Wednesday, October 29, 2014

How Israel Kirzner's Theory of the Entrepreneur Blows Brad Delong Out of the Water

Brad DeLong has a complex and generally uninteresting lefty West Coast-style post out defending former lefty West Coaster, now East Coast money printer, Janet Yellen, for her speech where she discussed the pet lefty  politically correct "problem"  of "inequality."

I don't want to discuss the entire post, but DeLong does write this, which I do want to focus on:
What I and everybody else in the economics community outside of Washington DC see as a fair-minded review of the issues surrounding how parental resources impact opportunity,
Although parental resources may present different types of opportunities. It is simply wrong to suggest that opportunities don't exist in poorer neighborhoods where, indeed, most parents are likely poorer.

One simple example of the differences in opportunities, though far from the only, is the fact that many athletes from basketball players to football players to boxers come from poor neighborhoods.

It is really difficult to expect that a Jewish kid growing up surrounded by wealth is going to, for example, pursue a career in boxing and turn into the next Mike Tyson or Macho Camacho. To be sure, there may be outliers, but the average wealthy kid is going to be too soft to play against a kid from the hood.

Once an ethnic group climbs out of poverty, their exposure to the environment that breeds the physical toughness is gone, and thus you see much less of them in sports, especially the most physically challenging sports. There are no  Jake LaMotta's and Maxie Berger's in boxing anymore.

I use sports as only one example, for sure there are many other obvious examples, including music, acting and comedy, where the poor environment helps brew huge opportunity.

I believe the opportunities for success in these environments goes well beyond these obvious examples. But it is the coddling of the left by the poor,which prevents many to look for and seek out the opportunities which are there. They are told the system is screwing them and that there is nothing they can do about it.  There entrepreneurial spirit is squashed.

For sure, government regulations cut off many opportunities but there are generally ways around such barriers. The real killer for the poor is the lefty chant that the poor are helpless. And this is where Austrian school economist Israel Kirzner's observations about entrepreneurship are so valuable (SEE:Austrian School Economist Named as Possible Nobel Prize Recipient) . Specifically, his observation that one does not need capital, but only know how to get access to capital, to be an entrepreneur, removes the false barrier put up by lefties, and many others, that entrepreneurial success can not be achieved without rich parents or already held capital.

Kirzner's observation, that personally owned capital in not a requirement of an entrepreneur, is a nuclear bomb on the lefty thinking that if you don't have a rich daddy you are screwed.


  1. Bob,

    " there are many other obvious examples, including music, acting and comedy, where the poor environment helps brew huge opportunity."

    I have an acquaintance once who told me, "White people can't play jazz." While I disagree with the statement as is, the point he was trying to make is that one has to struggle in life to a certain extent to develop the sound necessary (aka soul) to excel in jazz music. If one looks back through the history of jazz, it is plain to see that black players are far and away more prolific.

    Of course, your racist buddy Doc Webster has a little different perspective on the situation to consider, LOL!

    Another gaping hole in the jazz world (that surely upsets the libbies and libwaps) would be women. Yes, there are many great jazz singers who are women, but how many of the great players of instruments in jazz history are women? (Should we just round it off to zero?) Further, how many great jazz singers are white women? Very few...

  2. This compliment the above article quite well, Bob: