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Confessions of an intellectual who "failed in business"

By Daniel M. Ryan
web posted January 14, 2008

"I'm Daniel M. Ryan, and I failed in business." This kind of Alcoholics-Anonymous approach is generally verboten in business ranks, because it implies giving up. There's a certain sense in that avoidance, as AA is designed for giving up something that's become harmful to its members. Since business really cannot be compared to alcoholicism, except through ad hoc "oughtas," it's no wonder that the confessional approach is avoided.

The trouble with doing so, though, is that the obstacles to becoming entrepreneurial-minded are not talked about, unless they can be wrapped into obstacles faced in a "happy ending" story. The ones who really got themselves into a rut tend to keep quiet about it – with one glaring exception.

Had we still been living in a free-enterprise society, leaving this mire as it was would be all right. It would have been subject to the same common sense particular to a free economy: some people have it, others don't. Some people are at home in the business class, some people learn the tricks, and others just don't belong there. That would be the end of the story; all else would be seen as vanity or disappointment - or as braggartry and Babbitry.

Not nowadays, though. The fact is that certain people, who "fail in business" because the economic world did not conform to their carefully thought-out plans, tend to get an easy ear turned their way from the government cheque-dispenser. It's easy to infer who gets the easy ear: just ask what it takes to put together an application for government support, and ask yourself what type of businessperson, or would-be businessperson, would rather like the procedures that must be followed. Doing so will reveal who gets the most sympathy, and the most support, from government programs that are designed to "help [a kind of] business."

I don't know if I fit the requisites; I probably don't. Rather than being a careful forward-planner, I'm more of a shoestring type. I didn't have any resistance to business, and I tend to be ‘pro-business' in orientation. So, looking for any secret "anti-business attitude" inside my psyche would be a fruitless quest, unless the goal of doing so is to reinforce a stereotype.

Actually, a business-minded person looking at my endeavours would probably say that I made the typical tyro's mistakes. Undercapitalized; insufficient attention paid to the competition; disguised hopes ‘n dreams. That assessment would be true on the face of it. Unfortunately, though, there are some people who are undercapitalized, and don't seem to pay that much attention to the competition (although they would if sales dropped,) whose hopes ‘n dreams tend to be realized. I am obviously not that type of person.

The reason why is, I'm actually too long-term in orientation. In order to bootstrap yourself from broke to viable as an entrepreneur, you have to live in the short term. Making the next sale is paramount.

That's why codes of ethics are often sold to would-be bootstrappers as practical rather than "the right thing to do." Short-termism does tend to lead to unethicality if not contained. Behaving ethically is, of course, consistent with a long-term approach. Any would-be entrepreneur who is pegged as an ‘old woman', or something along those lines, has actually been pegged as too long-term-oriented for gut-level entrepreneurship.

A writer faces a certain difficulty. Someone whose true métier is writing will find it hard to get with the hype, unless he or she uses a nom de vende – a "name of the sale." Doing so means a writer is less constrained by the fear of "sullying his/her name," or (to put it less romantically) clashing with his/her career as a writer through splitting the brand name. That obstacle can be gotten around with the above technique.

In my case, though, I found another barrier – a mental block – that prevented me from taking off as a quick-off-the-gate entrepreneur: I avoided the "sure thing."  This sentence all-but sums up my difficulties. Strangely, the source of it is school – no, not because of any anti-business content, which I've effectively shaken off, but the method. I'm too "text-book habituated." The same process which makes learning easier makes entrepreneurship seem "unseemly."
 
This bias doesn't necessarily lead to an anti-business orientation: amongst the pro-business "bookworm," it tends to lead to an unfounded suspicion that something inevitably will go wrong with the "sure thing." (By this phrase, I mean a quick buy-and-sell for a profit, or unbundling a wholesale lot to sell at retail – a kind of goods-arbitrage.) After all, don't our economics classes all rub in the point that there's no free money lying on the street, implying that any "free money" must be ipso facto worthless?

In and of itself, learning this fundamental lesson of economics doesn't imply the ruination of a fellow as an entrepreneur. It could merely imply that there's a risk attached to the "sure thing." On the face of it, the no-free-lunch rule tells us that "sure things" fall apart from time to time. There's nothing in it that says that "sure things" must fail all the time. Immersion in economics can't be faulted for shorting out a would-be entrepreneur in that way.

The real cause, I now realize, is habituation to lesson plans. The "sure thing," or opportunity to make a profit through buying and selling as based upon presently-available data, looks an awful lot like looking up the correct answer in the textbook – or like asking the teacher, or a fellow student, for it. This comparison is one that the pro-business student, as well as the anti-business student, is prone to make. The idea that an entrepreneur is providing a valuable service through simple arbitrage just seems too unbelievable for those who grew up with, and are used to, lesson-plan study. Those who don't like business that much have their preconceptions reinforced by this disjoint. Those who do like business tend to decide that they don't have the right touch.

Except in one area that's known to be full of peril and failed plans: the stock market. The intellectual who would shrink away from collecting a profit on a wholesale-lot split wouldn't mind a speculative profit at all. Why? Because the investments market is the farthest thing from "boosting heaven" that there is. It isn't uncommon to show a loss on the first trade, and this anchoring takes away any squeamishness about collecting a later profit. It's too evident that there is no "textbook in the sky" that'll give a profitable answer, and the underlying obviousness is rubbed in when the first loss is realized. That's why intellectuals who aspire to be entrepreneurs tend to go to the harder arena of Wall or Bay Street to seek their fortune. It's not a question of seemliness or sullying; it's less violative of the anti-arbitraging taboo implanted in the mind of anyone who's done well in school through the reinforcements of the lesson plan. ESR

Daniel M. Ryan is a regular columnist for LewRockwell.com, and has an undamaged mail address here.

 

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