Entrepreneurs and Their Gifts; J. S. Shaw

Most of them don't have a craving for seafood, since Montanans grow up on hamburger or beefsteak. And the proprietors aren't selling mere seafood-they are selling exotic prepara tions such as blackened red snapper and blue fin tuna! But that's the way it is with entrepreneurs. They take unpromising locales and rough raw materials and try to fashion them in accord with an idea glowing in their minds - a new of fering that will appeal to the customers that Jane S. Shaw is Senior Associate of the Political Economy Research Center and was previously Associate Economics Editor at Business Week. they believe (against all odds) are there. That's why author George Gilder calls entrepreneurs "givers," people who give first and receive re wards later-and they are rewarded only if people voluntarily pay for what they've been offered. Frequently, few people choose to pay and the business doesn't last very long.

Sometimes, of course, enterprises succeed. Times change, new people move into town, tastes develop. Maybe this time it will work. Thanks to an ever-renewing crop of such en trepreneurs, little Bozeman has riches beyond anything one could rationally expecta store devoted exclusively to doll furniture, a nursery that supplies African violets only, two upscale kitchen boutiques, three high-toned wine shops, and a book store that carries the New Yark Times Book Review and books by Anne Tyler and Barbara Pym. The trouble is, a lot of shops don't last very long. At anyone time, the Bozeman you see is a snapshot that will never be the same again. In the past two years, I've seen restaurants, exer cise clubs, food stores, clothing shops, and fur niture outlets come and go. Shops rarely go bankrupt. According to Dun and Bradstreet, all of Montana had fewer than 200 bankruptcies in 1985. But businesses change hands frequently and for little cash. A flower shop, I hear, sold for $3700 several years ago-about what it had cost a few years before.

Statistics show that at anyone time, about one in seven of all the businesses in our county is less than a year old or has changed hands within the year. New optimists take the place of old ones, renting out empty storefronts as others close their doors. I used to worry when I saw a "going out of business" sign, antici pating a great loss, but now I know that some other expansive soul will replace the one who lost his shirt. An economist recently observed that we get more goods and services in Bozeman than we 125 deserve. What he meant is that-as a result of all these eager entrepreneurs-we don't pay the full cost of the goods and services we buy. Instead, the providers pay in the form of lost profits and lost fortunes. We, the consumers, are the beneficiaries. I haven't been able to determine whether the turnover in Bozeman is greater than in other places or just more visible. While Montana's bankruptcy rate is lower than that of the ma jority of states, bankruptcies are a relatively rare phenomenon everywhere, and bankruptcy figures don't begin to reflect the change of ownership that is so noticeable here.

If the turnover is greater here, it is because people like it here. The romance of the West and the freedom of the outdoors attract people. There isn't much in the way of employment, so people bring their own - using up their grub stake from back East to start shops, restaurants, and businesses. They run them until their pa tience or their money runs out. A business can't operate over the long run unless it makes a profit. But Bozeman's experi ence suggests that an endless succession of businesses can operate without profits - as long as there are romantic optimists to take up where the disillusioned leave off. Gilder says that entrepreneurs "orient their lives to the service of others." They may not mean to do it at such great expense to them selves, but as I sip chardonnay at Terrapin Sta tion and contemplate the blackened red snapper, I am grateful. D In Retrospect T he entrepreneurs are neither perfect nor good in any metaphysical sense. They owe their position exclusively to the fact that they are better fit for the performance of the functions incumbent upon them than other people are. They earn profit not because they are clever in performing their tasks, but because they are more clever or less clumsy than other people are. They are not infallible and often blunder. But they are less liable to error and blunder less than other people do. Nobody has the right to take offense at the errors made by the entrepreneurs in the conduct of affairs and to stress the point that people would have been better supplied if the entrepreneurs had been more skillful and prescient. If the grumbler knew better, why did he not himself fill the gap and seize the opportunity to earn profits? It is easy indeed to display foresight after the event. In retrospect all fools become wise.

-LUDWIG VON MISES, Profit and Loss IDEAS ON LIBERTY 126 Liberty and Individual Responsibility by Dwight R. Lee L iberty is both a highly valued outcome of a beneficent political economy, and . an essential ingredient into it. In some respects a consideration of the role of liberty as both output and input is straightforward. Lim ited government, serving to maintain the legal environment necessary for an economic order based on private property and voluntary ex change, provides fertile ground for individual liberty. And the lifeblood of a political economy characterized by limited government, private property, and voluntary exchange, is the flow of information that can be provided only when individuals possess a full measure of political and economic liberty. However, a careful examination of how a political economy based on classical liberal principles both nourishes, and is nourished by, individual liberty reveals a complicated interac tion between the social institutions necessary for liberty and the exercise of liberty. The exer cise of liberty, unless tempered by a responsi bility that can never be imposed entirely by a force external to the ethical convictions of the individual, will with time undeIU}inethe social institutions upon which liberty depends. A careful study of the political economy of liberty contains within it a warning of just how fragile is the foundation upon which liberty stands.