

Richard David Bach
From the book, The Bridge Across Forever:  A True Love Story

Most well known for his book Jonathan Livingston Seagull, I have always been intrigued by the Richard Bach quote above.  So much so I have it hanging in my office.  It is a photo, brilliantly yellow and orange, of a man flying with a hang glider toward the sunset.  A modern Icarus.

While it sounds like something Jonathan would say, he did not. 

But Jonathan was also about soaring, personal growth and development, achieving a higher level and forever bettering himself.  And these processes never end as one can never "arrive."

These concepts all indicate the basics of capitalism and free enterprise. 

When allowed such freedom, an unfettered dreamer will always find a way to fit into the market that most allows his individualism and abilities to soar.  The Invisible Hand will take over, and this individual, or individuals together, will step up and take their place in the vast heirarchy of the marketplace.

This marketplace is inifinite.  It never arrives.  It is never finished.  It has the ability to always expand, to always innovate, to always find product differentiation, to always create substitutes, and to always reduce costs and therefore price.

AND THIS IS TRUE FOR GOODS OR SERVICES!

When policies and regulations force innovators and producers to have to find ways around this or that to make something happen, the policies and regulations are not helpful.  A way will always be found!

And the wrong headed will create further policy and regulation to try to prevent that from continuing, forcing another creative way around that!

Wouldn't it be better for all society, and lift all boats, if the tide of creativity was instead put into thinking, development, production and distribution of whatever the good or service that will make lifestyles easier, cheaper, more interesting and time saving?

Economics is not driven by demand.  It is driven by supply.  Economics is supply side!

Why can I so confidently say that?  Because the demand for a good or service has no economic attraction until it hits the market!

Is there a demand for unending and cheap energy, say cold fusion?  Such that, like the car in the movie, we could find some garbage like a banana peel and throw it into the "gas" tank and be able to float to another place really quickly?

OF COURSE THE DEMAND IS THERE!

Is there any economics in that regard?  None.  That energy source does not exist.  There is no supply.

No supply, no economics.

Can we get there? 

Not if we are spending our time with gubment taking sides and forcing money into this politically-correct product or that one! 

If those products earned market-driven profits they would be more than self sustaining!  They would be in demand!  And money would flow from the marketplace, and greater supply would be encouraged.

Profit is merely the market responding to the supply of a good or service it wants or enjoys!

And so, if we want a cheap, unending energy source, or astounding medical breakthrough, or an education system that creates graduates who critically think for themselves, or whatever the amazing good or service that will change the world - how do we get it?

With policies that encourage the thinking, development, production and distribution of those kinds of things!  

We must encourage free enterprise!

We really are never given a wish without also being given the power to make it come true.  But, and there is always a but,

we will have to work for it, however.

It Takes Effort To Move Up In The Parade

"Now, as individuals differ greatly from each other, in intelligence, sagacity, energy, perseverance, skill, habits of industry and economy, physical power, position and opportunity, the necessary effect of leaving all free to exert themselves to better their condition, must be a corresponding inequality between those who may possess these qualities and advantages in a high degree, and those deficient in them ... It is, indeed, this inequality of condition between the front and rear ranks, in the march of progress, which gives so strong an impulse to the former to maintain their position, and to the latter to press forward into their files.  This gives to progress its greatest impulse."

John C. Calhoun (1782-1850)

This is not only so much a free enterprise quote, as it should be a quote about the human need to strive for freedom and for people to work on their own behalf.

But alas, when "leaders" seek to convince others that a cradle-to-grave society is not only possible but desirable, well, they then seek to secure their power to the point that they can force these economic and societal inefficiencies onto society.

Always it is foisted and sold as "progress" and "improvement."

Of course it must be forced! 

Why?  Because those doing the foisting KNOW it is neither progress or improvement!  It is simply a means of securing power and exercising control.

It's been said that if all wealth was confiscated from everyone and then returned in exact equal amounts to all - it would not be long before society would be as economically stratified as it is now. 

Mostly those who are rich now would be rich again.  Mostly those who are dependent now would be dependent then. 

Sure some might end up richer than before.  And those who inherited their wealth without any idea of how to produce it again would likely end up in a lesser condition.

But for the most part the strata we see now would re-emerge.

Why?  Because of Calhoun's first statement above.  People "differ greatly from each other in..." and he lists many ways.

How can "leaders" legislate motivation, and energy, and dreams, and desire and all those things that make us individuals?  THEY CANNOT!  

How can "leaders" spread around the wealth such that all benefit and all enjoy a more closely "equal" condition?  THEY CANNOT!  

How can "leaders" pass enough laws to prevent the thieves and scammers from taking from others to provide for themselves?  THEY CANNOT!  That scum has always been with us and will always be, no matter what laws are passed and how "equal" society is said to be.

What a myth that any of this is possible!

Now I happen to disagree with the second half of Mr. Calhoun's statement!  He lived in society where there was no public dole!  There was no entitlement mentality!  There was no political party deriving its power from how many they could convince the myth above was alive and well!

Calhoun thought those in the rear of the parade were always striving and trying harder to make their way to the front.  He called that the "greatest impulse of progress."

But if it was the "great impulse" then, it is not so now!  The very gubment we have now spends much of its time and energy, and our money, developing ways to convince more and more of our citizens that their present condition is caused by the "rich," or whomever else, and that they are entitled, ENTITLED, to receive that taken from others instead of providing for themselves.

Look around the world where things are not working so well financially or economically and you will see this mentality to be more deeply ingrained than here! 

If you want to see the future of our society, and the direction it seems to be taking, look at countries like Greece where they riot if their financial bureaucrats even speak of putting a small piece of their entitlement pie onto a different plate!

I wish the parade truly was like Mr. Calhoun experienced, where those in the rear ranks were using their Constitutionally-protected freedom, and individualism, and personal leadership to better their personal conditions and move forward in the ranks with regularity.

To ask:  do YOU think we will get to that place again?

GETTING BACK TO THAT PLACE WILL TAKE TRUE LEADERSHIP!

The Multiplier Theory of Marbles

"I learned long ago that if you take marbles out of the marbles game and put them into a pile on the side they aren't being used in the game."

Judith, the Hairdresser

That was very impressive to hear!  It was The Multiplier Theory of Marbles!

This weekend I had occasion to go to the hairdresser.  No, not for me.  I went to spend some of the business profits that I am paid and call discretionary money.

As the benevolent capitalist in my family, I go into the market place every day to apply and multiply my talents in favor of pecuniary return, which I call profit.  I was asked if we could spend some of that profit on the family hair.  Being a capitalist, but a benevolent one, I agreed.  And was dragged along to the hairdresser as we had more than one thing to do.

The salon had eight chairs, and only one was being used.

As the members of my family were waiting to be helped, the first in line to receive us was a hairdresser named Judith.  Judith was older than any of the other employees in the salon, 50s I guessed, and not festooned with the same flamboyancy of hair or dress.  Interestingly, the youngest member of our group liked Judith immediately and sat down.

In such circumstances I like to poke my beak into the nest to see how things are going.  Since there were other chairs available, I waited a while and then pulled one up and sat down.

Judith was very pleasant and I began talking with her.  I asked my favorite question - "How's business for you Judith?"  (I like to use the person's name - it was on her name tag.)

She frowned.  "People don't have as much money as they used to.  So much is being taken from us we are all having a hard time just living.  Fewer people show up like you have.  I learned long ago that if you take money out of the marbles game and put them into a pile on the side they aren't being used in the game."

Wow!  I had never heard the economy referred to as that before!  Here she is struggling in a micro-economic circumstance, with her many empty chairs, and simplifying the macro economy down to a game of marbles!

She went on.  "When so many marbles are taken out of the game, the game slows down, fewer people are interested in playing.  And it's harder to win the marbles that are left.  And that pile on the side no longer used in the game isn't helping it at all.  I don't care what they say, things aren't getting much better."  

That is pretty astute economic analysis!  I said, "Do you know what that is called in economic terms?"  She did not.  I said that when money is left in the economy it has its own velocity as it travels around the economy, used for this and that.  It is used for basic economic activity.  People have more to be able to spend more, people invest more, and people use it to start businesses.  More money for investment leaves banks with more to lend.  As they lend, and that money gets used in business start ups, it is called the "multiplier theory of money."  The money creates activity which creates more money which creates wealth.  The economy grows.  The money is essentially multiplied!  

Removing so much from the economy, or the game of marbles as you put it, there is less floating around and less for economic wealth creation.  There is less money for people to get their hair done.  And the money is negatively multiplied.  Less is created.  The economy slows down.  There are, as you say, fewer marbles left.  And yet they want to make the pile on the side even larger!

"Isn't that the truth!  You really explained it to me!"

No, Judith, you explained it about as well as I have ever heard!  She understands and explained 

THE MULTIPLIER THEORY OF MARBLES!

Here we have a nondescript hairdresser in a nondescript hair salon understanding macroeconomics in a way few do.  She has woken up.  Small business truly is the engine of the economy.  Judith wants the engine to make things go.

I think more and more people are beginning to wake up to free enterprise.  Is it in time?

Clunky But Savvy Free Enterprise

"Because I do more stuff."

Jay, the Lawn Care Specialist  

As a kid I did a lot of different things to make money. 

I started delivering the morning paper at 12.  At that age I was so small the bag nearly dragged on the ground.  Later in the morning I mowed lawns in the neighborhood.  Then during the afternoons we went to local golf courses and got golf balls out of the lakes to sell back to the golfers.  At night, on the weekends, I flipped hamburgers at a Burger Chef, and was a cashier before the cash register told you how much change to return.  At the end of the day my tray was always perfect.  Which was important as I had to pay back any deficit!  And I only made $.95/hour.

Of course, I rode my bike everywhere.

When I asked my mother if I could start mowing neighborhood lawns she said yes, but that I had to buy the lawn mower.  She would pay half because I would use it to mow our lawn too.

It disturbed me she wouldn't pay me to mow our lawn.  "It's OUR house..." is what I heard.

She also said I had to buy my own gasoline and lawn-care tools.

There was a lot of competition in the neighborhood.  Even a girl up the street.  Her father bought her a lawn mower and she was mowing a couple of lawns.  The nerve that a girl thought she could mow lawns!  Of course, she was bigger than I was and could probably beat me up, but still, what nerve!

I HAD TO FIGURE OUT HOW TO GRIND OUT THE COMPETITION.  ESPECIALLY YOU KNOW WHO.

In print shop at school (7th grade) I designed and printed my own business cards.

I selected, set and blocked the type, spacing and centering it in each line and the card, pounded it level, chose the very professional color and printed 250 one by one on the hand printer with the lever.  (This is 1966)

Sure, it's a clunky card!  But I was the only kid in the class to print business cards!

That one thing says a lot about me.

Then I needed a lawn mower.  I picked out and bought a Toro, with a side bag.  It was a beast!  And I was so small I could hardly push it!

The business needed more capital.  A gas can was essential.  And tools!  I needed tools!  Having none of that I needed to borrow money from the bank (Mom), which I had to pay back with the other money I was making.

Going to the hardware store, I picked out the sturdiest, high-tech tools I could find.  Everything was done by hand, of course.  The grass edgers had pads on the handles to make them more comfortable!  And we already had a rake for clean up. 

In those days there were no huge, plastic bags, so the homeowner's metal trash cans had to be used for clean up.  But when full it was too heavy to move, so I would position it at the street so the "trash man" could empty it.  Then I raked debris into small piles, carrying each one by one to the trash can.

My business was ready to market!  My tactic was simple.  I went door to door where I knew there were no kids to mow the lawn.  I knew my business had to be different than the other kids who mowed lawns.

This was my door approach.  Ringing the bell (which was mostly a ringing buzz) I put on my best puppy-dog eyes.  My spiel was simple - and always polite.  Handing them my business card I would say something like, "Good morning.  My name is Jay and I have a lawn-care business.  I would like to mow your lawn and take care of your garden and bushes."

The next question was always something like why they should hire me instead of somebody else.  Not realizing my answer was not very savvy, but nonetheless it demonstrated the essence of free enterprise.  I would hold up my hand edgers, smile and say,

"Because I do more stuff."  

Not exactly the smooth operator a more adult individual would be, the little entrepreneur at the door had handed over a business card and set himself apart in the marketplace.  I did more stuff than the other kids would do!

To seal the deal the follow-up would be, "I will clean the yard, put your grass in the trash can, clip your bushes, pull the weeds and edge your whole sidewalk.  I have my own tools and I will come whenever you want."  I guess I was savvy after all!

Like the butcher, baker and beer maker providing someone a better-than-average dinner, I WAS ACTING OUT OF SELF INTEREST.

And I mowed half my neighborhood, as much as I could handle.  And along the way I learned a lot about diligence, customer care, promptness, dependability and yard care!

Oh, I charged $5.  The other kids were getting $2 and $3, maybe $4 for a corner yard. 

I GOT MY PRICE.