A nation founded on entrepreneurship.

The American economy and society, deeply rooted in entrepreneurship, reflect a deliberate creation by the nation’s founders and early leaders. This entrepreneurial ethos, a pathway for personal growth, innovative ventures, and nation-building, served as a cornerstone for the United States. Dr. Samuel Gregg, in “The Next American Economy,” and Cyrus A. Ansary, in “George Washington Dealmaker In Chief,” both highlight the pivotal roles played by the Founding Fathers in fostering this environment.

  1. Legal and Constitutional Foundation: The Constitution established a stable legal framework essential for economic activities. It protected property rights, enforced contracts, and implemented a system of checks and balances, creating a reliable and predictable environment for entrepreneurs.
  2. Emphasis on Free Trade: Contrasting with the restrictive British mercantile system, the founders advocated for open trade policies. They recognized the critical role of free trade in stimulating economic growth and prosperity.
  3. National Currency and Central Banking: The establishment of a national currency and a central banking system was pivotal in stabilizing the economy and supporting domestic and international trade.
  4. Protection of Intellectual Property: Intellectual property rights were enshrined in the Constitution to promote innovation and entrepreneurship.
  5. Infrastructure Development: Recognizing the importance of infrastructure, the founders invested in transportation systems, such as roads and canals, vital for commerce and economic development.
  6. Balanced Regulation: While advocating minimal government intervention, the founders understood the need for regulation to ensure fair competition and protect public interests.

Washington’s approach, as detailed by Ansary, combined his entrepreneurial spirit with a commitment to embedding these principles into the national fabric:

  1. Economic System Transformation: Washington established a system encouraging innovation and business formation, distinct from the British colonial model.
  2. Nationwide Entrepreneurial Environment: Drawing from his business experience, Washington’s policies were tailored to nurture an entrepreneurial spirit across the nation.
  3. Strategic Economic Development: His vision included transforming society into one conducive to entrepreneurship, leveraging the era’s technological advancements in land development and transportation.
  4. Government’s Role in Business: Washington worked to eliminate barriers to entrepreneurship, such as compulsory servitude and debtors’ prisons.
  5. Support for Copyrights and Patents: Understanding their importance, he championed the creation of a system to protect and encourage innovation.
  6. Infrastructure and Financial System Establishment: His leadership was crucial in developing transportation infrastructure, the National Bank, and a credit system, laying the groundwork for a robust economic environment.

This dual focus on institutional frameworks and individual leadership by figures like George Washington has been fundamental to the enduring entrepreneurial spirit of the United States, a key aspect of American exceptionalism.

The Value Creators Podcast Episode #30. Kartik Gada: The Impact Of AI on Entrepreneurship

Hunter Hastings and Kartik Gada discuss the transformative dynamics of the digital economy and its profound implications for society, economics, and governance. Kartik Gada provides a compelling analysis of how the exponential growth of the high-tech sector is reshaping traditional notions of supply, demand, and pricing, highlighting the unique characteristics of digital goods that defy conventional economic models

Through a deep dive into the future of taxation, entrepreneurship, and individual specialization, they explore the disruptive potential of AI and automation in revolutionizing the way we work, create value, and interact with the economy. Kartik emphasizes the significance of cybersecurity and ethical considerations in the digital age, and the use of technology to ensure fairness and safety for all participants.

Resources:

Book: ATOM: It is time to upgrade the economy
ATOM on YouTube
Kartik Gada on LinkedIn

Knowledge Capsule:

Kartik Gada is a futurist. He analyzes current and past data and trends to forecast what will happen in the future, and he has built a formidable track record. He joined The Value Creators podcast to talk about the future of entrepreneurships, of economics and of government.’

We are living in an era of ever-expanding entrepreneurship

  • Technological disruption creates new opportunities for entrepreneurs.
  • The only profession that never gets displaced by technological disruption is entrepreneurship.
  • What makes a human redundant for a certain task is, simultaneously, free money for the entrepreneur.
  • Automation makes revenue streams cheaper to generate for entrepreneurs, increasing the profitability of entrepreneurial activity.

Entrepreneurship should win out and result in a more decentralized economy, less dominated by big business – but government gets in the way.

  • The first principles of the accelerating technological disruption (Kartik calls it ATOM – the accelerating technonomic medium) are in favor of entrepreneurship.
  • But nation states are a countervailing force – a cartel of governance that doesn’t want to give up power.
  • Big corporations find it easier to enter into protection agreements with governments (e.g. vis lobbying for favorable legislation) rather than undertake open competition.
  • The switch from centralization to decentralized entrepreneurship will be turbulent as a consequence.

Accelerating technology favors the emergence of new business models.

  • Smaller and smaller teams can produce software and make money.
  • Social media is an example of providing celebrity influencers with the tool to generate profitable revenue flows.
  • AI will be a supercharger, making otherwise unprofitable revenue streams into profitable ones by reducing labor costs.

More and more industries are arriving at their disruption point.

  • Economic growth has been slow until now. For 5000 years it was zero, but continuous improvement in technology pushes growth rates up.
  • The higher the percentage of technology in the economy, the higher the growth rate.
  • No industries are immune to the effects of technology.
  • At the macro level, the effect is higher growth. At the micro level, it’s the accelerated disruption of existing industries and firms.

Education is an example of an industry ready for disruption.

  • Education (especially higher education) is an example of an industry attempting to create false scarcity which will be unable to withstand the technological provision of abundance.
  • The english speaking world alone has a million schools with millions of teachers teaching the same thing every day.
  • Technology can replace this wasteful duplication – giving all children access to all the education they can consume.
  • Higher education aims at gouging people with a scarcity-based model that is redundant.
  • Hiring corporations will change their recruitment practices to hire smart students prior to university and educate them internally. After a couple of years they’ll have both practical knowledge and an understanding of firm culture, making them extra-valuable employees.
  • It will be a modern version of apprenticeship.

Healthcare is another.

  • Patients already prefer ChatGPT to their regular doctor visit.
  • ChatGPT answers unlimited questions and isn’t trying to get rid of you for the next patient.
  • Access is 24 hours a day and there’s no need for an appointment – no need to spend 2 hours traveling and waiting for a 10-minute appointment.
  • Eventually, AI will disrupt the pharmaceutical industry too – most pharmaceuticals are just a reverse engineering of something that exists in nature, in plants, and AI will give access to this information.

Accelerating technology produces deflation; central bank money printing offsets it.

  • Technology always brings cost reductions; as it becomes a great part of the economy, this will be deflationary.
  • But we have a debt system, and deflation can be disruptive in this context: less cash available to pay debt.
  • Government central banks should increase money printing to address this problem.
  • Since demand for the dematerialized products of technological acceleration can grow to infinity, central banks will need to increase money printing far beyond its level today.

AI should pay taxes, not humans.

  • Governments cause the biggest problems for the new technological era through their fiscal behavior.
  • They spend more and more on the low tech welfare state, and they use taxation of productive human beings to pay for it.
  • But if AI can replace human workers, then AI should pay the taxes.
  • Eventually technology will replace the welfare state. Many services are already free in the technology realm, or paid for indirectly through pure exposure to advertising.
  • Google already provides free food and access to wellness services for its employees.
  • Governments build power over citizens with the income tax model and will be reluctant to cede it.
  • But they won’t be able to hide their colossally wasteful inefficiency from citizens who are familiar with tech services.

The Value Creators Podcast Episode #29. Raushan Gross on Entrepreneurial Value Creation in the AI Economy

Professor Raushan Gross, who teaches Business Management And Leadership at Pfeiffer University, has focused his most recent research on the impact and influence of A.I. on entrepreneurship. He published some of this research in a series of articles at mises.org. One of them links A.I. to The Wealth Of Nations, and, of course, the wealth of nations is driven by entrepreneurship. From this vantage point, Professor Gross identifies the multifaceted impact of AI on society, economics, and business strategies, advocating for a paradigm shift in management thinking to adapt to technological advancements.

Resources:

The Fate or Wealth of Nations: AI, Robotics and Automation

Will AI Learn to Become a Better Entrepreneur than You?

Prices, Food, Employment: AI and Robotics Are for Regular Folks, Not Just the Elite

Would You Hire an AI-powered McRobot or a Human Employee?

Artificial Intelligence Enhances Consumer Sovereignty

Artificial Intelligence Can Serve Entrepreneurs and Markets

The Fear of Mass Unemployment Due to Artificial Intelligence and Robotics Is Unfounded

Show Notes:

0:00 | Intro
2:27 | Exploring AI’s Impact on Entrepreneurship
7:18 | Can AI Surpass Human Entrepreneurship?
8:48 | Exploring AI as a Service and AI Stacking
12:08 | AI as a Team Member in Entrepreneurship
15:10 | Small and Medium Businesses Can Embrace AI for Strategic Advantage
17:13 | Transition to Autonomous Decision-Making with AI
21:13 | Concerns on AI Centralization and Oligopoly
25:15 | Adam Smith: Global Scale AI is the Wealth of Nations
26:40 | Elon Musk on Value Creation: the Value Meter
29:14 | Does AI Redefine Management by Value Metrics?
32:14 | Wrap-Up: Rethinking Management in the Digital Age

Knowledge capsule

AI changes how individuals and entrepreneurial firms interact with the market.

  • We can’t be sure of the form the interaction will take.
  • But we know that we are using AI in every market transaction
  • While some individuals have doomsday visions of AI, entrepreneurs ask, “How can I use this to improve my business and how I serve customers?”

Human ingenuity will always be a critical and irreplaceable part of entrepreneurship.

  • AI is an active tool for entrepreneurs.
  • It will be a competitive factor in servingand delighting customers.
  • It’s a service to entrepreneurs to help them succeed.

Entrepreneurs can assemble and combine bundles or stacks of AI services into complete business models.

  • Austrian economics explains how entrepreneurial business consists of combining and recombining value-facilitating assets.
  • This is precisely how entrepreneurs utilize AI.
  • There’s no need to own the assets, just to control them and their value direction, and this is the business service that today’s AI tools offer.

AI can be a team member in value creation teams recruited by entrepreneurs.

  • Most productive work is done in teams.
  • AI can be a team member, bringing new knowledge, querying and challenging existing knowledge, and helping to advance knowledge-building at speed.
  • AI can also automate a lot of implementation processes, freeing entrepreneurs to focus on creativity and innovation.

AI will also play a role in technological deflation.

  • While governmental monetary and fiscal policy creates inflation, the role of the entrepreneur and technology is deflationary: making production faster and lower cost with improved quality.
  • AI will contribute by lowering the costs of doing business.
  • Entrepreneurs will be more empowered and the general level of well-being will rise.

Any risks lie in the danger of centralization of AI.

  • Will governments centralize AI under their singular control?
  • WIll the massive investments required in building AI server farms and databases and LLM’s result in a few corporations controlling AI for the whole economy?
  • It’s more likely that entrepreneurs will be able to build their own models using base LLM as a platform.

One of Elon Musk’s innovations points to AI as a “value meter”.

  • Algorithmic management at Tesla includes the ability of AI to assess the real time value creation product resulting from a team’s work with the resources at its disposal.
  • The AI can simultaneously scan all the other value creation opportunities available at the same time and reallocate teams and resources to higher value uses.
  • In this way, AI acts as a “value meter” for the productive activities of a work force and factory.

Global Competition in AI:

  • There will be a global race for AI dominance among nations.
  • Those nations that are most  energetic and innovative will shape the future landscape of AI development.

The Value Creators Podcast Episode #28. Chet Richards: Certain To Win

Chet Richards discusses the intersection of military strategy and business leadership, offering valuable insights for navigating complex environments. Emphasizing the importance of agility and adaptability, Chet explores Colonel John Boyd’s OODA Loop concept, highlighting the need for continuous observation, orientation, decision-making, and action. 

He underscores the role of leadership in shaping organizational culture, driving innovation, and maintaining an external focus for sustained success. The idea of being “certain to win” is derived from Sun Tzu’s teachings, emphasizing the importance of constant self-evaluation and continuous self-improvement, conducted from an external perspective.

Resources: 

Chet Richards on LinkedIn

Certain To Win: The Strategy of John Boyd Applied To Business

Zen Mind: Beginner’s Mind: 50th Anniversary Edition

Show Notes:

0:00 | Intro
3:00 | Chet’s Perspective of Strategy: Strategy is about people
09:22 | Vision: Attraction and Uplifting Spirit
17:08 | Centrality of Time in General
25:14 | Helping Companies with Reorientation: Many-Sided Implicit Cross-Referencing
29:15 | Old and New Experiments and Allocating Resources for Success
33:34 | Ambi Dexterousness: Chaos Theory, It’s Called Explore and Exploit
41:52 | Culture as Opposed to Organization
42:24 | Wrap-Up: Culture as Developing External Focus and Acting on It

Knowledge Capsule

Strategy is about people.

  • It’s an error to think about strategy in terms of numbers (like market size and shares), spreadsheets, or plans and analyze competitive strengths and construct competitive advantages. 
  • Strategy is entirely about people and how they work together.

People should be “stoked up” and in harmony.

  • Ask if the people in your firm are “stoked up” – inspired by a shared vision, energized by a shared mission, and excited about what can be achieved.
  • And are they in harmony – fully aligned and all pulling in the same direction?

The harmonious team maintains an External Focus and an Open System:

  • Leaders emphasize the significance of maintaining an external focus in business.
  • Leaders operate as open systems, avoiding internal entropies.
  • Stress the importance of adapting to external changes for organizational success.

If these conditions are met, the externally-focused firm can move forward towards success, whatever the chaos of the world.

  • Unexpected events, surprises, setbacks, and unplanned opportunities represent the natural state of the world.
  • Different people within the firm will react differently, but if they are all pointed in the same direction towards a shared goal, a creative shared response to the changing environment will emerge.

Challenges in Maintaining External Focus:

  • It’s hard to maintain an external focus over time.
  • Highlights the role of leadership, particularly the CEO, in initiating and maintaining external orientation.
  • Emphasizes the need for tangible actions, mechanisms, and a culture encouraging an external focus.

Bureaucratic Challenges:

  • Internal bureaucratic hierarchies represent a challenge for the externally oriented firm.
  • There’s an inevitable tendency for individuals to prioritize internal career advancement.
  • This has a negative impact on innovation when internal orientation prevails over external market dynamics.

Cultural Strategy:

  • Think of “culture” and “strategy” interchangeably.
  • Culture plays a critical role in organizational success.
  • Culture aligns with the principles of harmony and orientation, essential for an effective strategy.

Portfolio of Experiments:

  • A business is a portfolio of experiments.
  • Discusses Lockheed’s skunkworks approach as an example.
  • Notes the challenge of maintaining viability for experimental endeavors alongside established operations.

Certain to Win Philosophy:

  • Chet Richards derives the concept of Certain To WIn from Sun Tzu’s teachings.
  • Focuses on constant self-improvement and self-evaluation.
  • Advises leaders to concentrate on fundamental aspects, harmonize efforts, and remain open to creativity.
  • Winning consists of passing one’s tests, not those of others.