Tuesday, September 11, 2012

Total Nut Job Tries to Prove Peter Klein's Case

Well, I was going to let my debate with Peter Klein rest, but this is just too rich of an object lesson in one of the differences in my view of profit opportunities and Peter's. Remember, Peter's view is that because of uncertainty:
 there are no objective profit opportunities to be alert to.
Peter's argument is that because of an uncertain world, we never know for sure if an action taken will be profitable and therefore no objective profit opportunities. For example, it would be considered a profit opportunity ex-ante, in my view, if someone thinks, "Hey, I'll go down to the deli and grab a sandwich."

But, given his view, Peter could object to this by saying, "Well, there are plenty of uncertainties that would make this action a loss. The man going down to the deli could get stabbed in the butt five times by a stranger."

I would argue that while this is an extreme possibility, it is not likely to even cross the mind of the man who desires a sandwich. In my view, in the real world, we are many times being imprecise and that we may view something ex-ante as a profit opportunity that ex-post turns out to be a major loss.

I mean, who the hell is going to think about getting stabbed in the butt five times by a stranger while considering heading out to stand in line to get sanwich?

But a nut job did just that. NyPo reports:
A thug followed a stranger into a Queens deli and repeatedly stabbed him in the buttocks, cops said today.
The assault, seen on shocking surveillance footage, occurred inside the store on 63rd Road in Rego Park around 5:45 p.m. Sunday.
The video shows the thug – wearing a white T-shirt, grey sweat pants and a black cap – enter the store before quickly pouncing on his unsuspecting victim and violently stabbing him in the buttocks several times before bolting from the store.
Police said there doesn’t seem to be any motive and that the attack was completely random.
The victim was treated for his injuries and is in stable condition, cops said.




Is this a loss for the guy who headed into the deli for a sandwich, for sure? Peter can argue, "I told you so." I'm going to say that in an uncertain, imprecise world, where anything can happen, that we don't consider many situations when considering "profit opportunities" and if we act on those ex-ante "profit opportunities" we could end up with an ex-post loss and a sore bleeding butt. However, I want to emphasize in my view, ex-ante, this looked like a profit opportunity. i.e. a few bucks for a a sandwich and a coffee and that is what the sandwich pursuer was alert to, and the possibility of getting stabbed in the butt never crossed his mind, that is, it was not part of his calculation when he considered heading for the sandwich.

8 comments:

  1. Bob. I think your abstracting "profit opportunities" to trivial and inane examples are not very relevant to real life entrepreneurial activity that most people care about. I think that is where Peter's argument is much more persuasive than yours.

    When thinking of "entrepreneurship", I think of the theory of the firm (whether sole proprietor or multinational corp) and various stages of production that is better at calculating the right mix of opportunity cost within his production process given a world of uncertainty/risk. The study of entrepreneurship would be silly if it focused only on drones of merchants buying low and selling high (and vice versa). It's watering entrepreneurship down to basically viewing every "entrepreneur" as essentially a pawn broker.

    Maybe it's not obvious to you, but it certainly is to me the theoretical superiority of the Misesian/Knightian framework of entrepreneurship that is much more rigorous than the narrow lens of "arbitrageur/entrepreneur".

    Steve Jobs was not an "arbitrageur/entrepreneurs." Steve Job got rich because he was able to use his judgement while juggling risk/uncertainty what consumers wanted BEFORE THEY EVEN WANTED products he decided to produce.

    To conclude, I found this video by Peter Klein to be the most helpful exposition about Entrepreneurship and this debate in general.
    http://www.youtube.com/watch?v=P-j4TqoAOfI

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    1. "The study of entrepreneurship would be silly if it focused only on drones of merchants buying low and selling high (and vice versa)."

      Precisely. The speculator is equated with entrepreneurship in the Kirznerian view. But speculation is only a form of entrepreneurship, and because it bears the uncertainty of the future. Picking up a $10 bill on the ground is not entrepreneurship, as there is no risk of loss associated with the action in any relevant catallactic sense.

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  2. Have you located the whereabouts of Peter Klein yet?

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    Replies
    1. Sorry you can't keep up anon.

      http://bastiat.mises.org/2012/09/entrepreneurship-once-more/

      Delete
  3. Bob, read Peter's book, "The Capitalist and the Entrepreneur".

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  4. I guess I know who's going to be a guest on The Robert Wenzel Show next!!

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  5. Full.RSS.Feed.Please!

    ReplyDelete