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A compendium of individual interviews and topical series covering a broad range of topics important to Austrians.

Mises Institute

    • Jan 4, 2022 LATEST EPISODE
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    Mark Packard On Entrepreneurial Imagination: You Can't Do Business Without It

    Play Episode Listen Later Jan 4, 2022

    Imagination is the first stage of any value generation journey — starting a development project, enhancing the customer experience, embarking on innovation, or building a business for the next year or the next decade. Imagination might sound like a fuzzy concept, but it's a robust business tool, the engine of the entrepreneurial design process. Mark Packard joins the E4B podcast to put imagination into a business context and describe the possibilities it opens up. Key Takeaways and Actionable Insights Imagination is central to entrepreneurs and entrepreneurship, and to innovation and advance in all aspects of business. We see business through mental models, as a kind of a movie our minds play for us. In this movie, we remember result and experiences from the past (which requires imagination) and we create images of what might have been, or, in the future, what might be. We know these images are not real, but they play through our mental model of business reality. They inform our plans and projects. We imagine cause-and-effect relationships between imagined concepts and ideas, and between actions and outcomes. From new product development to efficient administrative processes, every aspect of business involves — and requires — imagination. We can use imagination in simulating possible results. Not only do we employ imagination in our regular business activity, we also use it for advanced complex modeling. We add new inputs to what we have constructed in our imagination — in the form of “what if” queries - to create a new mental model that's different from the current one: a prospective reality that we can plan for and try to achieve. As we try to achieve that prospective reality, we receive feedback in various forms, which we use adaptively to further adjust and improve the mental model we hold in our imagination. Imagination is dynamic, always changing. Customers are also imagining, and entrepreneurs must imagine what they are imagining. We've highlighted in earlier episodes, the Value Learning Cycle that customers complete in the process of learning what to want and what to value (see The cycle begins with predictive valuation — consumers predicting to themselves how much value they'll experience from the product or service a business is pitching to them. That's imagination at work. If they buy and consume, value is an experience that results — and experience is a mental representation that includes imagination. Then in their post-experience valuation, customers adjust their mental model based on their new value knowledge. Future predictive valuations will be imagined with this updated knowledge. Imagination is central to customer expectations of value and to customers' decision-making. Businesses use three kinds of imagination to make a value proposition. Businesses develop value propositions for customers, utilizing 3 kinds of imagination: creative imagination (imagining the design of a future product or service that will deliver a valued customer experience); empathic imagination (imagining how the customer will feel as a result of the experience); and predictive simulation (imagining what the world will be like after pursuing the contemplated action). Creative imagination is a combination of needs knowledge (what customers want) and technical knowledge (what can be produced with available resources). In both cases, more knowledge is an aid to the imaginative process. Similarly, empathic imagination can benefit from more knowledge about the customer's mental model, developed through relationships and conversations. Predictive simulation is aided by rapid learning from testing and prototyping and developing design artifacts (like landing pages and A/B tests) that enable interim simulations of customer responses. Imagination can't be shared but visions can. When we work on a team or in a firm, it's productive to be aligned on the imagined future at which the group is aiming and is working towards. Strictly speaking, we can't share imagination. Everyone's imagination is subjective and individual. You can't imagine what I'm imagining. What can be shared is a vision, because it can be described in words developed from a shared language. Of course, every individual may interpret the meaning of the words differently, but with repetition, explanation and persuasive presentation, the group can get closer and closer to shared meaning. The vision becomes a cultural artifact — how we think in this firm, what we aim for in this firm, how we see the future in (and of) this firm. Similarly, in selling value propositions to customers, businesses are trying to get those customers to share a vision. We persuade them with storytelling, whether it's in the form of advertising, or PR or social media or the words printed on a package. Rhetorical skills — being able to communicate in a way that enable other people to see and share a vision, and to adapt it to their own vision — are key to successful entrepreneurship. Some people are better at imagination than others — but you can work on the skill set. Many business icons are or have been symbols of great imagination at work, such as Steve Jobs in the past and Elon Musk today. They're better at seeing the future than others. But everyone who understands imagination at the foundational level, as Mark Packard explained it in the podcast, can get better at it, and train others to get better at it, too. Imagination is a simulation run through our mental model based on knowledge we possess. One important step is to improve the knowledge set available for the simulation — better quality knowledge, more accurate knowledge, more detailed or intimate knowledge. More needs knowledge and more technical knowledge will improve creative imagination. Keep up with new technologies and with consumer trends and marketplace developments. More customer knowledge will enhance empathic imagination. Spend more time with customers. Use qualitative research (such as the E4B contextual in-depth interview: to understand their mental model better, so that the empathic simulations you run through that mental model will improve. Predictive simulation is an act of imagination that improves with learning about what works and what doesn't. Run more tests and new kinds of explorations. Explore, explore, and explore more. Don't take your own predictions too seriously; rather, expect to be wrong in ways you never imagined. Be humble, be adaptive, be agile, and recognize that you do have to predict in order to act. Triangulate with what others are doing because they're imagining too, and they may have more and better knowledge than you. Try to reconstruct their mental models and assess whether they'd be helpful for you. Additional Resources Elon Musk's Imagination (Video): "Subjective Value in Entrepreneurship" by Mark Packard and Per Bylund (PDF): "Empathy for Entrepreneurs: How to Understand and Identify Customer Needs and Wants from Their Perspective" (PDF): "Mark Packard on The Value Learning Process" (Episode):

    Paul Gottfried: The End of the Old Right

    Play Episode Listen Later Dec 31, 2021

    The Human Action Podcast wraps up the year with none other than the venerable Professor Paul Gottfried! This is our final show focused on the Old Right, the early 20th century political tradition which animated later libertarian figures like Murray Rothbard. How was this great legacy of peace and freedom on the Right—the Old Republic—lost to Cold Warriors and neoconservatives? Nobody is a better sociologist of American conservatism than Dr. Gottfried, and nobody is more compelling and erudite when it comes explaining how the Right went so horribly wrong (hint: former Commies). Lots of great names discussed, from Rothbard and Nock to Kirk, Strauss, Jaffa, Buckley, Meyer, and even Gore Vidal. Don't miss this show! Additional Resources Read Professor Gottfried's work on Conservatism:

    America's Radical Revolution and the Constitutional Coup

    Play Episode Listen Later Dec 29, 2021

    How did a handful of colonies created by the European Old Order establish a unique nation conceived in liberty? In Episode 2 of the Liberty vs. Power Podcast, Patrick Newman and Tho Bishop discuss the lasting tension between the Spirit of 1776 and the Constitution of 1787. The results of America's successful war for independence is one of the most important victories for the cause of liberty, but the forces of power adapted to new opportunities. Patrick and Tho also discuss the career of the infamous Robert Morris, and follow the rise of two men who are determined to mold America into the European nationalist tradition: Alexander Hamilton and James Madison. Articles "America's Libertarian Revolution" by Murray Rothbard — "Bacon's Rebellion" by Murray Rothbard — "How the Constitutional Convention Vastly Expanded the Powers of the President" by Murray Rothbard — "The Founding Fathers' Coup d'État" by Albert Jay Nock — "Economic Determinism, Ideology, and the American Revolution" by Murray Rothbard — "Liberty and Property: the Levellers and Locke" by Murray Rothbard — Books Cronyism: Liberty versus Power in Early America, 1607–1849 by Patrick Newman — Conceived in Liberty, Volumes I-IV by Murray Rothbard — Conceived in Liberty, Volume V by Murray Rothbard, Edited by Patrick Newman — Movie The Patriot — To subscribe to the Liberty vs. Power Podcast on your favorite platform, visit

    Six Powerful Business Insights From Austrian Economics

    Play Episode Listen Later Dec 28, 2021

    We're highlighting six of our 2021 podcasts that have special value for value creators. We invite you to listen to the special year-end podcast, and to sample each of those we've highlighted here, review the Key Takeaways we provide as a summary for each one, and download the free tools that accompany each podcast. Per Bylund explains that all successful entrepreneurs are Austrians.Episode #143: "Explore and Realize (and Keep Exploring): How Austrian Entrepreneurs Generate Value on the Path to Business Success" (PowerPoint): Mark Packard joins Per Bylund to explain how Austrian Value theory enables entrepreneurs to radically re-shape business thinking for greater value generation.Episode #108: "The Value Generation Business Model" (Video) Matt McCaffrey outlines the Austrian approach to business strategy: emergent not planned.Episode #127: "Emergent Strategy Process Map" (PDF) Mark McGrath orients entrepreneurs to purposeful adaptation to emergence via the OODA loop.Episode #138: John Boyd's "OODA Loop Graphic" (PPT) Ulrich Moeller provides the organization design model for the adaptive entrepreneurial firm: it's boss-less.Episode #133: "The Future Of Organization Design" (PDF) Saras Sarasvathy pulls it all together in the form of The Entrepreneurial Method.Episode #131: "Better Lives and a Better Society" (PDF)

    Theory and History

    Play Episode Listen Later Dec 22, 2021

    In the first episode of the Liberty vs. Power Podcast, Tho Bishop and Patrick Newman take a deep dive into the intellectual framework of Rothbardian historical analysis. This includes looking at the "conspiracy analyst" as a praxeologist, identifying what personal incentives may motivate individual actors that directly influence government policy. Tho and Patrick also discuss the importance of history as a vital tool in what Murray Rothbard considered "the science of liberty," and look at how battles over issues like Critical Race Theory highlight the ways the progressive left have leveraged historical narrative to strengthen their political agenda. Cronyism: Liberty versus Power in Early America, 1607–1849 by Patrick Newman — Important Links "The Conspiracy Theory of History Revisited" by Murray Rothbard — "Murray Rothbard and Jacksonian Banking" by Leonard Liggio — "Coming of Age With Murray" by Hans Hermann Hoppe — "The Forgotten Greatness of Rothbard's Preface to Theory and History" by George Pickering — "The Fight over Economics Is a Fight over Culture" by Ryan McMaken — "How to Do Economic History" by Joseph T. Salerno — "The Case for Revisionism (and Against A Priori History)" by Murray N. Rothbard — Additional Reading Theory and History: An Interpretation of Social and Economic Evolution by Ludwig von Mises — The Economic Mind in American Civilization: 1606-1865, Volume One by Joseph Dorfman — To subscribe to the Liberty vs. Power Podcast on your favorite platform, visit

    Diana Jones: The New Management Model — Guarding Group Relationships

    Play Episode Listen Later Dec 21, 2021

    Human action lies at the core of the application of Austrian economics to business: how do people act and how can we develop the best understanding of why they act that way. We apply that thinking to customers, and we can also apply it to business organizations. If we are able to answer these questions well, we can develop a profitable business model and an effective management model. Our guest Diana Jones has a distinctive perspective about the management model that's based on understanding people's personal and private experiences rather than their place in the hierarchy or their formal role in the process. Key Takeaways and Actionable Insights Relationships are fundamental to all systems thinking, and to all business management. Sociometry is a tool to measure relationships. Sociometry measures relationships between people and within groups. The unit of measure is distance. People can feel close to each other and other group members, and this closeness results in certain types of behavior. People can feel distant from each other, resulting in a different kind of behavior. They can also feel close or distant to concepts, like the company mission or the annual plan, and to institutions, like the Board of Directors or the HR department or a firm's way of pursuing innovation. They can feel close or distant to colleagues in a meeting, or to the meeting purpose and agenda. Measuring and understanding relationship distance contribute directly to performance management. Sociometry reveals the disproportionate importance of informal structures over formal structures. It's easy to think of the formal organization chart as the model for managing a firm. Planning descends from higher levels to lower levels, along with instructions on how to implement and what to do. It's not how companies function in reality. What makes companies work is relationships. People form bonds with each other, and the bonds they form shape the work that they do and how they do it. The bonds are often forged via sharing of knowledge and experiences that are private and personal rather than business and process knowledge. Productivity comes from people connecting on shared experiences, so that these personal and private relationships become more relevant to business operations than the formal structures, such as hierarchy. When relationships change, behaviors change, and vice versa. When relationships shift, the whole business system shifts. Formal structures don't work, at least not in the way top management thinks. And the titles associated with hierarchical position can be alienating and toxic to relationships, symbolizing and reinforcing distance rather than closeness. Sociometry helps to focus on these informal relationships and especially on the most important ones that make a big difference: for example, to improve customer service. There's a role for leadership in this system of informal relationships, but it's not the one that generally taught or written about. Leadership can emerge amidst informal relationships, but it doesn't come from authority. Leadership is not to be confused with position in the hierarchy. Leadership entails the communication of vision and helping people understand it, share it, and do the right things to achieve it. The informal structure and its relationships make the formal structure work. The formal structure produces cynicism, anxiety, and reactionary behavior. The informal structure can eliminate these negative tendencies, unleashing untapped talent and enabling and refreshing the firm. Leaders help people as guardians of these informal relationships: monitoring, empathizing, and nurturing. Many people need help working in groups. It's typical practice in business management to assign people to groups: agile teams, project teams, product development teams, functional teams, and so on. It's seldom questioned whether or not individuals understand how to work in groups. Usually, they don't. They're unsure whether to speak up or be compliant, or whether conflict is valued to arrive at consensus or is to be avoided. This is one more element of Diana Jones' thinking and method that tells us that the traditional thinking of business organization and management process is mostly wrong. Hierarchy and formal organizational models don't work, titles and authoritative roles are counter-productive, and reporting relationships are irrelevant when compared to relationship distance / closeness. There's a lot of the traditional management model blueprint we need to scrap. The better route to exceptional team participation and team results is via empathy. In Economics For Business, which is the application of the principles of Austrian economics to business management, we allocate great importance to the use of empathy as a tool, usually in the relationship between a business or brand and its customer. For example, we use empathic diagnosis to understand a customer's dissatisfactions and unmet wants. In Diana Jones's model, empathy is an internal organizational tool. She deploys it in a sophisticated way that identifies four different types of application. Cognitive empathy: imagining and understanding how a person feels and what they might be thinking.Emotional empathy: accurately reading and sharing the feelings of another person, and reflecting on those feelings in a way that helps everyone involved.Compassionate empathy: going beyond understanding to taking action that helps people deal practically with difficult situations about which they're emotional.Group empathy: the capacity to read the emotional tone of a group that's sharing a challenging experience. The core competency is the ability to read people and their emotional tone or state. Diana Jones gives the skill a name: interpersonal perception. It's a skill that can be developed in a learning loop of experience, experimentation, curiosity, and intuition. Additional Resources "Trust-Distance Matrix: Assessing the Cost of Distance in Business Relationships" (PDF): Leadership Levers: Releasing The Power Of Relationships For Exceptional Participation, Alignment, and Team Results by Diana Jones:

    Victor Chor: The Journey From Flipping to Global High-Tech Brand Building

    Play Episode Listen Later Dec 21, 2021

    Entrepreneurship is fulfilling and exciting and inspiring. It's fun. It's learning. It's a sense of achievement. It's a journey. Economics For Business loves to spotlight individual journeys to illustrate what's possible, provide learning about how to create and grow opportunities, and to inspire new entrepreneurship. This week, we are joined by Victor Chor, who leads us on a journey from a hobby of flipping on eBay to creating a brand and orchestrating a high-energy global value generation community. Key Takeaways and Actionable Insights The journey starts with action — develop your “doing skills”. Victor Chor started his journey via “flipping” on eBay: sourcing items to offer for sale, and using sales feedback (what sells, what doesn't) to determine future offerings. He developed the “doing skill” (as opposed to a “knowing skill” that comes from formal business education) as he made more and more sales. Flipping was a hobby that became a business. What's the benefit? Well, it's fun. There's money profit. There's a sense of achievement. And there's learning. Experimentation is at the heart of entrepreneurial success. How do you find out what works? You experiment. Try this, try that. Learning results. Victor learned the products that sell best. He learned scaling, as a repeatable process yielding increasing returns. He learned the best feedback loops for adaptiveness — in his case inventory management and how to keep it low through accelerated sales. Experimentation is a learning loop: experiment, gather feedback, learn, improve, run more experiments. Adopting customer centricity is a further advance on the journey. To a large extent, Amazon, with its “customer obsession”, led the way in making customer centricity the norm for e-commerce and internet selling. They not only continuously raise the bar for customer service excellence in terms of quality, speed, convenience, availability, and range of choice, they also introduced wide ranging competition between 3rd party sellers on their platform. Competition is a virtuous circle for customer satisfaction: if one firm establishes an advantage or a superior offering to which customers flock, then competitors must improve their offering even more to re-qualify for customer acceptability. In this environment, entrepreneurs learn about continuous improvement and the need to create a unique customer experience that can establish some sustainable advantage. The ability to grow in sales revenues morphs into the design of unique customer experiences. A further advance in the mastery of customer centricity is to engage customers in product and service development — what we've been calling co-creation of value. Through surveys and e-mail marketing and just hanging out and talking with customers, Victor's team has developed an acute understanding of customer wants, needs and preferences. And the technology field lets us all think like customers. Victor points out that he and his team are all customers for the products they take to market. They're all looking for quality and convenience and technological excellence, all experiencing what inconveniences customers, and therefore even better able to serve their market. The next level of advance on the journey is brand building — imagining, designing, assembling, and marketing a differentiated branded offering. There is a transition point where a project can become a brand. A project to develop and deliver a high-function technology product can cross into the branded perception and branded experience area. Branding is the ultimate power in delivering uniqueness. A brand can establish a sustainable and unassailable perception. Victor Chor advanced into brand building through building his community. The people he hired into his growing business has ideas for establishing and growing a brand. Wholesaling and distribution and manufacturing partners contributed both ideas and capacity. Victor developed a very original concept of a brand as a representation of all the people involved together in the venture. His image for a brand is that “it's a ballroom”: set it up and throw a party in which many can participate and all are welcome to help shape new products and the future of the brand. Infinacore is the brand name around which Victor and his team have assembled their community. It's focused on wireless charging and related high-tech convenience: the brand mission refers to “making the wonderful world we live in as simple as plug and play”. This is a brand platform with unlimited future potential, based on how customers define simplicity and plug-and-play in the future, and how they judge what they find to be wonderful. Reaching out more and more widely expands opportunity and opens up new avenues. Early in his journey, Victor utilized the services offered via Alibaba. He made contacts, built up a buddy list, engaged in chat on the platform, and used the network to source products. Many of his contacts in manufacturing and trading companies stayed in touch over time. Some of them started their own venture and their own factories. Long term relationships developed, and links to capability and capacity multiplied and grew stronger. Everyone in this network is on their own journey, feeling what Victor called the “shared vibe” of connection and collaboration. Alibaba proved to be a catalyst for learning — for example, learning a shared language, learning to negotiate, learning to communicate, and learning working practices like minimum order quantities — and an opening of new avenues, such as contacts with factories that could provide white labeling opportunities and technology improvements for original products. Ultimately, Victor was able to develop a leadership skill in entrepreneurial orchestration: pulling together and integrating resources, people and processes in a value network dedicated to the shared pursuit of high-tech brand building. The journey is arriving at a new peak, but never ends. There's a new product / wireless charging system launch coming up for Infinacore. It represents a new peak in both technology and brand, a unique original design with new benefits. The Infinacore community has advanced to a new higher level. The company has refined its vision and mission, not simply as communication, but as a picture of the future around which everyone in the community can gather and in which all can invest their effort and emotional energy. It's ingrained. There‘s shared passion and shared emotion. This is the step that removes the anxiety of uncertainty. When the vision is shared and the mission — what the community does repeatedly every day to make progress towards the vision — is clear, then the future is not a scary unknown, but a goal towards which there is continuous advance. There's no fear. Additional Resources "The Evolution Of A Global High-Tech Brand" (PDF): Visit Follow Infinacore on Instagram: @Infinacore

    Tom Woods on the Old Right

    Play Episode Listen Later Dec 17, 2021

    We continue our look at leading figures from the Old Right with guest Tom Woods, who helped publish the late Murray Rothbard's The Betrayal of the American Right. Rothbard admired the courageous and revisionist voices promoting the Old Republic, and shared their antagonism for war and economic intervention. Tom and Jeff discuss great essays like Albert J. Nock's "Isaiah's Job" and Frank Chodorov's "The Ethic of the Peddler Class;" the latter a rousing defense of the merchant class against both bureaucrats and the country-club conservatism which would emerge under William F. Buckley. The old antiwar and anti-New Deal works of figures like Menken, Hazlitt, Howard Buffett, Chodorov, and Nock deserve far wider consideration, especially as the "New Right" spirals into the worst of Buckleyite foreign policy and know-nothing economics. You owe it to yourself to explore this great but underappreciated tradition. Additional Resources Read Rothbard's important work: Albert J. Nock's "Isaiah's Job:" Frank Chodorov's "The Ethic of the Peddler Class:" Jeff Leskovar on "The Psychology of Human Action:"

    Mohammad Keyhani: Strategic Entrepreneurship — The Smart Practice of Combining Business Theories for Marketplace Success

    Play Episode Listen Later Dec 7, 2021

    Strategic management theories and entrepreneurship theories have diverged in academia. One perspective can't recognize the other. Yet the most promising and successful new business approaches demonstrate an agile combination of both sets of theories. Professor Mohammad Keyhani joins Economics For Business to explain this phenomenon and help us point the way to the future of strategic entrepreneurship. Key Takeaways and Actionable Insights. In business school thinking, there is a dichotomy between strategic management and entrepreneurship. In management scholarship, strategic management and entrepreneurship are distinct fields of study. Professor Keyhani calls them “two logics” of business. Both logics have gained legitimacy from their origins in economics. As business theories, they base their arguments on models from the field of economics, which, of course, is older and more mature. By importing thinking from economics, these business disciplines are able to construct generalizable theories (as opposed to, for example, a case study approach). The most famous generalizable theory in strategic management is Michael Porter's five forces framework, which borrowed from industrial organization economics. Most strategic management theories have been based on general equilibrium models of neo-classical economics. Strategic management became a theory of structures and constraints, and of imperfections in equilibrium (such as the concept of competitive advantage). The entrepreneurship discipline has been more varied and diverse and less dominated by economic models. Entrepreneurship scholars look to Austrian economics, which is based on verbal logic rather than mathematical models. But Professor Keyhani, in his Ph.D. dissertation, found an integration route between strategic management and entrepreneurship using the framework of game theory, adding elements of time and dynamics (both critical in Austrian theory) and adding the innovation of computer simulation (to which more and more Austrian economists are open as a way of adding computable algorithmic rigor to verbal logic). He established a way for strategic management and entrepreneurship to communicate with each other. Strategic management is a theory of competitive structures. Strategic management models are based on models of competition among players with similar value propositions, maybe with slightly different cost structures and other small differences, but all considered as competitors to each other. The models look at the nature of the competition, the structure of the competition, and seek insights into why some companies may have advantages over others. Strategy becomes an approach of identifying and building on strengths, about sustaining and managing an existing system, about operations rather than innovation, and about control and prediction. The consequence is a series of blind spots, mostly to do with the dynamics of action over time, the uncertainty that accompanies action, and the learning that results. Entrepreneurship is a theory of dynamic value creation. The question in entrepreneurship is how to create value and how to build a value creation system in the first place. The entrepreneur faces the questions, “Am I creating any value at all? Is anyone going to pay for this innovation and be happy with it? And will I be able to get more customers?” These questions precede the models that strategy and strategic management theory have been based on. Those models start off with the entrepreneur's questions having been answered, so they are not useful at the value creation stage. Based on Austrian economics, the entrepreneurship literature has provided mental tools and mental models for entrepreneurial thinking and an entrepreneurial approach to business. These include the emphasis on subjective value and customer sovereignty, and on uncertainty and unpredictability in business. There is value in action in the face of uncertainty, because it creates new information, which can support better decision-making. That mechanism is totally lacking in the equilibrium models of strategy. Theories of entrepreneurial action to generate learning are useful not only for startups but also for larger companies, to help them think and act more entrepreneurially, and to counter the defensive and anti-innovative thinking of building on strengths and defending position. Managing an existing value generation system can result in losing the long-term perspective of innovation, adding new product lines, taking advantage of opportunities, and potentially building new strengths. “Do both!” The best approach combines strategy and entrepreneurship. Professor Keyhani argues that, ideally, firms think strategically and act entrepreneurially, and he recognizes that, in the real world of practitioners, this is what businesses do. He uses blockchain as an example. No company can say that they have an existing strength in blockchain because it's a new technology and the business concepts that utilize it are only just emerging. It's a level playing field. Are there any advantages a company could have? Maybe a company has a lot of computer scientists and mathematicians. That might be a slight strength. But getting into blockchain businesses is an entrepreneurial action, largely different than building on strengths. The approach to innovation we support here at Economics For Business is “Explore And Expand”, and Professor Keyhani sees a good match between the explore-expand dichotomy and the entrepreneurship-strategy dichotomy. Exploration is a blind spot in strategic management theory and modeling — there is pretty much no exploration in the five forces framework or the RBV (resource-based view) framework. Exploration — acting for the learning value to open up options for more things that can be done in the future — is the entrepreneurial way of thinking. Effectuation (covered in episode #131: is another form of entrepreneurial logic. It recognizes that the entrepreneur faces so much uncertainty that it may not be possible to set specific objectives. But the entrepreneur knows that they want to do something, that they have knowledge and resources and relationships, and that they may be able to create some value from them. Effectuation is the “fuzzy front end” of value creation. Another way to combine entrepreneurship and strategy is speed of learning. The general capability to be more adaptive than competition, to go through the learning cycle faster, is a dynamic capability that can be strategic. Competitive moats in the software world. Is the structure-and-constraints approach of strategic management useless in the digital era we live in? Sustainable competitive advantage seems to be inapplicable when anyone can write software (or download it from Github), and access hosting and storage at scale from AWS. But in fact, software entrepreneurs do think in terms of competitive advantage. The modern term for it is “moats”. Venture capitalists look favorably on businesses that can surround themselves with a moat to keep out competition. The most discussed moat is network effects. This concept did not come from the neo-classical economics equilibrium models, but from the dynamic analysis of more users coming in to join existing users. The five forces framework suggests that advantages lie either in cost or differentiation, but a network effects advantage can be both. Two-sided platforms with two-sided network effects add even more complexity. It's strategic to achieve that status, but the theory did not emanate from traditional strategic management thinking. Professor Keyhani introduces the next entrepreneurial strategy breakthrough: generativity. We talked in episode #104 (see about the new phenomenon of digital businesses identified by Professor Keyhani: generativity. Achieving generativity confers significant competitive advantage for any entrepreneurial firms who can develop it through technology. It's an advantage that is not identified by existing strategy theories. Generativity can be thought of as the automation of open innovation. Products and services can be designed to offer features that enable outsiders to innovate with them, and these outside innovations benefit the company. For example, the Google Pixel smartphone and the Apple iPhone are generative products or generative systems. With the tools these firms provide in the phones, outside developers can create new apps, that they offer on the Pixel or iPhone platform for other outsiders to use. The app developers make money, and so do Google and Apple, both from sales of outsider-developed apps in their app stores, and from in-app purchases. Google and Apple are not utilizing their own knowledge — they don't know the problem the app is solving, or even who developed it or where they are. They don't have to make the solution, don't have to take the risk, and don't have to pay salaries or development costs. Yet they profit from the innovation. It's a huge competitive advantage for these two entrepreneurial companies. Additional Resources "The Strategic Management Model versus the Entrepreneurial Model" (PDF): "The Logic Of Strategic Entrepreneurship" by Mohammad Keyhani: "Was Hayek an ACE?" by Nicolaas J. Vriend: The ultimate list of tools for entrepreneurs—"Entrepreneur Tools" by Mohammad Keyhani:

    Jim Bovard on H.L. Mencken

    Play Episode Listen Later Dec 3, 2021

    HL Mencken is the writer you need to read immediately. He was savagely brilliant, caustic, and witty, but also prolific across genres in ways almost unthinkable of journalists today. His skill with the English language was virtually unmatched in the 20th century, as was his deep and abiding contempt for utopian statism in any form. And his broadsides against two world wars were incredibly courageous at the time. Our great friend Jim Bovard joins the show to discuss Mencken's work, his complicated elitism, his Old Right politics and social views, and the magnificent pleasure of reading this master. "H.L. Mencken, The Joyous Libertarian" by Murray N. Rothbard: Mencken Wikiquote:

    That Bangladesh Mask Study!

    Play Episode Listen Later Dec 1, 2021

    Our guest is Ben Recht, Associate Professor of Electrical Engineering and Computer Science at UC Berkeley, who recently got hold of and analyzed the raw data from the Bangladesh cluster randomized control trial of masking which made headlines in September. SHOW NOTES​ Ben Recht: Twitter and webpageBen Recht's recent blog post: Revisiting the Bangladesh Mask RCTMichel Accad Why N-of-1 is EnoughEp. 97 with Peter Klein on “Evidence-Based Economics: What the Doctor Ordered?“Watch the episode on the Accad & Koka Report YouTube channel

    Patrick Newman on Cronyism in Early US History

    Play Episode Listen Later Dec 1, 2021

    Patrick Newman is a fellow at the Mises Institute who have just published his new book. He talks about Rothbard's approach to history, whether the US revolution was libertarian, and the proper way to interpret Andrew Jackson. Mentioned in the Episode and Other Links of Interest: Patrick Newman's new book Cronyism: Liberty vs. Power in Early America, 1607-1849Patrick's previous appearance on ep. 49 of the Bob Murphy ShowDan Sanchez's article on Andrew Jackson's fight with Nicholas Biddle over the Second Bank of the United StatesBob's review of MMT (including Andrew Jackson's payoff of the federal debt)The YouTube version of this interview ​For more information, see The Bob Murphy Show is also available on Apple Podcasts, Google Podcasts, Stitcher, Spotify, and via RSS.

    Jenin Younes on Legal Challenges to Vaccine Mandates

    Play Episode Listen Later Nov 30, 2021

    Our guest is Jenin Younes, a Litigation Counsel for the New Civil Liberties Alliance. She joins us to discuss her involvement in advocacy and in legal challenges against vaccine mandates. She holds a B.A. degree from Cornell University and a J.D. from New York University School of Law. She has been featured on several national media outlets for her commentary and she recently penned an op-ed in the Wall Street Journal building the case against mandatory vaccination in children. SHOW NOTES​ Jenin Younes: Twitter and webpageWatch the episode on the Accad & Koka Report YouTube channel

    Luca Dellanna on the Power of Adaptation: Adapt or Die

    Play Episode Listen Later Nov 30, 2021

    Ceaseless flux. Those are words Ludwig von Mises used to describe the perpetual change in business conditions that entrepreneurs experience. The consequent need, he told us, is for a process of constant adjustment. The current word for that process is adaptation. Economics For Business talks to Luca Dellanna, a leading business expert who advises companies of all sizes on managing the challenge of continuous adaptation. Key Takeaways and Actionable Insights Adaptation is a necessary capacity of all businesses. Adaptation is a necessity. The marketplace changes, customers change, technology changes. Change is the norm. Firms that don't adapt will suffer and potentially die, so adaptation must become the norm for business. In complex systems theory, adaptation is the selection of strategies or actions that enhance survival or any other measure of success (or fitness, as its sometimes called) amidst swirling change. In business, adaptation means choosing your degree and pace of change. Change will be externally imposed if it is not internally embraced. Businesses can influence the level of change impact. They can critically examine their mental models, and assess their products, processes, beliefs, and people, to evaluate their fitness for adapting to market change. To avoid change being imposed from outside the firm — to avoid negative natural selection, in the evolutionary metaphor – all layers of the firm must embrace change, and proactively adapt. Eliminate unfit products and processes, pursue the development of new ones that are better adapted, and upgrade people resources through thoughtful hiring and active learning. Adaptation is different than responsiveness — it's embracing harm. We talk a lot about a business's responsiveness to customer wants and preferences, especially when those preferences are fluid and incompletely articulated and require interpretation. Responsiveness is critical — but it's different from adaptation. It's response to an external signal. Adaptiveness is embracing change inside the firm. Luca Dellanna has a striking way of communicating this: he advises his clients to deliberately expose themselves to what he calls “harm” — new problems never before encountered. The exposure must not be to a problem that could overwhelm the firm, but one that can be addressed at a subsidiary level or component level or via adjustment in a shared mental model. Luca calls this “small harm” — specific problems (e.g., the price of a product or service compared to the customer's willingness to pay). Proactively probe the problem, e.g., in a high pricing test, generate feedback and actively use the learning to adapt. Another word for “small harm” is stressors: situations that put stress on the firm. Set up systems to seek out these stressors so that adaptation is deliberate, and can be enculturated, rather than wait for a crisis that requires an emergency response. Lack of discomfort is a problem to avoid. Identify the leading indicators that describe the conditions that will change the future. Lagging indicators — such as revenue — are metrics that describe the past. There are leading indicators available such as number of customer contacts (describing what the pipeline might look like in the future), and satisfaction scores (describing future repeat sales). Luca recommends pairing one lagging indicator with one leading indicator to develop a metrics system. This is not the same as popular consultant-proposed metrics systems such as OKR (Objectives and Key Results). Objectives are not leading indicators. The best leading indicators are behaviors, because these can be easily adjusted if observed to be in need of change. Falling behind on objectives does not yield an actionable response if not linked to a causal factor. Inadequate behaviors (e.g., conducting a sales call without following the proven process) can be addressed, especially if they are clearly linked to positive outcomes. This is the same principle as Amazon's focus on what they call controllable inputs, and Amazon knows a lot about driving business growth. There are several strategies to pursue adaptation. Redundancy (having more than needed): A focus on efficiency and “no waste” can be detrimental to adaptation if it leaves no resources for experimentation and exploration. Employees need time to work on new things, not just on current tasks and issues. Bottom-up initiatives: Central command and control can't run everything, anticipate every harm, or plan every experiment. Ensure entrepreneurial empowerment of front-line employees and functions so that they can initiate learning. Avoid game-over: In experimenting, calibrate the risk to ensure that a negative result is not overwhelming, and, in regular operations, be aware of any possibility of a major crisis — a Black Swan event — and be sure that it will not destroy the firm or deliver a setback from which it will be hard to recover. Never stop exploring, in a culture of anti-fragility. Nassim Nicholas Taleb famously coined the term “anti-fragile”. The company that has the most well-developed capacity to learn from problems and harm is the most anti-fragile. The culture of anti-fragility is always to surface problems when they are encountered and address them at the source. Luca stresses that culture is built when everyone in the company can see a consistent set of actions in which the trade-offs of addressing problems are consistent with the stated vision. For example, a culture of safe operations will be reinforced when safety precautions are taken even when the cost, in time or money or both, is high. The leading indicator is that every individual and every operation and sub-operation is following safe practices, and that the company readily commits resources when a new safety procedure or installation is proven to be effective. If the trade-off is made that the new procedure is effective but too expensive to install, the culture will be punctured because the company has acted contrary to its declared vision. Additional Resources "The Power Of Adaptation" (PDF): Read Luca Dellanna's book, The Power Of Adaptation: Another application of adaptation, Teams Are Adaptive Systems: 12 Principles For Effective Management by Luca Dellanna: Visit Luca Dellanna's website to find more resources: E-mail Luca at

    Garet Garrett's "The Revolution Was"

    Play Episode Listen Later Nov 24, 2021

    Garet Garrett was among the most important figures from the literary, political, and laissez-faire economic traditions of the Old Right, but his name is hardly known today. In 1938 he penned "The Revolution Was," a remarkable essay about FDR's revolutionary New Deal and, more importantly, how it was accomplished. FDR's revolution had already happened, though few Americans understood it or grasped what the triumph of an administrative state would mean. The New Deal was a revolution "with the form," because the old trappings of constitutionalism and separation of powers remained intact. What had changed was the substance of American government, engineered through skillful propaganda and marked by radically increased control over the nation's capital and businesses. This essay is entirely relevant to our current politics, and explains with tremendous clarity the the ongoing revolution happening under our noses today. Ryan McMaken joins Jeff Deist for a deep exploration of the essay and its lessons for us today. You owe it to yourself to read this masterpiece. Read Garet Garrett's prescient essay:

    Christopher Habig: How Understanding Subjective Value Will Revolutionize the Medical Care Industry

    Play Episode Listen Later Nov 23, 2021

    The field of medical care is so ripe for new entrepreneurial solutions. As is always the case, solution design begins with understanding subjective value, both for customers (patients) and providers (doctors) Christopher Habig of Freedom Healthworks ( joins Economics For Business to explain how an Austrian, subjective-value focused approach is bringing market freedoms to medical care. Key Takeaways and Actionable Insights Step 1: Like many entrepreneurs, Chris Habig started a revolutionary business from a place of familiarity and existing knowledge. The so-called effectual process in entrepreneurship begins with two straightforward questions: what do I know and who do I know? Chris Habig grew up in a family where both parents are physicians. This vantage point gave him the opportunity to observe the critical doctor-patient relationship first hand, as well as the way in which modern bureaucratized medicine imposes obstacles and complexities that strangle the value generation potential of that relationship. Step 2: Assessing the subjective value gap. From his Austrian analytical perspective, Chris was able to identify the subjective value gap. For customers (patients) it is the loss of the positive feelings that they associate with the doctor-patient relationship. Chris summarizes them as advocacy, access and affordability: my doctor is on my side and looking out for me; my doctor is always available to me; I will not be excluded for economic reasons. These feelings are negated by bureaucratic medicine. There's a subjective value gap on the physician side, too. Research shows that doctors are stressed, and no longer find fulfilment in their work. Their mental health declines and there is an increasing rate of defection (leaving the industry) and even suicide. It's a sign of a dysfunctional system to exert such an effect on its human capacity. Step 3: Identifying the barriers to remove. Value generation often consists in the removal of barriers to the realization of the desired experience. Chris identified two major barriers: insurance and government. The current approach to medical insurance actually hampers the market for what customers truly desire, which is the positive feelings of the doctor-patient relationship. Now it's a patient-insurer relationship: will my visit / test / procedure be covered? Will there be a big bill in the mail? And, of course, the participation of government to enforce the current system through legislation and regulation perpetuates the barriers. Step 4: The entrepreneurial solution. The solution is to free the system from its constraints through entrepreneurship. The physician is the entrepreneur on the supply side. Via a new business model called Direct Primary Care (DPC), the physician-entrepreneur creates a new value proposition for customers. Access is provided via a subscription model, and this financial innovation enables the thriving of a practice composed of a small number of patients to whom the physician can devote more time per visit, more attention, and more personal and individualized care. The physician is networked into a web of complementary secondary and specialist services that can be orchestrated for the individual patient's need. All the associated business services are clustered around the DPC practice, and the physician does not need to be bound by a hospital system bureaucracy. The new financial model enables the customer to take charge of their medical expenses, paying cash for current needs and reserving insurance for catastrophic events, which is the way it should be used. Consumer prices are lowered throughout the system. Lives are improved on both sides of the doctor-patient relationship. Step 5: The support system for the entrepreneurial model. We live in an age in which distributed entrepreneurship can be embedded in an enabling system of digital infrastructure. Part of the innovation that Freedom Healthworks brings to the renaissance of the doctor-patient relationship is the platform on which the DPC business model can run. Chris has identified 158 steps for the set-up, operation, and maintenance of a DPC business model. These can all be hosted, enabled, and implemented on the physician's behalf. Finance, technology, operations, marketing, and vendor relationships can all be systematized and partially or fully automated. The doctor can focus on the relationship component of interacting with patients. Step 6: Scaling. Can entrepreneurs build out a fully-functioning cash-based direct care system to rival and ultimately replace the government-insurance company nexus? It's already happening. As each DPC practice proves itself, more entrepreneurial physicians will make the transition and momentum will build. DPC is an important example of the future of entrepreneurial economics. Additional Resources "Enabling A Direct Primary Care Practice" (PDF): "FreedomDoc Launch Process" (PDF): Healthcare Americana podcast: Visit and

    The Toxic Politicization of Society

    Play Episode Listen Later Nov 17, 2021

    Tho Bishop, guest-hosting A Neighbor's Choice, interviews Jonathan Newman, author of The Broken Window. Tho and Jonathan discuss the supposedly transitory aspect of inflation, the overshadowing of economics by central planning, Keynesian economics, and more. Purchase The Broken Window online at

    Joe Matarese on Expectations and Building a Culture of Continuous Innovation

    Play Episode Listen Later Nov 16, 2021

    Every company starts as an innovation. Thereafter, the unceasing challenge is to keep innovating because the market continues to change, technology continues to advance and, crucially, customer expectations continue to rise. Economics For Business speaks with Joe Matarese, Executive Chairman of Medicus Healthcare Solutions, about how to build the culture of continuous innovation and overcome the countervailing forces of the status quo. How to understand consumer expectations and build organizational culture that rewards continuous innovation: Key Takeaways And Actionable Insights Every company starts as an innovation. The challenge is to continue — and ideally accelerate — innovation without pause. As Joe Matarese puts it, innovation gets you into the game. It's how every company starts. There's the identification of a gap in the marketplace and the operationalizing of a new innovation to fill the gap, better than any other competitor or rival entrant. Innovation is seldom a great new invention or unprecedented leap. It's more often the day-to-day incremental changes and improvements in products and processes to meet customers' changing expectations. The great challenge is to continue or even accelerate innovation as the company grows and expands. Continuous innovation combines mindset, processes, technology, empathy, and organizational empowerment. The world is complex and ever-changing. Innovation is necessary for all businesses to keep up or even move ahead. Innovation is not simple, and it's not easy — in fact it's a continuous struggle against opposing forces. Joe Matarese has directed innovation from three vantage points: big corporate, startup, and large growth company. To achieve the goal of continuous innovation requires attention to multiple factors: Mindset: Innovation must be the commitment for everyone in the company. That means always asking the question, “How can we do better?” Such a mindset requires both tolerance of discomfort — since there's never any rest — and humility in the face of feedback. Innovative companies hire people with these characteristics and cultivate constant vigilance throughout the firm. Processes: Things get done through the implementation of processes. Innovative are always seeking to improve their processes — make them faster, lower cost, and more efficient in their use of inputs, especially the use of people's time. Innovation itself is a process, and process improvement is a form of innovation. Technology: Irrespective of how innovative any one company may be, technology is progressing at an increasing rate of change with potential to render all processes faster, lower cost, and capable of higher quality and fewer errors. One way to ensure continuous innovation is the rapid adoption and early implementation of new technologies as they become available. Empathy: Even more powerful than technology is the capacity to tap in to customers' expectations. This is the source of knowledge about future requirements. Customers are experiencing new technology, are absorbing innovation from other firms in the market (whether they are firms that are competitive to yours or simply adjacent), are experiencing change, and their expectations are changing and becoming more demanding by the moment. By sensing their changing expectations, the innovative firm is in position to be a first responder or an innovator before the expectation has even hardened or matured. Being ahead of expectations is a powerful place to be. Empowerment: People in front line sales and service functions are closest to customers and their expectations. Line operatives are closest to process implementation. Supply chain managers are closest to business partners and vendors. It is these front-line positions that are best placed to deliver information about expectations and what's changing. They are also best placed to sense dissatisfaction and unease, and to make real-time changes and adjustments. If they are empowered to make changes and to both suggest and implement improvements — even if what they try doesn't work — they will be more highly motivated and more likely to serve as an internal engine of innovation. Tools: Joe shares how his company, Medicus, has developed tools for innovation. Internally, all employees have access to communications tools that ensure the customer data they collect, and the ideas they generate as a result, are widely circulated and responded to. Externally, doctor whom Medicus reimburses for services have access to a tool to record their time that is administratively simple and generates fast payment, addressing two measures of unease. Our platform curates many tools for entrepreneurs. One example relevant to this episode is the "Continuous Customer Expectations Monitor" (see It guides entrepreneurs through the continuous process of tracking and keeping up with changing customer expectations. There is a constant counterforce to innovation that the innovative company must recognize and overcome. There is an innate human resistance to innovation and change. Consider this from a leading brain scientist and psychologist: When information streams in through our sensory systems, it first stops off at our amygdalae, which are there to ask the question, “Am I safe?” We feel safe in the world when enough of the sensory stimulation coming in feels familiar. When something does not feel familiar, however, our amygdalae tend to label that unfamiliar thing as dangerous, and they respond by triggering our fight-flight-or-play-dead fear response. —Jill Bolte Taylor, Ph.D., Whole Brain Living ( It's natural in humans to resist change. It may not be safe. It may threaten my job, or my comfortable routine, or generate unwanted uncertainty. Fear of change is real. The function that exercises the fear response in companies is bureaucracy. Bureaucracy exists to ensure compliance with existing rules, and their consistent and uniform implementation. Bureaucracy is anti-innovation. When a business leader commits to improving a product or process, he or she is undoing what someone else in the firm had championed and nurtured and maintained. It's a constant battle that must be waged between change and the maintenance of the status quo. The adoption of new technologies is an effective technique of innovation, but it can also trigger a fear response. Technology is the continuous innovator's weapon. It advances at its own pace, as a form of evolutionary advance. Every technological innovation spurs new applications in the marketplace. The adoption of these new technology applications is a catalyst for continuous innovation in the firm, supporting both product and service improvements and the incremental efficiency of processes — faster, leaner, lower cost. The fear mechanism exhibits itself as employees worrying about their jobs. Perhaps the application of technology will reduce the number of people supporting a particular process from 5 to 4 to 3 or 2 or even one or none. They fear that progress will punish them. They adopt a defensive mindset. The innovator's goal is to change the mindset to one of anticipation of rewards for progress. Basic economics tells us that resources which are no longer utilized in a process that is rendered more efficient are thereby released for higher and more productive uses. Innovation leaders can communicate that, and make sure employees know they will be rewarded for progress via new and better opportunities for them to contribute more through the higher productivity that innovation brings. The greatest resource for continuous innovation comes from customer intimacy and empathy that senses customers' escalating expectations. When we talk about a changing marketplace, we are really talking about customer expectations. Innovation elevates customer expectations and thereby triggers the next round of innovation in a never-ending cycle. For example, now that many people carry iPhones and other smartphones, they've become used to unprecedented levels of convenience, interconnection, functionality, and intuitiveness. Their expectations for every other piece of technology they encounter, and every interface they navigate, are raised to a new level. There's a marketplace of expectations and every new technology raises the bar. The way to keep pace, and to have any chance of anticipating and meeting the next level of raised expectations is to get as close to the customer as possible, to be with them when they're using your product or service or technology and listen and empathize when they express a wish (or expectation) that the experience could be easier, better, faster, less frustrating, more enabling. “I wish it were as easy as my iPhone” is the expression of an expectation that everything should be as easy as the iPhone. Innovating firms build in mechanisms that make continuous innovation not only possible but likely. There's a quote in the book Working Backward, about continuous innovation at amazon, to the effect that “Good intentions don't work, mechanisms do”. The intent to improve a process or product is not enough; people already had good intentions in the first place. Mechanisms turn intentions into actions and achievements. Some of the mechanisms Joe Matarese recommended are: Mechanisms for taking in data from and about customers: Customer intimacy has a mechanism, in the form of frictionless and unstructured data collection. Give front line employees and the technology they use the unfiltered capacity to gather customer information about their dissatisfactions and report it back. Let people experiment: The E4B technique of explore and expand applies to everyone in the organization. Elevate experimentation over compliance. That's the way learning happens. Eliminate bureaucracy that is not mission-supportive: Every company eventually builds bureaucracies in order to support consistent application of business rules. Innovators differentiate between bureaucracy that is mission-supportive and bureaucracy that is mission-obstructive. HR is often a department where bureaucracy grows. If HR is helping to recruit talented people who will contribute to innovation, then the bureaucracy is mission-supportive. If HR imposes rules that unnecessarily impede innovation, then that part of the bureaucracy should be shut down. The goal is to liberate the value-generating creativity of everyone in the organization, and not to impede it. Decentralization and entrepreneurial empowerment: Decentralization is a mechanism of innovation. The goal is for your organization to consist of hundreds of individuals thinking creatively and solving problems for customers. You want them all to think and to learn! They must know that the firm cheers them on for doing so. Additional Resources "Designing An Organization For Continuous Innovation" (PDF): "Continuous Customer Expectations Monitor" (PDF): Medicus Healthcare Solutions: Whole Brain Living: The Anatomy of Choice and the Four Characters That Drive Our Life by Jill Bolte Taylor:

    Realistic Prospects for Secession and Decentralization

    Play Episode Listen Later Nov 12, 2021

    This week's show features a panel discussion recorded in late October at our annual Supporters Summit. Panelists Ryan McMaken, Jeff Deist, Mike Maharrey, and Tho Bishop lay out real strategies for achieving decentralization. Includes an introduction by Joey Clark. Recorded in St. Petersburg, Florida on October 22, 2021.

    Libertarian Strategy from the Jacksonians

    Play Episode Listen Later Nov 11, 2021

    On the latest Free Man beyond the Wall podcast, Pete Quiñones, Patrick Newman, and Tho Bishop discuss Andrew Jackson and his cadre who fought against central banks—and cronyism in general. What can libertarians learn from the strategy they deployed and the power they were willing to wield? Additional Resources Cronyism: Liberty versus Power in Early America, 1607–1849 by Patrick Newman "Cronyism from the Constitution to the Mexican-American War": Pete Quiñones interviews Patrick Newman

    Per Bylund: How Austrian Entrepreneurs Succeed

    Play Episode Listen Later Nov 9, 2021

    Successful entrepreneurs are Austrians, they just don't know it yet. This is a famous assertion from Dr. Per Bylund, and we dissect its meaning in the latest Economics For Business podcast. Key Takeaways and Actionable Insights Success starts from a deep understanding of subjective value (see What's the value of a successfully completed Google search? What's the value of the feeling of satisfaction that results from having cooked an excellent meal enjoyed by your family? What's the value of the PowerPoint template you utilized to make a well-received boardroom presentation that may boost your corporate career? Austrian entrepreneurs know not to ask the question in that form. First, value is not measurable; it's a feeling or experience in the mental domain. It may have great intensity, it may have long duration, but it can't be measured in dollars or with any other number. Yet the generation of customer value is the entrepreneur's goal. How can the goal be achieved when the understanding of value is so challenging and its measurement is impossible? This is the brilliant advantage of the Austrian entrepreneur. The customer learns what a value experience feels like. A customer can't describe the value they are seeking or what goods and services will deliver it. The value process is not one of demand and supply. As Ludwig von Mises understood, customers feel a sense of unease — “things could be better” — and begin to explore possible avenues to relieving their unease. Of course, this exploration takes place within a complex system of needs: individual and personal goals, family comfort and security, job success and economic status. Customers sort through possibilities with incomplete information and in the context of uncertainty. The gap between feeling unease and finding the best good or service to address it is large. They might try multiple potential solutions with varied cost/benefit profiles before they arrive at one that seems best, or better than alternatives. In other words, they learn: value is a learning process. The entrepreneur helps their customers to learn. The customer's value thinking is constrained: in the present, they can't imagine a solution that they haven't yet tried or that has not been available to them. The entrepreneur innovates around the constraint, by providing and communicating new means that the customer could utilize in the future. Entrepreneurs can't directly shape the customer's choice. It's a fallacy to believe that advertising or promotions or presentation of features and benefits can accomplish that. The customer's context is too complex for such a simple mechanism to work. The entrepreneur creates a tomorrow in which the customer will feel better off, and provides the means to facilitate the experience, a means for the customer to learn what a better tomorrow feels like. They meet customers in a market that doesn't yet exist. Austrian entrepreneurs have a unique value generation tool. The complexity of the customer's value system — all the components of value interacting and changing in time — can be simplified with the use of a key that Austrians call the hierarchy of values. Every individual has a set of goals or values they pursue in life. Some of these are more important than others — we call them the highest values. For example, people who engage in sport and athletic activities may have several values for doing so: for fitness and health, for social reasons, for self-improvement, and so on. One value may be the most important in their own individual hierarchy — for many people it is the sense of achievement. By improving their speed or time of running or bicycling, by winning a tournament or a league or playing on a winning team, the individual can experience a sense of personal achievement that is rare, valuable, and fulfilling. It is a commercially strong behavior to appeal to this highest value among customers. Nike does this for example with its “Just do it” appeal. To simply undertake the athletic activity is achievement: you've done something. And, of course, Nike wearables help the process of experiencing the highest value. All entrepreneurs can appeal to customers' highest values, and the Austrian entrepreneur has deeper insight into this action. Austrian humility is a success factor. So much of business success is projected as heroic implementation of superior strategy. Austrian entrepreneurs do not suffer from such hubris. They take a humble approach to business, understanding that the customer is often engaged in searching and learning without a clear outcome in mind, and that, therefore, the entrepreneurial business cannot be certain of any future results. Entrepreneurs humbly follow, letting the searching customer take the lead, and accepting the customer's terms of service. This is how entrepreneurs learn how to facilitate value — often from the harms they suffer from getting their value proposition out of alignment with the customer's preferences. If the value proposition is wrong, or the price is too high, or the convenience not to the customer's liking, then no transaction is made, and the entrepreneur must — humbly — adjust. The most successful entrepreneurs are able to maintain their attitude of humility at all points in the value cycle. Austrian entrepreneurs take the role of fitting in to the customer's value system. It's a flow, not a plan. Conventional business planning is anathema to Austrian entrepreneurs. The linear process of producing and selling to generate transactions with the goal of meeting a targeted volume or revenue in a fixed period of time is not appropriate for the humble, learning, exploring business of entrepreneurship. Entrepreneurial success stems not from good planning but from adaptively fitting in to the evolving value system we call the market — a system that is different for every individual customer, and into which many overlapping and competing entrepreneurial value propositions are also trying to fit. Planning is not a good tool for this purpose. Creativity, imagination, and adaptiveness are called for. The dynamic of learning from the customer and adjusting to changing signals calls for responsiveness not plans. The entrepreneurial journey with the customer is a flow, sometimes through white water. In this context, the Silicon Valley concept of pivoting is appropriate, although not quite as the West Coast gurus see it. Their pivot is a one-time major shift in direction, perhaps to a new business model when the original one proves inadequate. The Austrian pivot is continuous and flowing, adjusting the boat to the subtle and frequent signals sent by customers. Explore, Realize, Then Keep Exploring. We've talked in the past about an “explore and expand” model for entrepreneurial value generation. The entrepreneur co-explores various paths to value with the customer, and when one emerges as productive of significant value, the entrepreneur can expand the allocation of resources to that path and drive revenue growth, through selling more to the same customers, or recruiting new customers or both. Professor Bylund added some nuance to this: the entrepreneur never stops exploring. When an exploration results in substantial value realized, there remains a lot of further exploration to understand the value experience of the customer in greater depth and detail, and continuous monitoring of changes and adjustments in the customer's system and value network. The entrepreneur is continuously tested. The entrepreneurial ethic is an ethic of service; profit is a shared outcome of consumer and producer choices. Entrepreneurial firms are in business to serve customers. This principle may be appropriately expressed via mission statements and expressions of purpose; it remains the core of all entrepreneurship. Profit is an outcome of two collaborative choices: the exchange price the consumer is willing to pay for the value they anticipate receiving, and the choice of costs the entrepreneur considers proportionate to the value he or she expects to generate for the customer. There are many entrepreneurs in the market for resources bidding on costs at the same time, and so the individual entrepreneur's choices are conditioned by those made by others. Profits emerge from this system. Cash flow is a better indicator of the capacity of the entrepreneur's business model to convert resources into exchange value for customers (although not the artificial cash flows of engineered P&L's — rather, the true cash flow of the customer's eagerness to exchange for the newly produced offerings from the entrepreneur). There's a distinctly Austrian approach to entrepreneurial business. In a famous paper called "Inversions of Service-Dominant Logic," (see professors Stephen Vargo and Robert Lusch called for inverting “old enterprise economics or neoclassical economics” in favor of a new perspective. One of their proposals was an inversion of “entrepreneurship and the view that value creation is an unfolding, emergent process” to a position “superordinate to management”. Business schools, they stated, teach a management discipline rooted in the industrial revolution. There's an emphasis on centralized control and planning. Vargo and Lusch sought to replace this approach with value creation as “an emergent process within an ever-changing context, including ever-changing resources; it is, by necessity, an entrepreneurial process”. The distinctive Austrian entrepreneurship approach captures and expresses the emergent process, and provides entrepreneurs (and managers) with the tools and methods to help them shape thriving businesses as they discover new solutions to relieve customer unease. Additional Resources "Explore and Realize (and Keep Exploring): How Austrian Entrepreneurs Generate Value on the Path to Business Success" (PowerPoint): "Inversions of Service-Dominant Logic" by Stephen L. Vargo and Robert F. Lusch (PDF):

    Murray Sabrin: How Entrepreneurs Beat the Fed-Generated Boom-Bust Cycle

    Play Episode Listen Later Nov 2, 2021

    Entrepreneurial businesses acknowledge and understand the inevitability of boom-bust cycles in the Fed-manipulated economy. But they refuse to be defeated or even deterred. They find the profitable pathway through both the boom and the bust. Murray Sabrin has compiled a guide in his latest book, Navigating The Boom/Bust Cycle, An Entrepreneur's Survival Guide ( Key Takeaways and Actionable Insights So long as we have central banking, entrepreneurs will experience boom-bust cycles. They adapt to this reality. Entrepreneurship is, in its essence, focused on the generation of new value, producing betterment, growth, and improvement. While customer preferences and the nature of competitive offerings may change, and conditions such as pricing and contracts may vary, entrepreneurs work towards continuous enhancement of markets. Their efforts are thwarted by governments, who can't leave markets alone to function smoothly, and especially to central banks who aim overtly at manipulating markets through artificial credit creation. Austrian entrepreneurs are acutely conscious of this problem, since they understand Austrian business cycle theory. But they must nevertheless adapt to the boom-bust problems the central bankers bring about. The first tool of adaptiveness is the recognition that there is the private economy and the public economy are different and separate. Some economists talk of a mixed economy, but, as Mises pointed out, such middle-of-the-road thinking is socialist. The public economy is where the government trades, including trading in money, debt, and credit manipulation, and in the regulations that governments use as their management tool. Entrepreneurs seek to establish a private economy where the government does not trade. The most important part of the market where the government is absent is the creation of customer value, especially in the form of innovation. Governments destroy value and deny innovation. When entrepreneurs can operate in the light of value generation, leaving governments in the dark, there's room for profitable operations. Entrepreneurs can further protect their safe haven with good anticipatory timing of the boom-bust cycle. There are signals that help. Murray Sabrin's book provides a long list of websites and links where relevant data is published that can help entrepreneurs watch the trend that might signal the timing of the boom-bust cycle. The first signal is the so-called inversion yield curve, when short term interest rates start to elevate, and even get to higher levels than longer term rates. This is unnatural, implying that there is greater uncertainty in the short term than the long term. It can only happen when markets are fearful of the short-term consequences of government policies and interventions, even though they are confident of entrepreneurially-induced growth and improvement in the long run. As a rule of thumb, according to Murray, the beginning of a recession can be anticipated roughly one year from the inversion of the yield curve. Of course, other factors can intervene, such as the government's idiotic shutting down of businesses over the fake COVID-19 pandemic. Nevertheless, entrepreneurs should pay attention to the yield curve signal. They can monitor it at [[{"fid":"126773","view_mode":"image_with_caption","fields":{"format":"image_with_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"The Inverted Yield Curce","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"1":{"format":"image_with_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"The Inverted Yield Curce","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""}},"attributes":{"alt":"The Inverted Yield Curce","style":"height: 433px; width: 528px;","class":"media-element file-image-with-caption media-wysiwyg-align-center","data-delta":"1"}}]] Another signal for entrepreneurs to monitor in the overall economy is the unemployment rate. This rate declines during the boom, and actually starts declining as the recession is ending or a few months afterwards. There are variations in the pattern by industry, which Murray describes in detail in the book. He provides a list of 12 St. Louis Fed employment data series to monitor, covering sectors such as manufacturing, durable consumer goods, finance and insurance, and construction. He offers many more signals — such as homebuilder stock prices — to monitor boom-bust timing. There is plenty of data for the savvy entrepreneur. Strengthening value effectiveness and value security beats managing for efficiency. The economics profession has been guilty of misguiding entrepreneurs with its focus on efficiency, i.e., managing for fewer inputs per unit of output, and eliminating “waste”. It can cause fragility, impede value generation, and slow down innovation and responsiveness to change. One example is the management of supply chains. Managing them for maximum efficiency can also make them insecure, if, for example, there are no ready supplier replacements when one slips up. We are experiencing the impacts of supply chain fragility right now in the US. It's for reasons extraneous to regular business operations, but the effects serve to highlight the need to keep supply chains secure under attack from government interventions. Entrepreneurial businesses that develop the strongest possible upstream supplier relationships and cultivate a richly connected value network may be able to perform better when boom-bust hits the supply chain. Entrepreneurs fight the Fed on inflation. The Federal Reserve insists on maintaining its 2 percent inflation target, which is economically destructive in many ways (see "Why the Fed's 2 Percent Inflation Standard Is So Bad" by Ryan McMaken: Entrepreneurs pursue deflation, always aiming to deliver better quality at lower prices. Why? Because it's what customers want, and entrepreneurs are in business to serve customer needs. Entrepreneurs bring abundance. The Federal Reserve, taking the position that higher prices are good for the economy, promotes scarcity. Entrepreneurs make their workforce a strong resource, rather than a source of cost-cutting in economic downturns. The purveyors of so-called efficient management traditionally see the workforce as a cost, and urges entrepreneurs to cut costs by firing people in economic downturns. Entrepreneurs focus on effectiveness instead, and see their workforce as a resource and a source of ideas and initiatives for improvement and adaptation in all environments. A motivated frontline workforce is closest to customers and can bring back information, ideas, and new initiatives to make the business more responsive to customer needs and more capable of delivering desired customer experiences. This is the case whatever the state of the Fed-manipulated economic cycle. Growth entrepreneurs think expansively at all times. Entrepreneurs create new value for customers, and they don't call a halt to their pursuit of value just because of the macro-economic data that's being reported in the mainstream media. They understand that customer preferences, or the order of those preferences, may well change in a boom or a bust time, and they maintain their vigilance in monitoring and responding to these changes. These are the signals to which they respond, not the economic headlines. Entrepreneurs look for the opportunity to introduce new goods and services at all times, and not just at the “right” moments in the economic cycle. They're always looking for new ways to deliver more value. Perhaps, in a downturn, there's a greater call for service and repairs on existing equipment than for buying new equipment. Entrepreneurs can adjust and recombine their assets to provide more repair work and thus make up for lost sales revenue. Entrepreneurs are great cash flow managers, and tend to keep cash on hand or available for those times when this level of money can be utilized for expansion. One potential application in this book is the acquisition of assets from other businesses in a downturn, when business operators who are less savvy run out of cash and offer assets for sale at low cost. Murray calls this “picking up the pieces”. There may also be the opportunity to expand geographically into new regions. There's always growth somewhere. In sum, the answer to the boom-bust cycle is value agility. In the 4Vs business model on the Economics For Business platform, the fourth phase of the value cycle is value agility. We use this term to indicate the speed of responsiveness that successful entrepreneurs exhibit in response to customer feedback. Murray Sabrin uses the same term in his book, and defines it as “a process where entrepreneurs... adapt and adjust to continue to meet consumers' perceptions of value your business delivers” (p. 111). He asks, “do entrepreneurs stick it out when the economy is in a slump or wave the white flag and close the doors?” Mastering value agility means never being faced with that agonizing decision. Additional Resources Purchase Navigating The Boom/Bust Cycle, An Entrepreneur's Survival Guide at Use promo code BOOM20 for 20% off. See a preview of Murray Sabrin's book at (PDF). "The 4Vs Business Model" (Video): The Economics For Business platform: "Why the Fed's 2 Percent Inflation Standard Is So Bad" by Ryan McMaken: 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity (Chart):

    Daniel McAdams on the Ron Paul Doctrine

    Play Episode Listen Later Oct 29, 2021

    Daniel McAdams of the Ron Paul Institute joins the show to discuss what might be termed the Ron Paul Doctrine: a combination of laissez-faire at home, decentralized domestic political power (up to and including secession), robust free trade, and strict non-intervention abroad, This doctrine—which mirrors Mises's prescription for a liberal society—makes no phony distinctions between foreign and domestic policy, or between military and economic interventions. It places peace and property at the center of a free society, and calls for humility rather than hubris in politics. Daniel also gives his thoughts on Dr. Paul's doctrine as it applies today to China, Turkey, Russia, and Iran.

    Bharat Kanodia: How Subjective Value Generates Valuation In Business

    Play Episode Listen Later Oct 26, 2021

    All value is subjective. But often, when an exchange is to be made, a numerical value is required. It's a special kind of economic calculation, what Bharat Kanodia terms “a subjective opinion based on objective facts”. Bharat has built a career on valuations, from 2-founder garage start-ups to the Eiffel Tower. He shares his knowledge, experience, and insights with the Economics For Business podcast. Key Takeaways And Actionable Insights Valuations start with a “what?” and a “why?” What is the subject of the valuation? Is it a building but not the land it's sitting on? Is it a patent? Is it a monetized patent or just an approved patent? Is it the assets of a business or is the going business? All these definitions and classifications of what's being valued clearly make a big difference to the outcome. What is the purpose of making a valuation? It might be a step in buying a business. Or in selling a business. It may be a valuation of an asset for insurance purposes, or for estate tax estimation. The valuation may be a tool for raising capital, or an assessment following a capital raise. The same asset can have different valuations for different purposes. That's why it's important to start with the what and the why. The most challenging business valuation is for a start-up. Two founders working from a garage have a business idea and some code but no customers and no revenue. The business needs a valuation in order to raise capital. It makes no sense to value it on the basis of discounted future projected cash flows. They're imaginary. The business is going to be valued based on the story the founders tell, and a rule of thumb valuation that works backwards from the percentage of the business the founders are willing to give to a seed investor. Most 2-founder garage pre-revenue businesses are deemed worthy of a $1 million valuation, because an investor can be given 20% of the business for a $200,000 investment, which are reasonable heuristics for both parties. Bharat advises founders not to haggle too much over this valuation stage — if the business is successful, this initial financial structure is largely irrelevant for the founders. In subsequent post-revenue investment rounds, operations have more impact on valuation than future revenue projections. Even once there's revenue and a validated business model, projected future revenues are seldom the basis for valuation. There's usually a hockey stick projection, or a long list of unverifiable assumptions. It's more important to investors — and valuers — to examine operations, and specifically whether the business owners have a valid, detailed, and convincing plan to scale up. This kind of operations planning demands great rigor, both for purposes of implementation and for convincing investors. Often, it's the quality of storytelling that underpins the valuation. With a detailed operations plan in place, the selling business founder or proprietor can build a persuasive story about future growth and potential. Here, emotion plays a big part. Can the business owner communicate how intensely the need is felt by potential customers? Can he or she communicate the passion they feel to deliver a solution to those customers? And the deep emotional commitment to the years of hard work it will take to attain appropriately ambitious goals? The story, well-executed, validates the valuation. For businesses like CPA firms, medical practices, and construction, 2 major factors have an outsize influence on valuations. When an investor buys a mature service business, especially a local one, they are generally seeking hassle-free cash flow. They're not looking to buy problems to fix. Two factors stand out for these kinds of buyers. One is reliable recurring revenue from loyal customers. It must be revenues that are fully attributable to the service, and unlikely to be cut when there is a change of ownership. The second is automation or established smooth-running and self-maintaining operations mechanisms. Bharat's advice to sellers of these kinds of businesses is to automate everything you can, with reliable control software wherever possible. These kinds of service businesses may have high levels of reputation and trust based on surveys and qualitative data, but those intangibles must be backed up with the behavioral reliability of the customer base. In today's markets, followers are a highly valued asset. In many ways, recurring revenue is a metric to quantify followership. Ryan Reynolds has a followership. Nike has a followership. Tom Cruise has a followership. These followers are all monetizable as buyers of goods or services or movie tickets associated with these personalities and brands. Your personal brand has value if you have followers and if the followership can be monetized. Every asset can be assigned a valuation — even the State of Hawaii and the Brooklyn Bridge. Bharat has been called upon to give valuations of the Brooklyn Bridge, the Atlanta airport, and the state of Hawaii, among many other famous places or things. Sometimes, the valuation is for insurance purposes, sometimes for accounting. In all cases, there's a number (or a range). Once the what and the why are established, there is a mechanism for valuation that can be applied to any asset or stock or flow. Additional Resources "Pathways To Business Valuation" (PDF): "How to Double Valuation?" (Video): "What's Pre-IPO Worth?" (Video):

    Joe Salerno on Rothbard's History of Economic Thought

    Play Episode Listen Later Oct 19, 2021

    We wrap up our look at Murray Rothbard's sprawling two volume An Austrian Perspective on the History of Economic Thought with Dr. Joe Salerno, Rothbard's friend and colleague. This show covers the second volume exclusively, starting with the Frenchman JB Say and working through Ricardo, the British Currency School, John Stuart Mill, and finally Karl Marx. Salerno has penetrating insights about all of these thinkers, from Say's understanding of production to Ricardo's erroneous systemization of Adam Smith. He also has great background regarding Mises and the Currency School vs. Banking School debate, on free banking and full reserve banking, and on Mill's deep misconception of money. The show ends with a thorough look at Rothbard's treatment of Marx over more than 100 pages: Marx's sick view of man as a collective, his hatred for the division of labor, his absurd and deterministic "laws of history," his materialism as a replacement for spiritualism, and the underlying folly of "superabundant production." You don't want to miss this show! Additional Resources Read Rothbard's important work:

    Samuele Murtinu: How Low Time Preference Elevates the Investment Returns of Family Corporate Venture Capital

    Play Episode Listen Later Oct 19, 2021

    Family businesses play a major role in the US economy. According to the Conway Center, family businesses comprise 90% of the business ventures in the US, generate 62% of the employment in the nation, and deliver 64% of US GDP. And, they're good at venture capital. Samuele Murtinu, Professor of Law, Economics, and Governance at Utrecht University, visits the Economics For Business podcast to share the findings and insights (see from his very recent analysis of venture capital databases. Key Takeaways and Actionable Insights Corporate venture capital is a special animal. There are many types of venture capital. Professor Murtinu focused first on the distinction between traditional or independent venture capital (IVC) and corporate venture capital (CVC). Independent venture capital funds are structured with a general partner in the operational, decision-making role, and investors in the role of limited partner. Corporate venture capital funds are fully owned and managed by their parent corporation. The CEO or CFO of the corporation typically appoints a corporate venture capital manager, who selects targets, conducts due diligence and so on from a subordinate position in the corporate hierarchy. The important difference between IVC and CVC lies in objectives and goals. IVC goals are purely financial — the highest capital gain in the shortest possible time. CVC funds often have strategic goals in addition to, or substituting for, financial goals. These strategic goals might include augmenting internal R&D capabilities and performance, and accessing new technologies and new innovations, or entering new markets. Another form of CVC licenses patented technologies to startups in cases where the corporate firm does not have the capacity to exploit the IP, but can oversee the implementation at the startup with a view to further future investment or acquisition. This is the method of Microsoft's IP Ventures arm, for example. Typically, IVC investments are easy to measure against financial performance benchmarks or targets. CVC's strategic investments are harder to measure. Goals such as technology integration are too non-specific to measure, and normal VC guardrails like specified duration of investments are not typically in place and so can't be used as benchmarks. On the other hand, CVC investments often expand beyond the financial into strategic support via corporate assets such as brand, sales and distribution channels and systems. Corporate venture capital out-performs traditional venture capital in overall economic performance. Professor Murtinu's performance metric in his data analysis was total factor productivity — performance over and above what's attributable to the additions to capital and labor inputs. IVC's performance for its investments was measured in the +40% range, and CVC's was measured at roughly +50%. IVC performs better in the short term, while CVC performs better in the longer term. This difference reflects the lower time preference of CVC. It extends to IPO's: corporate venture capital funds stay longer in the equity capital of their portfolio companies in comparison to independent venture capital. Family CVC is another animal again — and even higher performing than non-family CVC. Professor Murtinu separated out family-owned firms (based on a percentage of equity held) with corporate venture capital funds for analysis. Some of his findings include: They prefer to maintain longer and more stable involvement in the companies in which they invest.They prefer to maintain control over time (as opposed to exiting for financial gain).They look to gains beyond purely financial returns, including technology acquisition / integration into the parent company and/or learning new processes.They are more likely to syndicate with other investors, for purposes of portfolio risk mitigation.They target venture investments that are “close to home” both in geographic terms and in terms of industries closely related to their core business. The resultant outcomes are superior: a higher likelihood of successful exits (IPO or sale to another entity), and a greater long term value effect on the sold company after the IPO or exit. Further, there is evidence from the data of a higher innovation effect for Family CVC holdings, as measured by the post-exit value of the patent portfolio held by the ventures. Family CVC is resilient in economic downturns. During the last economic downturn, family CVC invested at double the amount of corporate venture capital, reflecting family businesses' preference for long-term investing and for control. The lower time preference of family businesses and family CVC is crucial for the achievement of superior financial performance, especially in the longer term. Family CVC's lower time preference and longer investment time horizons result in beneficial effects. Ownership in the venture companies is more stable, and the value effect after IPO (when family CVC stability continues because these funds stay in the post-IPO company longer) is significant. Professor Murtinu relates this phenomenon to Austrian economics. The longer time horizon permits a closer relationship between investor and entrepreneur — it develops over time — and their subjective judgment about the future state become more aligned. Frictions and information asymmetries are reduced, and a shared view of the future emerges. This stability can scale up to the industry level and national level when there are more family CVC funds at work. Instead of pursuing unicorns and gazelles, an environment more conducive to duration and resilience is created. Additional Resources "Types of Venture Capital" (PDF): "Families In Corporate Venture Capital" by Samuele Murtinu, Mario Daniele Amore, and Valerio Pelucco (PDF):

    Critiquing an MMT TED Talk

    Play Episode Listen Later Oct 13, 2021

    Bob provides a running refutation of Stephanie Kelton's recent TED talk on Modern Monetary Theory (MMT). Mentioned in the Episode and Other Links of Interest: Stephanie Kelton's TED TalkBob's review of Kelton's book explaining MMTBob's article on opting out of Social SecurityKelton's intro to MMT, The Deficit MythBob's interview of a founder of MMT, Warren Mosler. Then Bob's analysis of that episodeBob's critique of a popular identity (equation) in the MMT literature. ​For more information, see The Bob Murphy Show is also available on Apple Podcasts, Google Podcasts, Stitcher, Spotify, and via RSS.

    Jay Bhattacharya on Public Health

    Play Episode Listen Later Oct 12, 2021

    Our guest is Jay Bhattacharya, Professor of Medicine and Health Policy at Stanford University. Professor Bhattacharya is also research associate at the National Bureau of Economics Research, a senior fellow at the Stanford Institute for Economic Policy Research, and director of the Stanford Center on the Demography of Health and Aging. Dr. Bhattacharya gained international prominence during the COVID pandemic for his contributions to determining the infection fatality rate of the virus, and for his criticism on broad coercive lockdown policies and vaccine mandates. Along with colleagues Martin Kulldorff and Sunetra Gupta, he wrote the Great Barrington Declaration of focused protection which has garnered 860,000 signatures to date. SHOW NOTES​ Jay Bhattacharya: Twitter and Stanford pageWatch the episode on our YouTube channel

    Fabrice Testa on Super Entrepreneurship

    Play Episode Listen Later Oct 12, 2021

    Entrepreneurship is a method, and it's also a mindset. Fabrice Testa has written a book that brilliantly integrates the two: he calls the integration "Super Entrepreneurship," and his book title is therefore Super Entrepreneurship Decoded ( He has the appropriate credentials as a proven super-entrepreneur who has created and nurtured numerous great companies (and successfully sold a couple of them). Fabrice knows the true meaning of the phrase, “The day before something is a breakthrough, it's a crazy idea”. Entrepreneurs are animated by their purpose. Super entrepreneurs embrace a massive transformative purpose. The motivation for entrepreneurs is to help others — to solve problems for others, as we sometimes phrase it. Super entrepreneurs, in Fabrice Testa's language, are those who choose to dedicate their businesses to solving the biggest problems. By setting big goals, they attract many like-minded partners, collaborators, and employees. By targeting transformation, they aim to change the world in a significant way. In making this choice, super entrepreneurs are delving deeply into their own personal story to understand their own drivers and their own passionate commitment. There's a major self-discovery component. Having set their MTP, super entrepreneurs develop a systematic approach to the pursuit of their goal. Fabrice Testa recommends that super entrepreneurs combine what he calls CRAZY thinking with a relentless sense of purpose. CRAZY is an acronym for elements of entrepreneurship that Testa calls the Five Secrets. We agreed not to give them away, but they add up to a five-step method entrepreneurs can follow, and a checklist that they can use to assess the market power of their own concepts and business models. The context for the 5-step method is the exponential rate of growth of available and applicable technologies for entrepreneurship, and the convergence of those technologies that results in a compounding of productivity. When, for example, sensor-based data collection can be combined with A.I. and robotics, whole new fields of automation open up, potentially helping billions of people. A relentless sense of purpose is a major element in the super entrepreneurial mix. Super entrepreneurs are highly motivated. They display high levels of ambition and drive, and they generate strong momentum. They seek change, and aim for breakthroughs. They love to set the bar high. There is a spirit to super entrepreneurship, an intangible spark of super energy and boldness that sets the best entrepreneurs apart and powers them to unusual levels of achievement. There's a plan, but it's not fixed. Fabrice Testa identifies a master plan for the activities of high-achieving entrepreneurs, but it's not the restrictive plan of the business school strategist. One term he used was Roadmap: there's a goal to get from A to B, but it's OK to visit C, D and E along the way, and to learn and double back and embrace recursive procedures to reach the targeted end-results. The key to success is keeping the goal in mind with flexibility on the route to get there. Let the customer be the guide. Testa subscribes to the protocol of involving the customer early and often in the process of designing and building a product or service or a company. Entrepreneurs are always working with assumptions, and, at minimum, must validate them with customers. He introduced us to the “Starbucks method” of customer validation. Park yourself in Starbucks, order a beverage of your choice, then look around for likely-looking people who might be open to a brief conversation about your idea or proposal or even prototype. It's easy to engage people, they're willing to help, and you can offer to buy them a coffee to lubricate the relationship. A few hours investment of your time and a few dollars invested in coffee will result in a deep, broad and rich set of reactions and responses and a meaningful feedback loop. Success is more about fitting in than it is about timing. When writers and historians are trying to analyze the unusual success of a particular business, they often attribute a lot of the cause of the outcome to timing — the product or service or technology came along at just the right time. This is a misinterpretation. The happy correspondence of a new offering with a receptive context is not timing but fitting in. According to Fabrice, to fit in in a big way is to fit in with the zeitgeist of the era. The dictionary definition of zeitgeist is the general intellectual, moral, and cultural climate of an era. What Fabrice is pointing towards is a heightened ability to sense the movement of the time, and the direction of its flow, and to step into that river at the right point. Entrepreneurship is everywhere, and can be achieved at multiple scales. Super entrepreneurship is not limited by the scale of resources, but it can certainly be augmented wherever resources are abundant. That's why we seek to encourage entrepreneurship for individuals, teams, and firms of all size, including the largest corporations. Big companies under-perform at entrepreneurship for two reasons. First, they spawn bureaucracy, which is a form of organization that is counter-entrepreneurial. Second, they have existing businesses to defend and fear the consequences of self-disruption. The solution is to change the purpose of big corporations so that they can become super-entrepreneurial. The purpose would be to create new businesses with no bureaucracy and separated from the defense mechanisms of existing business units or divisions. Additional Resources Super-Entrepreneurship Decoded: 5 Secret Keys to Create Breakthrough Businesses that Change the World by Fabrice Testa: "Super Entrepreneurship" (PDF):

    Middle of the Road Leads to Socialism: An Online Seminar with Dr. Robert Murphy

    Play Episode Listen Later Oct 11, 2021

    This special virtual seminar for donors to our fall campaign was livestreamed on October 8th, 2021. Jeff Deist and Bob Murphy discuss Mises's views on interventionism and their continued relevance today, particularly after the last year and a half of economic intervention resulting from covid tyranny. "[Interventionism] preserves some of the labels and the outward appearance of capitalism. It maintains, seemingly and nominally, private ownership of the means of production, prices, wages, interest rates, and profits. In fact, however, nothing counts but the government's unrestricted autocracy... This is socialism in the outward guise of capitalism. It is the Zwangswirtschaft of Hitler's German Reich" —Ludwig von Mises, The Middle of the Road Leads to Socialism Read the full text from Mises here.

    Rothbard and Adam Smith

    Play Episode Listen Later Oct 8, 2021

    We continue our look at Murray Rothbard's two volume An Austrian Perspective on the History of Economic Thought with a show focused on Adam Smith. Rothbard attacked him mercilessly as a plagiarist who set economic theory back decades with his muddled views on value and price. But was this criticism justified, or was Smith actually an early and valiant proponent of laissez-faire? Our guest Hunter Hastings defends Smith in this rollicking discussion, while Professor Jonathan Newman is not so sure. They also discuss the Scottish Enlightenment and Smithian thinkers like Bentham and Malthus, and even tackle the contentious question of whether Smith produced Marx. Don't miss this! Additional Resources Read Rothbard's important work:

    Mark McGrath: The Adaptive Entrepreneurial Method: VUCA, OODA, IOT

    Play Episode Listen Later Oct 5, 2021

    Austrian economics is distinctive in its recognition and, indeed, embrace of continuous change: customer preferences change, competitors' actions change, markets change, technology changes, prices change, business methods change. New knowledge is continuously created and accumulated. And Austrian economics equally recognizes that entrepreneurial businesses must change in response: capital combinations change, supplier and customer relationships change, organization structure changes, business portfolios and value propositions change. Continuous change is required — which is something business has not traditionally been designed for. How do businesses manage continuous change? In the current digital age, the rate of change in the external business environment is accelerating, largely as a consequence of rapid technological evolution and the ways in which customer behavior and preferences change in response. We plan to cover the issue of continuous change from multiple angles in the coming weeks and months. This week, Mark McGrath joins us to review a tool for value creation amidst continuous, roiling change. It has been around for a while and so is proven in multiple arenas and situations. It goes by the name of OODA. Key Takeaways and Actionable Insights The OODA loop is a deeply sourced tool that draws on eastern philosophy, western science, and aligns with Austrian economics. When a firm as a network of individuals, knowledge, ideas, tools, processes and resources works with clients and customers and their systems, all should be better off as a result of their co-ordinated action. The better the capacity to learn and make adjustments together, the better the capability to recognize and seize opportunities, and to act at co-ordinated speed. Those who can handle the rate of change fastest will be the most successful. The originator of the OODA loop model, John Boyd, synthesized thinking from multiple sources about this problem. In business, we can call it the Adaptive Entrepreneurial Method. The loop is triggered by uncertainty, or what is referred to in the model as VUCA: Volatility — circumstances change abruptly and unpredictably; Uncertainty — knowledge is incomplete and the future is indeterminate; Complexity — we are individuals in a dynamic interconnected whole with emergent outcomes; Ambiguity — multiple interpretations from multiple observers, and multiple conclusions. VUCA enters the OODA loop as unfolding interaction with the ever-changing external environment or market, as information and data coming into the company, and as unfolding circumstances, whether these are the company's own sales trends and customer relationships or the activities of competitors. VUCA is the state of the universe. It's the normal condition that entrepreneurs should assume as the basis for action. It also creates an exciting state of opportunity in which dynamically adaptive entrepreneurial businesses can thrive. OODA is a feedback loop. OODA stands for observing, orienting, deciding, acting — a continuous process. [[{"fid":"126373","view_mode":"image_no_caption","fields":{"format":"image_no_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"The OODA Loop","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"1":{"format":"image_no_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"The OODA Loop","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""}},"attributes":{"alt":"The OODA Loop","class":"media-element file-image-no-caption media-wysiwyg-align-center","data-delta":"1"}}]] Orientation is critical to successful operation of the model. For a firm or for an individual entrepreneur, orientation is a mélange of inputs: mindset, personality, our way of thinking and interpreting, previous experiences and how we've processed them, our ability to process new information, our ability to handle change, our ability to analyze and break things down while simultaneously piecing things together and synthesizing them into an insight or construct that never existed before. Orientation houses all our biases, and all our cognitive models. It's how we perceive and how we experience the world. It determines how we process all the information we observe. Decisions are hypotheses. From our orientation-determined analysis and synthesis of incoming data, we envision a future state: what could happen if we did something? In Misesian terms, we imagine what it would be like in the future if we were able to address our own uneasiness — if we were to change our current state and trade it for another one. Any action that follows must be preceded by a decision, a hypothesis of what we think might happen. Action is an experiment to test the hypothesis. In applying the OODA loop, entrepreneurs demonstrate a bias for learning and a bias for action. We learn by testing what happens when we act and making new observations of the outcomes of the action. These outcomes will give us new signals to employ in re-orienting to ensure that our decisions and actions are well-aligned with reality. The OODA loop model is consistent with the Explore and Expand approach to business strategy. At Economics For Business, we have frequently urged entrepreneurial firms to abandon business school strategic thinking and replace it with an Explore-And-Expand approach, running many fast, low-cost exploratory experiments and quickly expanding investment in those that work, discarding others. In OODA loop, experiments are decisions and actions, and re-orientation results in expanding application of the successful ones. In OODA, we continuously build and re-build our perception of the VUCA world and attempt to match our perception with reality through exploration and expansion. We aim to ensure our orientation is attuned to the way the world is and not to the way we want it to be or imagine it to be. The more we learn, the more we build and re-build, the faster we can advance. Speed of learning is important, so long as it is based on well-processed information. Guidance and control. In the OODA loop graphic, there are two areas designated “implicit guidance and control”: our actions and our observations. Our orientation implicitly guides and controls both. Our orientation as entrepreneurs or as economists will always affect how we perceive things. Where some might see an obstacle, others see an opportunity. That's orientation at work. On the action side, orientation implicitly guides and controls our actions. There are some things we can do automatically, employing heuristics or procedures that we don't stop to think about. This also is orientation at work — and at speed. Continuous testing. The OODA loop, processing VUCA information into decisions and action via continuous reorientation, is a test. An entrepreneur is always being tested. As time moves unstoppably forward, new challenges continuously emerge. It's the ceaseless flux of human affairs, as Mises put it in Human Action. If we maintain an open and flexible or agile approach or orientation to this continuous testing, we'll avoid failure. Focusing on a well-understood purpose will eliminate wasted time and wasted action. The Adaptive Entrepreneurial Model has three major elements: VUCA, the way the world is; OODA, as described above; and IOT. IOT stands for In Order To: the purpose or mission. As we deal with VUCA, and continuously change our orientation as we learn from our decisions and experiments, quickly finding out what works and what doesn't, we must never lose sight of our purpose and our intent. What are we trying to accomplish? Everyone in our firm, or on our team, must share the same purpose and be able to articulate it in the same way. When that's the case, creative and co-ordinating action can move forward without instruction: we don't have to tell people what to do when they're in the middle of VUCA so long as they have the same shared purpose in mind. Everyone focuses on what needs to happen and why. There's never action for action's sake; it's always with a shared purpose. If team members do not share the same understanding of purpose, then they're creating more VUCA. If they do share understanding, the orchestration of their individual efforts produces harmony. People, ideas, things — in that order. All action is human action, all decisions are human decisions, all teams are human teams. When orientations are aligned, harmonious co-ordinated action is possible. There's a high priority on relationships — with teammates, colleagues, customers, vendors, partners. In a business utilizing the OODA model, people always come first because they are the ones who act. Ideas follow, judged through the lens of helping people to decide and act. Things — technology, property, money — are at the third priority level to ensure they support people and enable their ideas. "A sound understanding in application of these comments will yield geometric results." Improved results are the repayment for the effort expended to study the Adaptive Entrepreneurial Method. Additional Resources "The Adaptive Entrepreneurial Model — Core Thesis" (PDF): John Boyd's "OODA Loop Graphic" (PPT): "The Epistemology of the OODA Loop" (PDF): "Destruction And Creation" by John R. Boyd (PDF): The Theory Of Dynamic Efficiency by Jesús Huerta De Soto: The Ultimate Foundation Of Economic Science by Ludwig von Mises:

    COMMON SENSE: The Case for an Independent Texas

    Play Episode Listen Later Oct 5, 2021

    Bob covers some of the key points in his new pamphlet on restoring the Republic of Texas. Mentioned in the Episode and Other Links of Interest: Bob's new pamphlet, COMMON SENSE: The Case for an Independent TexasBob's recent appearance on Tim Pool's showBob's article on opting out of Social Security ​For more information, see The Bob Murphy Show is also available on Apple Podcasts, Google Podcasts, Stitcher, Spotify, and via RSS.

    Rothbard's History of Economic Thought from Greeks to Physiocrats

    Play Episode Listen Later Oct 1, 2021

    Was Adam Smith the founder of modern economics? Not so, says Murray Rothbard in his staggering two-volume An Austrian Perspective on the History of Economic Thought. Dr. Patrick Newman joins the show for a look at Rothbard's treatment of economics before Smith—from the Ancient Greeks all the way to the Scottish Enlightenment—and his take no prisoners revisionist approach. Jeff Deist and Dr. Newman cover Aristotle and Plato, Aquinas, Protestants and Catholics in the Middle Ages, Spanish Scholastics, Mercantilists, French Physiocrats and Turgot, and the criminally underappreciated Richard Cantillon. If you're a fan of economics and non-bowdlerized history, don't miss this! Additional Resources Read Rothbard's important work: Find out more about Dr. Newman's new book:

    Joe Salerno versus Paul Krugman on Austrian Business Cycle Theory

    Play Episode Listen Later Oct 1, 2021

    Using a recent Paul Krugman column as the jumping off point, the Mises Institute Academic Vice President Joe Salerno explains and defends Austrian business cycle theory. Mentioned in the Episode and Other Links of Interest: The YouTube version of this interviewBob's response to Krugman's NYT pieceJoe Salerno's 2012 QJAE article responding to ABCT criticsJoe Salerno's previous appearance on the Bob Murphy Show ep. 16Bob's critique of Selgin on Canadian fractional reserve banking ​For more information, see The Bob Murphy Show is also available on Apple Podcasts, Google Podcasts, Stitcher, Spotify, and via RSS.

    Murray Sabrin's 7-Point Entrepreneurial Solution to the Medical Care Crisis

    Play Episode Listen Later Sep 28, 2021

    Entrepreneurs solve problems for customers. There are few problems bigger than the horribly perverse medical care system under which patients suffer in the US. The system has evolved over time, with the stimulus of bad decisions, bad actors, and bad incentives. Entrepreneurship can solve the system problem with specific actions at the component level, each of which are practical and do-able, and can interact to create a new outcome at the system level. Murray Sabrin has studied both the system and the component solutions, and he joins the Economics For Business podcast to enumerate his proposed actions. Key Takeaways and Actionable Insights Healthcare is a consumer good, and a consumer responsibility. Medical care is a provider proposition. Consumer sovereignty is a cornerstone concept in Austrian economic theory. Consumers determine what is produced as a result of their buying or not buying. Does this principle apply in healthcare? To answer requires us to differentiate between healthcare and medical care. Healthcare is an individual choice and a personal responsibility: we do everything we can to maintain a healthy lifestyle of eating and drinking, exercise and sound physical and mental health practices. In the internet age, there is plenty of knowledge available to help us in our decision-making. Medical care is what we turn to when sound healthcare proves to be insufficient to keep us off medication and out of hospital. How do consumers realize value from medical care providers? To do so is very challenging due to (among other barriers) price fixing, price opacity, price inflation, monopolistic and duopolistic market structures, the misuse of insurance, bureaucratic management, perverse incentives, government intervention, and barriers to entrepreneurial entry. Are there potential solutions in the face of this systemic dysfunction? Yes: solutions that come from the best countervailing source — entrepreneurship. Entrepreneurial Solution #1: Direct Primary Care — Restoring the doctor-patient relationship. Murray Sabrin recalled the $5 doctor visit of the past, characterized by a personal relationship with no bureaucracy or insurance forms. Entrepreneurs are now re-establishing that relationship via Direct Primary Care. DPC is retainer fee-based access to unlimited doctor visits, including office-based testing and additional services, with no insurance forms. DPC doctors have fewer patients in their practice and can consequently provide more time and attention. Stronger relationships are built, which is the essence of entrepreneurial value-generation. Entrepreneurial Solution #2: Transparent versus distorted pricing. Pricing is one of the most important bulwarks of free markets. In medical care, pricing is opaque to the point of invisibility, distorted, and inflated. It is unresponsive to the normal choice-based supply-demand mechanisms, and not indicative of value. Some entrepreneurs are acting to change these pricing conditions via what is termed fee-for-service: transparent pricing for specific services. An often-cited example is Surgery Center of Oklahoma, where specific prices for specific surgical services are openly posted on their website. Other members of the Free Market Medical Association provide similar price transparency. One of the results is revelatory price comparison: Murray told the story of a DPC practice patient who identified a 75% price reduction at Surgery Center of Oklahoma compared to a local South Florida hospital. Entrepreneurial Solution # 3: One stop shopping at local non-profit clinics. Murray described the launch and success of several non-profit local and regional clinics, including one for which he was the founding trustee. These are philanthropically established and funded local clinics with volunteer staff, providing a range of services. Equipment and pharmaceuticals may be fully or partially donated by the manufacturing companies. The combination of direct primary care doctors and specialists can make these clinics one-stop shopping solutions for patients seeking quality medical care. With a little philanthropic assistance, they could eliminate the need for Medicaid. Entrepreneurial Solution #4: Direct Contracting. Insurance companies purposefully inflate medical care prices to fund their business model. Murray told the story of a large (4-500 employees) company that contracted directly with a service that brought a vehicle with an MRI machine to the employers location, and charged $400 per MRI to the employees. The same vehicle was utilized by a nearby hospital that charged $6,000 for the same MRI. Direct contracting saved $5400 per unit cost, or 90%. Direct contracting has the potential to significantly reduce costs in the Medical Care system, while opening access and increasing convenience. Entrepreneurial Solution #5: The 3-tier household medical care budget system. Murray has a well-constructed and eminently practical household medical care budget system. There's a version for families with at least on member in employment and an alternative for those on Medicare today. There are three elements: Direct Primary Care for a monthly fee, covering unlimited office visits and routine tests.A Health Savings Account to cover costs of specialists, prescription drugs, medical equipment, major tests and brief hospitalizations.Catastrophic insurance coverage for major operations and hospitalizations and long term care. Greater detail is provided in Murray's book, Universal Medical Care From Conception To End Of Life. Download our corresponding PDF, which features an adapted table from Murray's book: In a system of personal responsibility, we would all manage our household medical care budgets with these kinds of tools. Entrepreneurial Solution #6: Voluntarism And Mutualism. Voluntarism has a long tradition in America. Mutual aid societies were prevalent before the New Deal. Ethnic, religious and trade groups joined together for mutual support. The Federal Government co-opted these functions and now people look to Washington DC to solve their problems. But young people today are more interested in voluntarism and non-political social activism. 30 years ago in the Wall Street Journal, Peter Drucker argued for the non-profit sector to replace the welfare state. Creative and innovative people find ways to surmount institutionally-erected barriers in all phases of life, and medical care is certainly one of those. There's a liberating and energizing sense of acting as the custodian of one's own life and helping others who need it. It's the entrepreneurial ethic. Entrepreneurial Solution #7: Distributed Knowledge. There is so much available knowledge today about healthy life habits and about the symptoms and characteristics of various medical conditions, and about options for treatment. We as individuals are free to explore, and responsible for gathering our own store of knowledge. The outcome of the research may not be definitive, and we may find ourselves making a choice between alternatives. But doctors and hospital administrators make choices too, and they are not infallible. It may be possible for an individual to gather more knowledge about their own specific condition from the internet than any single doctor can know, simply as a consequence of concentrated effort. Each of us can take responsibility for our own life. Summing up: Murray Sabrin's prescription: Eliminate employer-based insurance.Make a single exception for the case in which the employer pays the direct primary care fee for the patient.The resultant employer savings are deposited in employees' health savings accounts.Employees determine their best medical care options.Phase out Medicare and Medicaid.Let young people create super health savings accounts so that they don't need Medicare in the future.Hospitals price at realistic market pricing, not insurance-inflated prices.All prices are transparent.Get the government out of medical care — it's none of their business.Free up resources from the medical-pharmaceutical-insurance complex and redirect them to savings, investment and philanthropy. Additional Resources Read Murray's book, Universal Medical Care from Conception to End of Life: The Case for A Single-Payer System: It's self-published and all proceeds go to charity and non-profits. "Individual Single-Payer Alternative For Employer-Based Insurance" (PDF): Surgery Center Of Oklahoma: Forward: Direct Primary Care Coalition: Volunteers in America:

    Dr. Patrick Newman Introduces Rothbard's History of Economic Thought

    Play Episode Listen Later Sep 24, 2021

    Just a few years prior to his death, Murray Rothbard started one of his most ambitious writing projects: a full-fledged, three volume history of economic thought from a uniquely Austrian perspective. Unfortunately he never wrote the third volume, intended to span the post-Marx marginal revolution all the way through the mid-20th century. But the two existing volumes, over 1000 pages, start with ancient Greece and make their way to Adam Smith, Bentham, JS Mill, Ricardo, and Marx. As always, Rothbard is both compelling and radically revisionist. Contra most economic historians, he believed the proto-economists before Smith had much to offer. Both the Spanish Scholastics and French Physiocrats, for example, showed an understanding of value and subjectivism well before Smith developed his muddled cost theory. These two volumes (free here in pdf!) are a must read for any student of economics, and Dr. Patrick Newman is the perfect guest to bring them to life. Don't miss this first in a series of episodes on An Austrian Perspective on the History of Economic Thought. Additional Resources Read Rothbard's important work: Find out more about Dr. Newman's upcoming book:

    Max Hillebrand on Free Software Entrepreneurship with Bitcoin

    Play Episode Listen Later Sep 21, 2021

    Entrepreneurs are developing a new world of innovative business models far from regulated markets, crony capitalism, and corporate control. It's a new world of cyber security, free software, value-for-value exchange, integrated with bitcoin. Max Hillebrand operates in this new world, and he shares both his vision and his expertise on the Economics For Business podcast. Key Takeaways and Actionable Insights The praxeology of cyberspace. Praxeology is timeless, with equal application in this era of cyberspace and the internet as in any other era. Individuals are in a state of unease, and they can perceive a better future in which their unease is relieved. They allocate resources to achieve that end. Those resources can be scarce or non-scarce. Non-scarce goods are non-rivalrous; I can share them with you and not give them up for myself. Information goods are non-scarce. They are patterns of words and symbols that can be shared. This is the world of free software. It's also the world of cyber security. Cryptography is just a math formula. If I wish to express myself freely to one other person or a small group of people, I can enable my non-scarce expression for only that small group, giving them the private key to decrypt the message. The value of free software: scratch your own itch. A growing cadre and movement of internet entrepreneurs is engaged in the preparation and distribution of free software. Free doesn't mean it's not valuable. New technologies and new free software are created to solve customer problems more efficiently and more effectively. One of the beautiful attributes of free software is that it is open to user contribution — anyone who can read the software can change the software and publish those changes, so that future users can enjoy an even better experience. Everyone in the free software community — producers and consumers — is incentivized to ensure that the tools that they all use are running at their best. This is sometimes referred to as the “scratch your own itch” ethos. The creators of the software are also the users of the software. Customers know the problems that they want to have solved, and give the ultimate feedback of fixing it themselves. Free software in business. Producers of free software create the highest quality technology tools. Entrepreneurs looking for the best technology have an incentive to seek out these producers and their products. There is no lack of demand. How do the producers get paid for their development efforts? One way is via a service exchange. Users of free software often like to add customization, personalization and locally specific integration features to free software that they use. Producers can be contracted and compensated for these customization services. Red Hat followed this business model of servicing Linux users all the way to a $US34 billion valuation in an acquisition transaction with IBM. Value-for-value exchange: a new business model? The second way to get revenue from free software production is via donations — users recognize the value of the experience of using the product and voluntarily send payment to the producer, even though no “price” was asked. This emergent concept of voluntary payments made for freely distributed valuable content and products is beginning to bloom into a new form of exchange, which has been given the name of the value-for-value (VFV) model. It's especially prevalent on the blockchain and on bitcoin networks. Take a freely distributed podcast as an example. The producer can put a Bitcoin lightning network public key in the RSS feed and listeners can voluntarily send any amount of bitcoin back for every minute they are listening to the podcast. This happens automatically in the background when the listener hits Play and stops when he or she hits Pause or Stop. One-time payments can be made as well, if preferred. Payment can be boosted if the listener here's something they deem especially valuable to them and wish to extend an extra reward. It's the ultimate market feedback mechanism. Bitcoin as free software Bitcoin is another tool of cyberspace, engineered and designed to solve the problem of money. Many innovators over time have made attempts to create digital money to make internet transactions fast, infinitely cheap, stable and private. But none of the attempt, until bitcoin, were able to solve the problem of verification of transactions and enforcement of rules without a trusted third party. Bitcoin solves the important problems, not just of verification but of “who verifies?” Verification is always and ultimately human. Bitcoin entrains entrepreneurs who download the bitcoin software and confirm they are running the agreed monetary rules on their own hardware. When another entrepreneur connects and asks for rules-based verifications of valid transactions, bitcoin merchants on the network are running the software and checking the transactions of others. They are entrepreneurs producing verification according to established and agreed rules. It's an entrepreneurial merchant network. Get paid in bitcoin, hold bitcoin, invest with bitcoin. Max emphasizes 3 aspects of the bitcoin enabled life that can insulate and protect entrepreneurs from the inflationary fiat future. Get paid in bitcoin To get paid in bitcoin means to have a “censorship resistant” method of receiving payment from customers. People who do not have access to a bank account can become entrepreneurs. People whose bank accounts might get shut down can remain entrepreneurs. Anyone who fears for the future of the fiat system can insulate themselves against future payment system uncertainty. Hold cash reserves in bitcoin Saving should mean holding an asset without counterparty risk. Bitcoin serves that purpose — it's counterparty risk-free money. Holding a reserve without counterparty risk frees the individual to make a trade with an entrepreneur at any time in the future. There I no risk of inflation. Your saving can't be diluted. Denominate your contracts in bitcoin When more and more entrepreneurs denominate their contracts in bitcoin, a stable monetary asset that cannot be inflated, the detrimental cycles identified by Austrian Business Cycle Theory can be eliminated. This is the exciting long term prospect of bitcoin. It may be a long path, and it will take time and courage to complete the journey, but it is possible. There are entrepreneurs today (Max is one) who get paid exclusively in bitcoin and hold their cash reserve in bitcoin. Additional Resources Max's website: Some examples of free software tools: Professor Mohammad Keyhani's Entrepreneur Tools: Cryptoeconomics: Fundamental Principles of Bitcoin by Eric Voskuil:

    Pandemic Ethics: Is Public Health Out of Control?

    Play Episode Listen Later Sep 20, 2021

    Our guest is Euzebiusz (Zeb) Jamrozik, MD, PhD, a practicing internal medicine physician and fellow in ethics and infectious diseases at the Wellcome Centre for Ethics and Humanities at the University of Oxford. He is head of the Monash-WHO Collaborating Centre for bioethics at the Monash Bioethics Centre. His academic work on infectious disease ethics is focused on vaccines, vector-borne disease, and drug resistance. Dr Jamrozik is lead author of the report of a Wellcome Trust funded project on ethical and regulatory issues related to human challenge studies in endemic settings. SHOW NOTES​ Zeb Jamrozik, MD, PhD: Twitter and WebpageJamrozik E and Heriot G. “Imagination and remembrance: What rolw should historical epidemiology play in a world bewitched by mathematical modelling of COVID-19 and other epidemics.” (In History and Philosophy of the Life Sciences free text available)Jamrozik E and Heriot G. “Not in my backyard: COVID-19 vaccine development requires someone to be infected somewhere.” (In The Medical Journal of Australia free text available)Euzebiusz Jamrozik and Michael Seldeling. Human Challenge Studies in Endemic Settings: Ethical and Regulatory Issues (Springer, 2020, free text available)Watch the episode on our YouTube channel

    Mark Packard: How to Put Time on Your Side

    Play Episode Listen Later Sep 14, 2021

    Entrepreneurial action occurs in time. This brings uncertainty, because of continuous change. We can't know what will be our future result, yet we must produce now in order to discover it. Are there answers to this conundrum? Yes. They're found in action, and the timing of action (see Mark Packard joins the Economics For Business podcast to share his research. Kay Takeaways and Actionable Insights There are three ways we can think about time. Eternalism: Time goes back in the past to infinity and forward in the future to infinity. It's a real thing, e.g., we can identify “points” in time. This is the time of physics. Presentism: Past time does not exist, it is a memory pattern; the future is undetermined, it's just a mental image. The only time that exists, and is real, is now. This is the time of Austrian economics. Growing tree: The past is real, it has been determined, and there is one real historical truth (think roots and branches). The present is real and unfolding (new leaves growing every day). The future is undetermined. Presentism is the view of time that best aligns with Austrian entrepreneurship and subjectivism. Entrepreneurs act based on their own sense of time, which can be both objective (the clock is ticking) and subjective (how I act in time and how I feel about it). Entrepreneurial action occurs in time, which brings uncertainty. Why must entrepreneurs deal with uncertainty? Because production takes time, and there is continuous change, so the outcomes of the production process in the future can't be known. Even if the entrepreneur knows what demand is today, it can change over time, and can't be known in the future. Businesses choose entrepreneurial action long before they know how it is going to turn out. Entrepreneurial uncertainty is a consequence of the existence of time. Time is scarce, but it's not a resource. We can legitimately refer to time as being scarce. We often feel as though there is not “enough” of it. We'd like to be able to try to pack more effort and action into the time available to us. When we talk in terms of scarcity, it's tempting to think that time is a resource, akin to other scarce resources. We manage those other resources, we allocate them, we combine them, we use them efficiently. We'd like to think the same way about managing time. But we don't have control of it. Time just flows. It's not at our disposal to use and allocate as we see fit. We can't defer judgement on how to allocate our time, for example, because time keeps flowing and by deferring judgement we just did allocate some present time to not acting. The resource over which we do have control is our effort. We can choose how to allocate our efforts in time. Our efforts are not scarce in the same way that time is scarce. Our efforts are limitless; we can put effort into a wide range of applications. It's because time is scarce that effort must be allocated as if it were scarce. As time flows, customers' perception of value changes, and entrepreneurs must follow this change process closely. The effects of the flow of time are not exclusively limited to the allocation of entrepreneurial effort. They are also manifested in the customer's Value Learning Process. (Mark Packard describes this in detail, and gives us some management tools:,,, and As a result of the flow of time, customer value is a process. Customers prefer the best satisfaction they can presently identify. As time flows, and they gain more knowledge and experience, what they value changes. Their preferences are different in the future than in the present. There is continuous change. Since consumers are sovereign to the entrepreneur, it is mandatory to keep up with these changes. The continuous process of value learning never stops, and entrepreneurs must follow closely, gathering feedback, empathically interacting with this feedback, and making adaptive changes in their value propositions in response. Sometimes, customer preferences may stabilize. Entrepreneurs may come to believe that there is a loyal cadre of reliable customers, and may invest in nurturing this loyalty and in relationship building. But they can not permit themselves to become too comfortable in these relationships. Customers are not loyal to a product or service or brand or supplier. They always seek the best satisfaction, and once new knowledge is available to them, they will change their behavior. All entrepreneurial choices about action are made in the context of time, with significant consequences for outcomes. Because customer preferences are continuously changing through time, entrepreneurs are faced with an uncertain decision about when to act. At what point in time do they have enough knowledge to go to market with a new value proposition, or a new or improved product or service? They know that, as soon as they act, customer preferences are going to change further (perhaps as a consequence of the action). If the entrepreneur decides that acting as the first mover in introducing an innovation gives them an advantage, they also know that competitors have an opportunity to process the new changes and overtrump that advantage as a second mover. Both are competing over the customer's shifting sense of greater satisfaction. When does the entrepreneur know enough? How does a business identify the narrow window in the customer's value learning process that provides a signal to act? Timing is a big, important piece in the entrepreneurial puzzle. There are several areas of time management where entrepreneurs can improve their skills. While time isn't a resource to be allocated, it provides a context for action in which entrepreneurs can subjectively make changes for the better. Recalibration Is your internal clock moving too fast or too slow? Do you find that you are always running late, or, alternatively, arriving too early and consequently “wasting” time (i.e., burdened with time periods you can't fill with appropriate action)? If so, it's time to recalibrate. Change the pace at which you do things. The world proceeds objectively at clock time, but your internal clock is subjective. You may need to align the clocks better. Change your schedule or rearrange your tasks to make your internal clock better aligned with real clock time. Better time planning Sometimes we simply err in assessing how much time to allocate to each of our various tasks. Each one takes longer than we planned, and by the end of the day, we're several tasks “behind” and some will remain undone. If that happens over and over again, if there is regularity in your mistiming, you should change your mode of planning. Allocate different — more realistic — amounts of time to the completion of each task. Allow for delays. Don't “lose track of time”. Fix your prospective memory Do you put tasks on your to-do list for the future and then forget them? This is a failure of prospective memory — your memory of the future. Prospective memory is your recall of the schedule you had planned out for yourself. One answer is to use mechanical or digital aids. Write down your to-do's on a calendar. Enter them into your phone. Set an alarm as reminder. Whatever, happens, don't be the bottleneck. Time management is not trivial. For entrepreneurs, being late, missing meetings, missing deadlines, or experiencing delays is likely going to cost you dearly. Don't be the bottleneck, don't be the one causing the problems, for your colleagues, your partners, your customers, or any collaborators. Fix your own timing issues. Additional Resources "How to Master Time" (PDF): "Value is a Learning Process" (PDF):

    Mark Spitznagel Teaches the Economists How to Invest

    Play Episode Listen Later Sep 14, 2021

    Bob reviews Mark Spitznagel's latest book, Safe Haven: Investing for Financial Storms, on which he was a consultant. Bob explains that Spitznagel rejects the alleged dichotomy between risk and return, and then gives a numerical example to illustrate the two schools of thought. Mentioned in the Episode and Other Links of Interest: Bob's appearance on Jordan Peterson‘s podcastBob's surprisingly high ranking among influential economistsHis episode with Winston Ewert (who helped design the AI that produced the ranking)Mark Spitznagel's new book Safe Haven: Investing for Financial Storms and his previous book, The Dao of Capital ​For more information, see The Bob Murphy Show is also available on Apple Podcasts, Google Podcasts, Stitcher, Spotify, and via RSS.

    Misadventures in Fibrillation

    Play Episode Listen Later Sep 13, 2021

    Our guests are Thomas Wingert, a patient, Bogdan Enache, an electrophysiologist at Centre Hospitalier Princesse Grace in Monaco, and Saurabh Jha, an Associate Professor of Radiology at the Perelman School of Medicine and the University of Pennsylvania. SHOW NOTES​ Point/Counterpoint on Halting the Implantation of Subcutaneous ICD. Editorial by B. Enache and J. Mandrola in JACC Electrophysiology.Watch the episode on our YouTube channel

    Murray Sabrin's New Book on Escaping Medical Fascism

    Play Episode Listen Later Sep 10, 2021

    On the heels of Biden's vaccine mandate announcement, Dr. Murray Sabrin joins the show to discuss his new book on escaping the state's medical fascism. Universal Medical Care from Conception to End of Life lays out the sobering reality of our unsustainable "health care" system. It explains the ruinous policies which changed doctors from respected guardians of patients to functionaries for government and third party insurance companies—and the unsustainability of our current path. But the book also shows us the way out. The model for market medicine is simple enough: patients pay cash for basic services, have high-deductible catastrophic insurance for emergencies (priced according to actuarial realities), while charitable hospitals and clinics serve the truly poor and indigent. Heroic entrepreneurial doctors already operate in this cash-only marketplace, and Sabrin's book gives us a road map for delivering better and cheaper medical care to millions of Americans. Additional Resources Watch the Mises Institute's Medical Freedom Summit held in June: Order Dr. Sabrin's fascinating new book:

    Per Bylund: The Unrealized

    Play Episode Listen Later Sep 7, 2021

    Understanding The Unrealized requires us as entrepreneurial businesspeople to think better, and to resist settling for what is merely feasible in a regulated, risk-mitigated world. We must ask what could be possible in a different world, and act on that basis. Sound economics supports such action. Per Bylund takes us through his thinking about The Unrealized. Key Takeaways and Actionable Insights First, see beyond what's there. From Bastiat's famous parable about the broken window comes the economist's instinct to think about 2nd, 3rd, and Nth order consequences of actions. These are typically unseen by those who don't think like economists, and never even considered by politicians. Entrepreneurs always have 2nd or 3rd alternative actions in mind if the consequences of their first choice are unexpected, and they will always adjust further if required by customer feedback, with the constant aim of producing high customer value and satisfaction. They see beyond what's there. Government regulators and legislators make promises on the basis of forecast 1st order consequences only. Regulators promise that the consequences of their actions will be beneficial, at least to some groups. For example, in minimum wage legislation, they promise a pay raise for the lowest paid workers. What is not seen are all the jobs that disappear — are never offered — as a 2nd order consequence of making minimum wage labor unaffordable to the profit seeking entrepreneurs, the ones who create jobs. Beyond the unseen is The Unrealized. In reality, regulations are not what politicians promise. They are not actions to help people. They are restrictions on entrepreneurs' economic behavior. Entrepreneurs are aiming at satisfying customer wants as much as possible. Regulations aim to restrict this customer-satisfying action by forbidding certain innovations, or declaring that they must be designed and implemented in ways that have value for the regulator and not for the customer or entrepreneur. Entrepreneurs are forced to abandon some of their efforts to generate new value by satisfying customers, or to redirect their efforts into less value-producing channels. The potential output of their creativity goes Unrealized. Society accumulates and compounds losses when entrepreneurial creativity is curtailed. What could have been the case if entrepreneurs were unbound, if the regulatory chains were cast off? We can't know. But we can know that The Unrealized is a cost to society. And the cost is cumulative. Technology and innovation thrive and grow in response to observations of how customers experience value from it. Entrepreneurs introduce a new application of technology by building on what's available today and adding to the value experience that they observe customers enjoying today. If innovation is restricted by regulation (or any other barrier), these observations can't take place. The next big thing that builds on today's big thing won't happen. We keep falling behind what is possible because of these regulatory restraints. Consumers become cumulatively worse off. Society is permanently and increasingly damaged. We are placed on a different value trajectory — one that limits our options. What if Henry Ford had been restricted from introducing assembly line manufacturing of automobiles? It's not hard to imagine such a case in the OSHA environment of today. What if the innovation cloud of new roads, better engines, gas stations with coffee and hot dogs, and all the other ancillary results of assembly line manufacturing had not been allowed to form? Such a thought experiment demonstrates how regulation places society on a different trajectory than what is possible from unlimited entrepreneurial innovation. Will Uber's technology launch us on a trajectory of ever-more-ingenious applications of on-demand service, stimulated by consumers' unlimited imagination of greater and greater convenience? Or will taxi medallion regulation permanently limit that imagination to keep it within the boundaries of bureaucratic compliance and control? Per Bylund's term for the effects of bureaucratic control is limited optionality. Quality of life is elevated when we have greater optionality. Regulators don't want us to have that experience. Less optionality means less value. Continuous reinvention can't be planned. The second and third and Nth order consequences of unrestricted entrepreneurial creativity and consumer imagination are not subject to planning. Emergent new inventions and innovations are not predictable. The probability of positive outcomes from the creative process can be enhanced by entrepreneurial intent and aspiration and effort. But on the other hand, the range of positive probabilities is greatly reduced by restrictions on that intent and aspiration. What could be is bounded by what is attempted, and regulations narrow the field in which attempts are made. Make sure you do not restrict your own creativity with self-imposed regulation-like limitations. Regulation limits innovative possibilities. What if the same is true of your own entrepreneurial practice? What if The Unrealized is concealing itself in your own business? Are you sure that your imagination about possible futures based on your understanding of customer wants is expansive enough? Are you sure that you have considered all possible approaches to satisfying those wants, even the ones that are most unlikely? Have you examined every possible pathway to a unique position in the marketplace? Have you found every possible way to cut out cost and time from your production process? Are all your processes designed and engineered to remove all barriers to successful outcomes? If you are inside a corporation, are there corporate restrictions that act like regulations, channeling your creativity into pre-ordained pathways and towards pre-selected attractors? Are there unnecessary constraints on emergence? The Unrealized lurks everywhere. The entrepreneurial task is to root it out. Additional Resources Per Bylund's book, The Seen, The Unseen, And The Unrealized: Mises U 2021 presentation, "The Seen, The Unseen And The Unrealized": "The Broken Window Fallacy" by Robert P. Murphy: "Compounding Shortfalls in Innovation" by Hunter Hastings: "Mark Spitznagel: At What Price Safety?" — another take on The Unrealized from an investing perspective:

    Kingsley Amis's Lucky Jim

    Play Episode Listen Later Sep 3, 2021

    Having branched to our first novel with All Quiet on the Western Front, the Human Action Podcast begs your indulgence for one of the works of 20th century British satire. Lucky Jim is the late Kingsley Amis's seminal send-up of campus life, and it's among your host's favorite books. The book takes place in 1951, and England is trying but failing to lose its class distinctions. The protagonist Jim Dixon is singularly unfit for the academic life he's chosen, and the opportunities for Amis to skewer both the academy and English society are manifest. Allen Mendenhall of Troy University joins the show to discuss the academic pretenses and foibles punctured by Amis, along with great insights about Amis's background and political views. If you like satire, don't miss this show or this book!

    Ulrich Möller: The Video Game Industry Points to the Future of Organization Design

    Play Episode Listen Later Aug 31, 2021

    Austrian economics has a lot to say about how to organize firms for maximum value generation. Austrian principles point to the delegation of entrepreneurial judgement to the front-line employees who interact directly with those who actually create value: users. The military organization models of the twentieth century, involving command-and-control in hierarchical structures, are slow to change, and the management literature evidences an unwillingness to abandon the hierarchy. But there is a fast-growing industry that's the locus of prodigious value generation where the hierarchy has already been abandoned and flat networks of distributed judgement are taking its place. Ulrich Möller is one of several Austrian economists who are studying the firms in the video game industry and demonstrating how their findings can bring positive organizational change to the rest of the business world (see our E4B Knowledge Graphic at Key Takeaways and Actionable Insights Organizational innovation has a long and successful track record in the video game industry. A lot of value has been generated in the video game industry in a short period of time. Video games surpass movies and music in revenue. Without a long history of corporate hierarchies and bureaucracy to shed, firms in the industry embraced the organizational innovations of open source software, including anonymous collaboration among highly distributed self-organized teams, peer review systems, and agile processes. In addition, the industry created its own laboratory for testing revolutionary organizational theories in virtual economies set in virtual worlds. Valve is a company in the video game industry that took organizational innovation to its logical conclusion: the end of hierarchy. Valve — a very successful, industry-leading company — pursued a value-generation logic to frame its approach to organization: Creativity is our core resource — the most important skill in game development.Creative employees are key to our capabilities.Creative people are most productive when left to express their own creativity in their own way.Hierarchy blocks creativity, as do planning and routine.How do we design a company to attract and retain the sort of people who are able to take the boldest creative steps? The answer? Let employees decide what to work on. Let them exercise entrepreneurial judgement. Let them, in effect, do both strategy and implementation. Give them all the decision rights. Let them identify customer preferences — since they know the customer best; let them decide how best to address those preferences; let them decide how to achieve competitive differentiation; let them allocate resources, choose costs, and manage profitability; let them control quality and decide when software is ready to ship. Employees work in self-organizing teams, and are free to migrate from team to team, and free to change their roles. There are no fixed job descriptions. In place of command-and-control, a few simple rules or constraints have emerged for the exercise of governance. F.A. Hayek wrote about norms that emerge in social groups to shape behavior. These are not legislation, i.e., written formal restrictions. They are what he called rules, constraints that everyone accepts in the shared commitment to collaboration and the pursuit of the most favorable outcomes. The most significant of these rules at Valve is the “Rule Of Three”, a simple agreement that at least three individuals must agree on the initiation of a new project, or on other major decision points. The emergent standard was that this is just enough to prevent maverick behavior, and a low enough number to facilitate agile action that's not bureaucratically constrained. Another rule or constraint goes by the name of Social Proof. This is a broader and looser peer review standard. If the original team wishes to recruit more members, they must persuade others of the value generating potential of the project (in competition with other projects in the firm); successfully doing so constitutes “social proof” of value. Rules-based peer review process replaces management structure. Conventional approaches to organizational design focus on structure. This might be command-and-control hierarchy, or structured networks, or strategic business units or functional departments. Valve abandoned structural thinking and replaced it with flow analysis. How can we attract the most creative people to our venture? How can we encourage the most productive flows of bold creative thinking? How can teams best assemble and collaborate for the most productive output? How can we integrate with the user community in the best way? How can the most value-generative projects attract the best resources? These are all questions about flow. Austrian economists are distinctive in viewing capital as a flow rather than a structure, and this view holds true for human capital just as much as physical capital. Emergent rules for self-organizing human systems can perform all the managerial functions that were historically left to control structures. Actionable Insight Summary Design your organization for flow not structure.Design to attract the most entrepreneurial people in the most entrepreneurial roles (self-selection).Let them self-organize.Let rules and value codes emerge.Teams as business units.Eliminate the boundaries between the firm and customers and other partners. Additional Resources "The Future of Organizational Design" — our E4B Knowledge Graphic (PDF): "Levels without Bosses? Entrepreneurship and Valve's Organizational Design" by Ulrich Möller and Matthew McCaffrey: "Entrepreneurship and Firm Strategy: Integrating Resources, Capabilities, and Judgment through an Austrian Framework" by Ulrich Möller and Matthew McCaffrey:

    The “Nixon Shock” Was Only the Final Nail in the Coffin of the Gold Dollar

    Play Episode Listen Later Aug 26, 2021

    Bob gives a brief history of money in the United States, explaining that the dollar was much “harder” in, say, 1810 than it was in 1910. This explains why there was significant consumer price inflation even in 1970, the year before Richard Nixon officially severed the dollar's link to gold. Mentioned in the Episode and Other Links of Interest: Bob's chapter in the new book, Understanding Money Mechanics, discussing the history of the US gold/silver standardsHis chapter on Mises' theory of the business cycleBob's articles discussing the 50th anniversary of Nixon closing the gold window: (1) Basic intro, (2) discussing the different regimes of the US gold standard, and (3) explaining the different inflation rates and the connection to Austrian business cycle theory [Note that this third article hadn't posted as of the original publication of the podcast episode; this link will be updated when available.]Bob's article in the Quarterly Journal of Austrian Economics on Mises' theory of the business cycle. ​For more information, see The Bob Murphy Show is also available on Apple Podcasts, Google Podcasts, Stitcher, Spotify, and via RSS.

    Saifedean Ammous on Knowledge Entrepreneurship

    Play Episode Listen Later Aug 24, 2021

    Saifedean Ammous is a knowledge entrepreneur. He creates new knowledge that's valued by his customers, because it helps them to think better and better informs their actions. He carefully appraises the knowledge provided by great thinkers of the past, and re-presents in a newly compelling fashion. He develops effective memes and ideas. He innovates in channels and distribution. He demonstrates how knowledge entrepreneurship can work in the 21st Century's globally-connected and digitally-connected economy. He joins the Economics For Business podcast to share some of his learnings and experiences Key Takeaways and Actionable Insights. Collect available knowledge then develop a new perspective. Saifedean took degrees in economics and engineering, at bachelor's, master's and Ph.D. levels. His accumulated knowledge was valid for the university professor track. Then his spontaneous knowledge accumulation efforts took him to Austrian economics and a new perspective: that the economics he had learned to date didn't make any sense, and that regime higher education was best understood as just another malinvestment. Most importantly, regime higher education was customer-less: it did not provide value for customers, because that was not its purpose. From that point on, Saifedean followed the path of customer sovereignty and of exploring what customers identified as valuable. Teaching is value generation. Saifedean's first customers were students in his university classes. He was able to generate value for his students by teaching them the economics they wanted to learn, along with giving them the optionality of seeing the knowledge through his distinctive perspective. When students engage and say thank you, it's a signal of value. A transformative event precipitated a shift into independent knowledge entrepreneurship. In Saifedean's case, the transformative event was Bitcoin, the study of which opened up a deeper understanding of hard money and low time preference. He “upgraded” to the Bitcoin Standard by exiting academic teaching and switching to entrepreneurial knowledge sharing. The first step was writing and publishing a book called the Bitcoin Standard (conventionally published by Wiley) and then leaving academia for the joys of hard money. He switched his platform for teaching from the university to the internet, and now is able to reach many more customers — citizens of the world who want to learn more about Austrian economics and to understand Bitcoin and hard money. How did he know they were out there? They self-selected via Saifedean's twitter feed. The “factory” for knowledge production and distribution is a website. A fairly basic website (i.e., not requiring any technological expertise or gear that is not available to everyone) is the platform for the new level of knowledge entrepreneurship. At, customers have been able to: Receive and read book chapters as they are written;Access video and audio online courses in Austrian economics;Buy books;Subscribe to podcasts (which he runs like a seminar);Find a “complete central bank replacement pack”. Saifedean told us he is just getting started, and there are more knowledge innovations in the pipeline. The Entrepreneurial Method. This unfolding timeline is an excellent example of the entrepreneurial method at work. Start with what you know.Find motivation in what you are passionate about.Utilize available resources.Let collaborators and customers self-select in.Use networking and influencers rather than conventional advertising and marketing to drive expansion.Let spontaneous order unfold. In addition, Saifedean associates the Austrian concept of lowering time preference with entrepreneurial success. Low time preference — willingness to save/sacrifice in the short terms for benefit in the longer term — is an essential part of the entrepreneurial method. One of the entrepreneur's “bird-in-the-hand” resources is their individual utilization and allocation of their personal time and effort. A new age of entrepreneurship is emerging and surging. In The Bitcoin Standard, Saifedean looks back to the nineteenth and early twentieth century as a period of technological innovation by entrepreneurs under the gold standard, bringing us indoor plumbing, electricity, the internal combustion engine, airplanes and elevators, among many more. Entrepreneurs were able to accumulate capital in the form of wealth stored in hard money to finance their innovations. He believes that the emerging Bitcoin Standard era will precipitate a new entrepreneurial flourishing, further accelerated by free software, network access, blockchain and hard money savings. Our goal at Economics For Business is to be a knowledge and tools provider for this entrepreneurial surge. Some knowledge links: "Knowledge Entrepreneurship" — our E4B Process Map (PDF): The Bitcoin Standard (in over 20 language translations): Principles of Economics: The Fiat Standard: Twitter for @Saifedean Twitter for Saifedean Ammous: @SaifedeanAmmou6

    Saras Sarasvathy On The Entrepreneurial Method

    Play Episode Listen Later Aug 17, 2021

    The scientific method has served us well to date. The entrepreneurial method, informed by the principles of Austrian economics, can take society much further. Dr. Saras Sarasvathy joins the Economics For Business podcast to distill the essence of the value generating and wealth producing method. Download our knowledge graphic for the Entrepreneurial Method: There is an entrepreneurial method — a systematic way to achieve the unpredictable. The scientific method aims to discover universal laws that make the future predictable. If we have enough scientific understanding we can, for example, build bridges that we can predict will not collapse. We can construct an entire scientific infrastructure in our society. The entrepreneurial method aims higher, at human flourishing. It aims at discovering how we can all work together to achieve our human purpose, including new purposes that we all agree are worth achieving. We can construct an entrepreneurial structure to build a better human life and a better society. Entrepreneurs choose a control strategy that's appropriate to uncertainty. Some people fear entrepreneurship because its outcomes are uncertain. But this is worrying about the wrong things: outcomes are outside your control. Entrepreneurs are more discerning about what can be controlled: means. Dr. Sarasvathy lists several control strategies: The Bird-In-The-Hand Principle: work with what you've got and can control, which she sums up in the questions: Who Am I? What Do I Know? Whom Do I Know? What resources do I own or control now? This is the first principle of control. Affordable Loss Principle: Entrepreneurs can control their downside, making it affordable and limiting uncertainty, by asking “What one value generation project would I undertake even if I risk losing everything I invest In it?” Crazy Quilt Principle: How do entrepreneurs control the uncertain process of identifying the right partners, including hiring the right people? They don't try to predict the results of hiring and pitching. Instead, don't hire, don't ask. Just talk to people — those who fit best will self-select into your project. Lemonade Principle: Don't fear the unexpected. Welcome surprises. All unexpected happenings are opportunities and can become resources. Leverage contingency, and make lemonade out of lemons. The Pilot Is The Plane Principle: Everyone on the plane is a pilot, co-engaged in shaping history. The plane will reach a destination, the exact nature of which is unclear, and everyone on the plane contributes to getting there. There are some guidelines that entrepreneurs have established over time. Non-Predictive Action Is The Driver Everything in the entrepreneurial method is driven by action. Or, more completely, action, interaction and reaction. Things you care about, things you can actually do, things we can do together, and how we handle surprises. Interacting with the environment with a sense of purpose, and thereby changing it in some way. Even-If Thinking Our aspirations and the outcomes we experience may not be symmetrical. Not succeeding is not the same as failing. Even if a new idea does not work out, what is the worst that can happen? We shouldn't make decisions just because we can't predict the future. Embrace the unpredictable but make sure the downside is under your control. Intersubjectivity The great productivity of entrepreneurship comes from intersubjectivity — two or more people can interact and come up with something neither one had actually thought about or dealt with or considered or contemplated before. Intersubjectivity is more than interpersonal and beyond negotiation. It's a question: “I am doing this. What do you think?” The Entrepreneurial Method leads to social good and a new role for business in society. A side effect of everyone in society learning the scientific method was the emergence of the middle class, defined by income. Science brought productivity which enabled a large swath of society to earn enough money to escape poverty. Everyone was able to harness science. Let's teach everyone the entrepreneurial method. Let everyone start companies, grow companies, invest in companies, all with no thought of prediction. A middle class of business will emerge, defined not by income but by venturing. This middle class will produce more jobs and more enduring, more stable companies, embedded in strong communities, with greater well-being and less churn. The fruits of creativity take root in endurance and durability — not in Schumpeterian creative destruction — and contribute to stability and the taking on of bigger challenges. Decade after decade, the middle class of business will generate value and produce wealth, employing lots of people and educating successive generations to take the entrepreneurial method with them into a better future. Additional Resources "The Entrepreneurial Method" (PDF): Among the innovations planned for the Economics For Business platform is a series of encapsulations of important research papers. Here is a sample: "The World-Making Scope Of The Entrepreneurial Method — An Encapsulation" By Gabriele Marasti (Original paper: "The Middle Class Of Business"): Some links: Effectual Entrepreneurship (PDF): "What Makes Entrepreneurs Entrepreneurial?" (PDF) "Entrepreneurship As Method: Open Questions for an Entrepreneurial Future" (PDF):

    Mark Spitznagel's Safe Haven

    Play Episode Listen Later Aug 13, 2021

    Fans of Austrian economics know hedge fund manager Mark Spitznagel as a brilliant thinker thoroughly steeped in Menger, Böhm-Bawerk, Mises, and Rothbard. His excellent 2013 book The Dao of Capital was rooted in Austrian capital theory and "roundaboutness," and his application of of that theory has proven highly beneficial for his investors. Now Spitznagel is back with a new book that directly challenges our understanding of risk. Safe Haven asks, and answers, a fundamental question: can mitigating risk actually add to the bottom line? Can safe havens be truly cost-effective, by adding to CAGR? Mises Institute Senior Fellow Robert Murphy, who consulted on the book, joins the show for a fascinating look at Spitznagel's penetrating and contrarian thesis. If you're interested in the intersection of investing and Austrian economics, don't miss this episode! Mark Spitznagel's Safe Haven: Investing for Financial Storms on Amazon: And Spitznagel's 2013 book The Dao of Capital: Austrian Investing in a Distorted World on Amazon:

    All Quiet on the Western Front

    Play Episode Listen Later Aug 13, 2021

    Jeff Deist hosts a solo show to discuss one of his favorite novels from childhood, All Quiet on the Western Front. Its young protagonist Paul Bäumer, barely out of adolescence, narrates the horrors of trench warfare from the perspective only a grunt soldier can provide. Bäumer and his mates lose their innocence, along with various limbs and often their lives. But what makes the book so compelling is not simply the description of wartime savagery, but the dialogue between the men: stripped of any illusions, they see the futility of killing and maiming simply to capture a few more feet of no-man's land. The dialogue in Chapter 9 between the men, arguing about whether states of "people" go to war, is masterful. This is a book every passionate antiwar advocate needs to read time and again. All Quiet on the Western Front on Amazon: Jeff Deist's review of They Shall not Grow Old:

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