Podcast appearances and mentions of Peter G Klein

Send us a textEconomist Dr.Peter G. Klein joins the cast to discuss Why Managers Matter: The Perils of the Bossless Company. We debate Valve's organizational structure, the evidence for manager economic impact, and Sweden's success. Read more about Dr.Klein here and find his book below:https://hankamer.baylor.edu/person/peter-g-klein-0https://www.amazon.com/Why-Managers-Matter-Bossless-Company/dp/1541751043/15:37 Why Managers Matter22:29 CEOs35:22 Valve

On this Episode 351 of Health Solutions, Shawn Needham RPh talks to Peter G Klein, PhD live from the Free Market Medical Association 2023 in Kansas City, Missouri. Shawn and Peter talk about Peter's background, government regulations, and healthcare licensing. Episode Resources ~ https://sites.baylor.edu/peter_klein Twitter ~ https://twitter.com/petergklein https://twitter.com/Baylor_Business https://twitter.com/NHHnor https://twitter.com/Mises Facebook ~ https://www.facebook.com/prof.peter.g.klein https://www.facebook.com/NHH.Norway https://www.facebook.com/baylorbusiness LinkedIn ~ http://www.linkedin.com/in/petergklein https://www.linkedin.com/school/baylor-university---hankamer-school-of-business/ https://www.linkedin.com/company/mises Book ~ https://www.amazon.com/stores/Peter-G-Klein/author/B0B8348DL8?ref=ap_rdr&store_ref=ap_rdr&isDramIntegrated=true&shoppingPortalEnabled=true FMMA ~ https://fmma.org Ep 351: Unintended Consequences of Health & Safety Regulations Peter G Klein, PhD, Live fr FMMA 2023 ~ #organization #innovation #strategy #management #PeterGKlein #FMMA #FMMA23 #podcastshow #podcast #podcasts #podcastclips #podcasting #optimalhealth #healthfreedom #medicalcare #HealthCare #PriceTransparency #freemarket #Liberty #FitAfter50 #FitOver50 #fitover40 #fitafter40 #Boise #IdahoFalls #Tricities #SiouxFalls #Wenatchee #EducateAndEmpower #NeedhamHealthSolutions #TeamNeedham #ShawnNeedham #HealthSolutions #MosesLakeProfessionalPharmacy #MLRX #SickenedTheBook #ShawnNeedhamRPh #ThinkOutsideTheSystem #OptimalHealthMatters #ItsTime ~ *** #BenShapiro & #DaveRamsey Fans. Learn how to be in the driver's seat for your healthcare choices {not the system or doctors!}

> Sign Up For Our Newsletter: http://www.firsthuman.com/being-human-newsletter/   This week I speak with Peter G. Klein, economist and co-author of Why Managers Matter: The Perils of the Bossless Company. Having been a veritable fanboy of super flat organisations since the start of my business career, this week we hear from the other side of the argument.  We talk: Myths and reality of 'bossless' organisations Do flat organisations perform better? Are people really better off without bosses? Management for knowledge workers Humanising bureaucracies Links: Why Managers Matter - The Book Peter's Website

Peter G. Klein is a Professor of Entrepreneurship at the Baylor University's business school, and Faculty Director of Baylor's Baugh Center for Entrepreneurship and Free Enterprise. He is also Adjunct Professor of Strategy and Management at the Norwegian School of Economics and Carl Menger Research Fellow at the Mises Institute. Peter's research focuses on the links between entrepreneurship, strategy, and organization, with application to innovation, diversification, vertical coordination, health care, and public policy. His work has appeared in numerous top journals from Academy of Management Review, to the Sloan Management Review. Peter's 2012 book Organizing Entrepreneurial Judgment, received the 2014 Best Book Award from the Foundation for Economic Education. His upcoming book Why Managers Matter, being published in October 2022, focuses on how even though the decentralized, “startup” culture has been increasingly popular the last few decades, the creative use of authority and hierarchy helps companies to be more agile and flexible, enabling educated, motivated people and teams to thrive. Peter has also held faculty positions at the University of Missouri's Division of Applied Social Science and Truman School of Public Affairs, the Copenhagen Business School, among other academic posts. He was formerly a Senior Economist at the Council of Economic Advisers. He holds a PhD in economics from the University of California, Berkeley and a BA from the University of North Carolina, Chapel Hill. In this podcast, he shares:Argues why this movement we are seeing toward decentralized organizations—flat hierarchies or no hierarchies—actually are not really flat Gives us a very clear answer to a critical question for anyone designing an organization: when and where is manager authority or centralized authority the better option to more open models What organizations need to do to unlock greater levels of intrapreneurship Why making profits depends on embracing uncertainty_________________________________________________________________________________________Episode Timeline:00:00—Introducing Peter + The topic of today's episode2:22—What is your definition of strategy?3:41—What got you interested in strategy?5:04—Could you elaborate on your idea of "without uncertainty there would be no profits"?7:15—Do you think some companies are more equipped to take on risk than others?10:25—Are organizational structures becoming "flatter" or more layered, and why now?14:54—If the role of the manager changes to org design and directing, does strategy change and does leadership in essence change?17:50—Where do we expect to see hierarchy vs. non-hierarchy structures?23:18—How can people connect with you and follow your work?__________________________________________________________________________________________"The role of the manager is to design, implement, and force the organizational rules of the game. In other words, you're not playing the game for people, you're not making everyone's decision for him or for her, but rather you're putting people in the right places where they can use their abilities, and their human capital if you like."-Peter G. Klein__________________________________________________________________________________________Additional Resources: Personal Page: https://sites.baylor.edu/peter_klein/Linkedin: http://www.linkedin.com/in/petergkleinTwitter: https://twitter.com/petergkleinNewest Book

Peter G. Klein is a Professor of Entrepreneurship at the Baylor University's business school, and Faculty Director of Baylor's Baugh Center for Entrepreneurship and Free Enterprise. He is also Adjunct Professor of Strategy and Management at the Norwegian School of Economics and Carl Menger Research Fellow at the Mises Institute. Peter's research focuses on the links between entrepreneurship, strategy, and organization, with application to innovation, diversification, vertical coordination, health care, and public policy. His work has appeared in numerous top journals from Academy of Management Review, to the Sloan Management Review. Peter's 2012 book Organizing Entrepreneurial Judgment, received the 2014 Best Book Award from the Foundation for Economic Education. His upcoming book Why Managers Matter, being published in October 2022, focuses on how even though the decentralized, “startup” culture has been increasingly popular the last few decades, the creative use of authority and hierarchy helps companies to be more agile and flexible, enabling educated, motivated people and teams to thrive. Peter has also held faculty positions at the University of Missouri's Division of Applied Social Science and Truman School of Public Affairs, the Copenhagen Business School, among other academic posts. He was formerly a Senior Economist at the Council of Economic Advisers. He holds a PhD in economics from the University of California, Berkeley and a BA from the University of North Carolina, Chapel Hill. In this podcast, he shares:Argues why this movement we are seeing toward decentralized organizations—flat hierarchies or no hierarchies—actually are not really flat Gives us a very clear answer to a critical question for anyone designing an organization: when and where is manager authority or centralized authority the better option to more open models What organizations need to do to unlock greater levels of intrapreneurship Why making profits depends on embracing uncertainty_________________________________________________________________________________________Episode Timeline:00:00—Introducing Peter + The topic of today's episode2:22—What is your definition of strategy?3:41—What got you interested in strategy?5:04—Could you elaborate on your idea of "without uncertainty there would be no profits"?7:15—Do you think some companies are more equipped to take on risk than others?10:25—Are organizational structures becoming "flatter" or more layered, and why now?14:54—If the role of the manager changes to org design and directing, does strategy change and does leadership in essence change?17:50—Where do we expect to see hierarchy vs. non-hierarchy structures?23:18—How can people connect with you and follow your work?__________________________________________________________________________________________"The role of the manager is to design, implement, and force the organizational rules of the game. In other words, you're not playing the game for people, you're not making everyone's decision for him or for her, but rather you're putting people in the right places where they can use their abilities, and their human capital if you like."-Peter G. Klein__________________________________________________________________________________________Additional Resources: Personal Page: https://sites.baylor.edu/peter_klein/Linkedin: http://www.linkedin.com/in/petergkleinTwitter: https://twitter.com/petergkleinNewest Book

https://youtu.be/py1C_4ZX174 The iron law of oligarchy is a political theory first developed by the German-born Italian sociologist Robert Michels in his 1911 book, Political Parties. It asserts that rule by an elite, or oligarchy, is inevitable as an "iron law" within any democratic organization as part of the "tactical and technical necessities" of the organization. Michels's theory states that all complex organizations, regardless of how democratic they are when started, eventually develop into oligarchies. Michels observed that since no sufficiently large and complex organization can function purely as a direct democracy, power within an organization will always get delegated to individuals within that group, elected or otherwise. The Iron Law of Oligarchy - Wikipedia Book discussed: Why Managers Matter: The Perils of the Bossless Company Dr. Peter G. Klein is Carl Menger Research Fellow of the Mises Institute and W. W. Caruth Chair and Professor of Entrepreneurship at Baylor University's Hankamer School of Business.

Why Managers Matter: The Perils of the Bossless Company: https://www.publicaffairsbooks.com/titles/nicolai-j-foss/why-managers-matter/9781541751033/ Peter G. Klein is Carl Menger Research Fellow of the Mises Institute and W. W. Caruth Chair and Professor of Entrepreneurship at Baylor University's Hankamer School of Business. ----------------------------------------------------------- The Voluntaryist Handbook: https://libertarianinstitute.org/books/voluntaryist-handbook/ Support the show, PayPal: KeithKnight590@gmail.com or Venmo: @Keith-Knight-34 LBRY / Odysee: https://odysee.com/@KeithKnightDontTreadOnAnyone:b BitChute: KeithKnightDontTreadOnAnyone https://www.bitchute.com/channel/keithknightdonttreadonanyone/ Minds: https://www.minds.com/KeithKnightDontTreadOnAnyone/ GETTR: https://gettr.com/user/an_capitalist MeWe: mewe.com/i/keithknight25 Flote: https://flote.app/VoluntaryistKeith Gab: https://gab.com/Voluntarykeith Twitter: @an_capitalist The Libertarian Institute: https://libertarianinstitute.org/dont-tread-on-anyone/ One Great Work Network: https://www.onegreatworknetwork.com/keith-knight Archive.org: https://archive.org/details/@keithknight13 Locals: https://donttreadonanyone.locals.com/ Spotify: https://open.spotify.com/show/0mG2QvxJe9TQpJiyrQTqfx

A strange strand of thought has emerged in European political economy circles that has been given the name of The Entrepreneurial State. The headline claim is that the state (i.e., nation state governments) can and should intervene in the economy to bring about innovation, and that, indeed, it is absolutely necessary for grand, mission-driven undertakings such as climate change amelioration and the commercial development of next-generation technologies. Economics For Business talked to Christian Sandström, co-editor with Karl Wennberg, of Questioning The Entrepreneurial State (see Mises.org/E4B_172_Book), a compendium of analysis by thirty-two leading economists (including friends of E4B such as Peter G. Klein, Samuele Murtinu, and Saras Sarasvathy) to demonstrate the fallacies of the case for an entrepreneurial state. There's a lot of sound economics to be learned from Professor Sandström's book. Key Takeaways and Actionable Insights There's a warm climate in Europe for government solutions to perceived economic problems. “The entrepreneurial state” is one of the forms these solutions take. Entrepreneurship is well-developed in Europe, and recognized as a growth accelerator. Nevertheless, since 2008-9, country-level growth rates have been below expectations. Professor Mariana Mazzucato originated the concept of “the entrepreneurial state”, telling fellow economists that they were all wrong in expecting growth to come from private entrepreneurship. Only government has the scope and scale to act entrepreneurially at the level of lifting the growth rate of the whole economy, overcoming the barriers to the introduction and commercialization of new technologies, and tackling the great missions such as climate change amelioration. Historically, she claims, this precedence has always applied: the state leads innovation and private entrepreneurs follow to fine tune the details of marketplace adoption and implementation. The ongoing failure of Green Deals represents just one illustration of the errors of the entrepreneurial state. One essay in Professor Sandström's book spotlights what he calls Green Deals: directed investments in various technologies aiming at so-called sustainable development. Public funds distort incentives in the market, making it “rational” for firms to pursue technologies without long-term potential. One of his examples is a municipality in northern Sweden that accumulated billions of Swedish Krona in debt investing in industrial plant aiming to create car fuel from cellulose, with the ambition of creating an environmentally friendly substitute for gasoline, which would also result in new jobs and a regional resurgence in competitiveness. The process of extracting ethanol from cellulose proved to be more difficult than promised, and no technological breakthroughs occurred. The 2008 recession resulted in falling prices for ethanol, yet more public money was poured in. The end result has been a high debt burden on the municipality, no new jobs, and no reindustrialization for the region. As Professor Sandström and his co-author Carl Alm conclude, this case and other similar cases stand in stark contrast to ideas about an entrepreneurial state successfully taking on risk and pursuing new technological opportunities. There are fundamental reasons why governments can't act entrepreneurially. First, governments don't operate in markets and they are not subject to market tests, like going out of business if they fail to meet customer needs. They bear no genuine entrepreneurial risk. They have no competitors and so no process of competitive refinement and improvement. Their entrepreneurial actions can't be evaluated. In effect, they want to achieve innovation without entrepreneurship, which is an impossibility. Governments lack the required competence for the tasks they claim to be able to undertake. Peter Klein, Samuele Murtinu and Nicolai Foss introduce and explain the economic concept of ownership competence. Entrepreneurs operating in competitive markets have strong incentives (i.e., their own property and their own funds) to allocate resources that they own or control to the most productive applications and to generating the value that the market prizes most highly. Knowing what to own, when to own it (or dispose of it), and how to create value through ownership, all under conditions of uncertainty, requires a skill set that bureaucrats and public actors don't have and can't exercise. Public employees can't exercise the ultimate responsibility that comes with ownership. Bureaucrats can't reproduce the human factors of entrepreneurship. Saras Sarasvathy introduced us to the entrepreneurial method of business innovation in episode #131 (Mises.org/E4B_131). Entrepreneurs self-select into the role of uncertainty-bearing, and then initiate projects and advance through a process of market co-creation, making commitments and then adjusting those commitments based on feedback loops and customer responses. They develop a lived experience that enables them to identify new goals to pursue and new means for pursuing them along the pathway. Creativity and adaptability are more relevant to success than investing acumen and planning. Governments can't operate in this way. They place big bets, with quantitative goals and illusions of predictability of outcomes, and they pay with other people's money. They are not capable of finding the serendipity that guides the entrepreneur. Governments don't understand the innovative generativity of new technologies. Professor Sandström's book includes quite extensive examination of what is identified as the Digital Platform Economy (DPE) — the digital entrepreneurial ecosystem of platform access to markets, data, algorithms, and cloud computing capacity (There's a useful report on the DPE provided in the book at Mises.org/E4B_172_PDF). Digital platforms are enablers for entrepreneurial creativity and business building as a consequence of the access that they give to new business tools and the interconnections to resources, both human and material. The platforms are provided by private companies, and the resulting value creation is user and customer co-generated. Governments misunderstand the Digital Platform Economy. They see platform providers as monopolistic owners of excessive market power to be regulated and taxed, and totally miss the value generation of hyper-connectivity between buyers and sellers, the complementarity of firms on both sides of the platform, the open access and the lowered transaction costs. These digital platforms will do much more to encourage entrepreneurial growth than any government ever could. Governments' errors are repeated because there is no genuine evaluation of their activities, initiatives, and “missions”. Professor Sandström investigated the way that the results of government innovation expenditures and initiatives are assessed. He found that most evaluations are conducted by consultants, paid by the hour and mindful of the opportunity for future business if their work is well-received by the government that employs them. Some other assessments are conducted by the government departments themselves. Perhaps unsurprisingly, Professor Sandström could find only 5% of these assessments that were critical in any way (mostly simply to say that the desired results were not achieved). Moreover, the assessments were economically incomplete. There was no identification or discussion of opportunity costs (what better uses could the funds have been put to) or of administrative costs, which are high since bureaucratic infrastructure grows with each new initiative. The government's best role is to remove itself as a barrier, and possibly to help remove additional barriers (for which it often bears responsibility in the first place). Is there such a thing as innovation policy? Professor Sandström says no. He does point out that, in the Austrian tradition, removing barriers to entrepreneurship can help to create the type of environment in which innovation can flourish. This might involve the elimination of legislation and regulation that gets in the way. It could also include nurturing educational institutions to bring the right kinds of thinking and learned skills into the marketplace. Any such initiative should be general and non-selective. Picking winners should be left to markets. Additional Resources Questioning the Entrepreneurial State: Status-quo, Pitfalls, and the Need for Credible Innovation Policy, edited by Karl Wennberg and Chris Sandström (PDF and ePub): Mises.org/E4B_172_Book "The Digital Platform Economy Index" (PDF): Mises.org/E4B_172_PDF Chris Sandström on Twitter: @ChrisSandstrom

A strange strand of thought has emerged in European political economy circles that has been given the name of The Entrepreneurial State. The headline claim is that the state (i.e., nation state governments) can and should intervene in the economy to bring about innovation, and that, indeed, it is absolutely necessary for grand, mission-driven undertakings such as climate change amelioration and the commercial development of next-generation technologies. Economics For Business talked to Christian Sandström, co-editor with Karl Wennberg, of Questioning The Entrepreneurial State (see Mises.org/E4B_172_Book), a compendium of analysis by thirty-two leading economists (including friends of E4B such as Peter G. Klein, Samuele Murtinu, and Saras Sarasvathy) to demonstrate the fallacies of the case for an entrepreneurial state. There's a lot of sound economics to be learned from Professor Sandström's book. Key Takeaways and Actionable Insights There's a warm climate in Europe for government solutions to perceived economic problems. “The entrepreneurial state” is one of the forms these solutions take. Entrepreneurship is well-developed in Europe, and recognized as a growth accelerator. Nevertheless, since 2008-9, country-level growth rates have been below expectations. Professor Mariana Mazzucato originated the concept of “the entrepreneurial state”, telling fellow economists that they were all wrong in expecting growth to come from private entrepreneurship. Only government has the scope and scale to act entrepreneurially at the level of lifting the growth rate of the whole economy, overcoming the barriers to the introduction and commercialization of new technologies, and tackling the great missions such as climate change amelioration. Historically, she claims, this precedence has always applied: the state leads innovation and private entrepreneurs follow to fine tune the details of marketplace adoption and implementation. The ongoing failure of Green Deals represents just one illustration of the errors of the entrepreneurial state. One essay in Professor Sandström's book spotlights what he calls Green Deals: directed investments in various technologies aiming at so-called sustainable development. Public funds distort incentives in the market, making it “rational” for firms to pursue technologies without long-term potential. One of his examples is a municipality in northern Sweden that accumulated billions of Swedish Krona in debt investing in industrial plant aiming to create car fuel from cellulose, with the ambition of creating an environmentally friendly substitute for gasoline, which would also result in new jobs and a regional resurgence in competitiveness. The process of extracting ethanol from cellulose proved to be more difficult than promised, and no technological breakthroughs occurred. The 2008 recession resulted in falling prices for ethanol, yet more public money was poured in. The end result has been a high debt burden on the municipality, no new jobs, and no reindustrialization for the region. As Professor Sandström and his co-author Carl Alm conclude, this case and other similar cases stand in stark contrast to ideas about an entrepreneurial state successfully taking on risk and pursuing new technological opportunities. There are fundamental reasons why governments can't act entrepreneurially. First, governments don't operate in markets and they are not subject to market tests, like going out of business if they fail to meet customer needs. They bear no genuine entrepreneurial risk. They have no competitors and so no process of competitive refinement and improvement. Their entrepreneurial actions can't be evaluated. In effect, they want to achieve innovation without entrepreneurship, which is an impossibility. Governments lack the required competence for the tasks they claim to be able to undertake. Peter Klein, Samuele Murtinu and Nicolai Foss introduce and explain the economic concept of ownership competence. Entrepreneurs operating in competitive markets have strong incentives (i.e., their own property and their own funds) to allocate resources that they own or control to the most productive applications and to generating the value that the market prizes most highly. Knowing what to own, when to own it (or dispose of it), and how to create value through ownership, all under conditions of uncertainty, requires a skill set that bureaucrats and public actors don't have and can't exercise. Public employees can't exercise the ultimate responsibility that comes with ownership. Bureaucrats can't reproduce the human factors of entrepreneurship. Saras Sarasvathy introduced us to the entrepreneurial method of business innovation in episode #131 (Mises.org/E4B_131). Entrepreneurs self-select into the role of uncertainty-bearing, and then initiate projects and advance through a process of market co-creation, making commitments and then adjusting those commitments based on feedback loops and customer responses. They develop a lived experience that enables them to identify new goals to pursue and new means for pursuing them along the pathway. Creativity and adaptability are more relevant to success than investing acumen and planning. Governments can't operate in this way. They place big bets, with quantitative goals and illusions of predictability of outcomes, and they pay with other people's money. They are not capable of finding the serendipity that guides the entrepreneur. Governments don't understand the innovative generativity of new technologies. Professor Sandström's book includes quite extensive examination of what is identified as the Digital Platform Economy (DPE) — the digital entrepreneurial ecosystem of platform access to markets, data, algorithms, and cloud computing capacity (There's a useful report on the DPE provided in the book at Mises.org/E4B_172_PDF). Digital platforms are enablers for entrepreneurial creativity and business building as a consequence of the access that they give to new business tools and the interconnections to resources, both human and material. The platforms are provided by private companies, and the resulting value creation is user and customer co-generated. Governments misunderstand the Digital Platform Economy. They see platform providers as monopolistic owners of excessive market power to be regulated and taxed, and totally miss the value generation of hyper-connectivity between buyers and sellers, the complementarity of firms on both sides of the platform, the open access and the lowered transaction costs. These digital platforms will do much more to encourage entrepreneurial growth than any government ever could. Governments' errors are repeated because there is no genuine evaluation of their activities, initiatives, and “missions”. Professor Sandström investigated the way that the results of government innovation expenditures and initiatives are assessed. He found that most evaluations are conducted by consultants, paid by the hour and mindful of the opportunity for future business if their work is well-received by the government that employs them. Some other assessments are conducted by the government departments themselves. Perhaps unsurprisingly, Professor Sandström could find only 5% of these assessments that were critical in any way (mostly simply to say that the desired results were not achieved). Moreover, the assessments were economically incomplete. There was no identification or discussion of opportunity costs (what better uses could the funds have been put to) or of administrative costs, which are high since bureaucratic infrastructure grows with each new initiative. The government's best role is to remove itself as a barrier, and possibly to help remove additional barriers (for which it often bears responsibility in the first place). Is there such a thing as innovation policy? Professor Sandström says no. He does point out that, in the Austrian tradition, removing barriers to entrepreneurship can help to create the type of environment in which innovation can flourish. This might involve the elimination of legislation and regulation that gets in the way. It could also include nurturing educational institutions to bring the right kinds of thinking and learned skills into the marketplace. Any such initiative should be general and non-selective. Picking winners should be left to markets. Additional Resources Questioning the Entrepreneurial State: Status-quo, Pitfalls, and the Need for Credible Innovation Policy, edited by Karl Wennberg and Chris Sandström (PDF and ePub): Mises.org/E4B_172_Book "The Digital Platform Economy Index" (PDF): Mises.org/E4B_172_PDF Chris Sandström on Twitter: @ChrisSandstrom

A strange strand of thought has emerged in European political economy circles that has been given the name of The Entrepreneurial State. The headline claim is that the state (i.e., nation state governments) can and should intervene in the economy to bring about innovation, and that, indeed, it is absolutely necessary for grand, mission-driven undertakings such as climate change amelioration and the commercial development of next-generation technologies. Economics For Business talked to Christian Sandström, co-editor with Karl Wennberg, of Questioning The Entrepreneurial State (see Mises.org/E4B_172_Book), a compendium of analysis by thirty-two leading economists (including friends of E4B such as Peter G. Klein, Samuele Murtinu, and Saras Sarasvathy) to demonstrate the fallacies of the case for an entrepreneurial state. There's a lot of sound economics to be learned from Professor Sandström's book. Key Takeaways and Actionable Insights There's a warm climate in Europe for government solutions to perceived economic problems. “The entrepreneurial state” is one of the forms these solutions take. Entrepreneurship is well-developed in Europe, and recognized as a growth accelerator. Nevertheless, since 2008-9, country-level growth rates have been below expectations. Professor Mariana Mazzucato originated the concept of “the entrepreneurial state”, telling fellow economists that they were all wrong in expecting growth to come from private entrepreneurship. Only government has the scope and scale to act entrepreneurially at the level of lifting the growth rate of the whole economy, overcoming the barriers to the introduction and commercialization of new technologies, and tackling the great missions such as climate change amelioration. Historically, she claims, this precedence has always applied: the state leads innovation and private entrepreneurs follow to fine tune the details of marketplace adoption and implementation. The ongoing failure of Green Deals represents just one illustration of the errors of the entrepreneurial state. One essay in Professor Sandström's book spotlights what he calls Green Deals: directed investments in various technologies aiming at so-called sustainable development. Public funds distort incentives in the market, making it “rational” for firms to pursue technologies without long-term potential. One of his examples is a municipality in northern Sweden that accumulated billions of Swedish Krona in debt investing in industrial plant aiming to create car fuel from cellulose, with the ambition of creating an environmentally friendly substitute for gasoline, which would also result in new jobs and a regional resurgence in competitiveness. The process of extracting ethanol from cellulose proved to be more difficult than promised, and no technological breakthroughs occurred. The 2008 recession resulted in falling prices for ethanol, yet more public money was poured in. The end result has been a high debt burden on the municipality, no new jobs, and no reindustrialization for the region. As Professor Sandström and his co-author Carl Alm conclude, this case and other similar cases stand in stark contrast to ideas about an entrepreneurial state successfully taking on risk and pursuing new technological opportunities. There are fundamental reasons why governments can't act entrepreneurially. First, governments don't operate in markets and they are not subject to market tests, like going out of business if they fail to meet customer needs. They bear no genuine entrepreneurial risk. They have no competitors and so no process of competitive refinement and improvement. Their entrepreneurial actions can't be evaluated. In effect, they want to achieve innovation without entrepreneurship, which is an impossibility. Governments lack the required competence for the tasks they claim to be able to undertake. Peter Klein, Samuele Murtinu and Nicolai Foss introduce and explain the economic concept of ownership competence. Entrepreneurs operating in competitive markets have strong incentives (i.e., their own property and their own funds) to allocate resources that they own or control to the most productive applications and to generating the value that the market prizes most highly. Knowing what to own, when to own it (or dispose of it), and how to create value through ownership, all under conditions of uncertainty, requires a skill set that bureaucrats and public actors don't have and can't exercise. Public employees can't exercise the ultimate responsibility that comes with ownership. Bureaucrats can't reproduce the human factors of entrepreneurship. Saras Sarasvathy introduced us to the entrepreneurial method of business innovation in episode #131 (Mises.org/E4B_131). Entrepreneurs self-select into the role of uncertainty-bearing, and then initiate projects and advance through a process of market co-creation, making commitments and then adjusting those commitments based on feedback loops and customer responses. They develop a lived experience that enables them to identify new goals to pursue and new means for pursuing them along the pathway. Creativity and adaptability are more relevant to success than investing acumen and planning. Governments can't operate in this way. They place big bets, with quantitative goals and illusions of predictability of outcomes, and they pay with other people's money. They are not capable of finding the serendipity that guides the entrepreneur. Governments don't understand the innovative generativity of new technologies. Professor Sandström's book includes quite extensive examination of what is identified as the Digital Platform Economy (DPE) — the digital entrepreneurial ecosystem of platform access to markets, data, algorithms, and cloud computing capacity (There's a useful report on the DPE provided in the book at Mises.org/E4B_172_PDF). Digital platforms are enablers for entrepreneurial creativity and business building as a consequence of the access that they give to new business tools and the interconnections to resources, both human and material. The platforms are provided by private companies, and the resulting value creation is user and customer co-generated. Governments misunderstand the Digital Platform Economy. They see platform providers as monopolistic owners of excessive market power to be regulated and taxed, and totally miss the value generation of hyper-connectivity between buyers and sellers, the complementarity of firms on both sides of the platform, the open access and the lowered transaction costs. These digital platforms will do much more to encourage entrepreneurial growth than any government ever could. Governments' errors are repeated because there is no genuine evaluation of their activities, initiatives, and “missions”. Professor Sandström investigated the way that the results of government innovation expenditures and initiatives are assessed. He found that most evaluations are conducted by consultants, paid by the hour and mindful of the opportunity for future business if their work is well-received by the government that employs them. Some other assessments are conducted by the government departments themselves. Perhaps unsurprisingly, Professor Sandström could find only 5% of these assessments that were critical in any way (mostly simply to say that the desired results were not achieved). Moreover, the assessments were economically incomplete. There was no identification or discussion of opportunity costs (what better uses could the funds have been put to) or of administrative costs, which are high since bureaucratic infrastructure grows with each new initiative. The government's best role is to remove itself as a barrier, and possibly to help remove additional barriers (for which it often bears responsibility in the first place). Is there such a thing as innovation policy? Professor Sandström says no. He does point out that, in the Austrian tradition, removing barriers to entrepreneurship can help to create the type of environment in which innovation can flourish. This might involve the elimination of legislation and regulation that gets in the way. It could also include nurturing educational institutions to bring the right kinds of thinking and learned skills into the marketplace. Any such initiative should be general and non-selective. Picking winners should be left to markets. Additional Resources Questioning the Entrepreneurial State: Status-quo, Pitfalls, and the Need for Credible Innovation Policy, edited by Karl Wennberg and Chris Sandström (PDF and ePub): Mises.org/E4B_172_Book "The Digital Platform Economy Index" (PDF): Mises.org/E4B_172_PDF Chris Sandström on Twitter: @ChrisSandstrom

Are we being softened up for another inflationary environment? The Mises Institute's Jeff Deist is joined by Peter G. Klein who calls in to talk about the media gaslighting on inflation, how we are being told to quit whining about rising prices, a feeling of "great resignation" from the labor market, his new book Why Managers Matter, and more. Also in the show, Jordan Schachtel calls in to talk about DC's hawkish stance over Russia and Ukraine. Follow Jordan Schachtel on Twitter. Visit A Neighbor's Choice website at aneighborschoice.com

With the news of Microsoft acquiring (or offering to buy, I'm entirely clear on the deal) Activision/Blizzard, I thought I'd talk a little about the economics of corporate mergers and acquisitions. In this episode I'm reading from an article published in FEE.org by Peter G. Klein. https://fee.org/articles/mergers-and-acquisitions-why-greed-is-good/

Austrian economics helps entrepreneurs to develop and implement more effective business strategies, and to open up streams of continuous innovation. As Joe Matarese, CEO of Medicus Healthcare Solutions, said about Austrian economics in relation to business: It just works (see Mises.org/E4B_126). In episode #127 (Mises.org/E4B_127), Matt McCaffrey outlined the Austrian strategy process of Explore and Expand, and its logic development. This week, he helps us dig deeper to identify the principles of Austrian economics that underpin our distinctive approach to business strategy. Key Takeaways and Actionable Insights Realism: real people, real markets, real entrepreneurs in real firms. Mainstream economics has never been able to help business, because of its focus on math, models, and prediction. Real people and their decisions and interactions and motivations and emotions can not be captured in equations and mathematical functions. Austrian economics has carved out a particular area of focus in the behavior of real people in its study of entrepreneurs and entrepreneurship. Austrians examine real entrepreneurial decision making day-to-day; they highlight real people experiencing value and entrepreneurs' role in generating that value. From this base, Austrian economics investigates how individual actions and choices and interactions lead to the formation of markets. Dynamism: The market is a process. Austrian realism sees the market as a dynamic process, continuously unfolding in interaction and innovation and change. Mainstream economics, with its preference for the greater mathematical tractability that comes with abstraction, has no capability of dealing with this real world dynamism. The embrace and study of dynamic processes gives Austrian economics much of its applicability in business. The business world is never static. It can't be understood in abstractions. It's real and messy and changeable and unpredictable. Uncertainty and complexity: embrace emergence. Uncertainty is a keyword for Austrian economists. It's a term that describes the real world in which entrepreneurial businesses operate. They can never know for sure what comes next; they can't anticipate all of the interactions between competitors, changing customer preferences, technological advances and social and economic trends. There is no sure-footed way to plan for the future. Austrians recognize uncertainty, and help businesses think about how to cope with it, how to narrow it, how to accumulate knowledge to lighten it, how to weigh decisions in the environment of uncertainty. The new scientific term for uncertainty is complexity: in any system, the interactions are so many and their results are so unpredictable that modeling and forecasting are impossible, and outcomes are defined as emergent (i.e., outputs happen in a way that is not predicted by merely combining inputs). Austrian economics helps businesses deal with emergence. Subjectivism: People are people, both as consumers and as providers. One of the realistic principles of Austrian economics is to deal with people as people: we are all subjective in our valuations and judgments and emotions. We are not homo economicus: perfectly rational (in the mainstream economists' definition of rational) in objectively weighing benefits and their opportunity costs. If all we are doing in producing goods and services for consumption is trashing the planet, then we can't be rational, in their eyes. In order to understand business and understand entrepreneurship, it is absolutely necessary to begin with subjectivism. Consumers' subjective values ultimately determine what is produced; if consumers don't value something, producers won't make it. On the producer side, entrepreneurs' subjective valuations of the resources they have available to them to assemble in a production process affect the value of their business. It is entrepreneurs' subjective evaluation that results in the identification of new uses for a resource, and the introduction of new innovations. Subjective values lie underneath every new business relationship with customers, from streaming movies to google searches to online travel booking. Subjectivism is everywhere in the economy and in business. Time: How to plan in the present to satisfy customers in the future. Austrians are unique in their understanding of the economic role of time in business. Entrepreneurs deal in future time. They imagine better futures in which customers enjoy greater satisfaction, and then they imagine how to bring it about and act on their imagination. Production — getting from imagination to consumption — takes time. Entrepreneurs are dealing with buying decisions in the present (such as hiring and buying inputs) for selling decisions in the future. They can't know future prices or future customer preferences, so it's a bet. The consumption decisions customers make today reflect entrepreneurial decisions that were made weeks, months, years or decades in the past. Austrian economics helps entrepreneurs manage the contingencies of time. Time makes the customer the boss. Austrians utilize the concept of consumer sovereignty as an analytical tool. It means that consumers are the ultimate decision-makers in all economic systems, because what they buy or don't buy determines what is produced. Their power is a result of the time it takes to produce. The value of resources that entrepreneurs assemble today depends on what consumers think and feel in the future. Forecasting is tricky and best avoided, but patterns can be recognized. A consequence of time and consumer sovereignty is the fragility and inaccuracy of forecasts. How is it possible to forecast consumer tastes in the future? There are some exceptional entrepreneurs who get it right. What's their secret? Austrians' understanding of dynamics and complexity can help point to the processes most likely to be associated with success, without attempting to forecast it. One alternative to forecasting is pattern recognition. Jeff Bezos said that consumers are unlikely in the future to ask for higher prices, lower quality or slower delivery. That's pattern recognition. It's generalized and broad based and lacking in precision and specificity. But there is a consistency to some patterns that entrepreneurs can recognize and act upon, adding their own idiosyncratic insights and guesses to shape the actual value propositions they will make to consumers. Out of all this emerges the Austrian entrepreneurial method. We've all been educated in the scientific method. It's utopian: experiments conducted with strict controls will yield the truth. The entrepreneurial method is different, but with equal status, and greater applicability in open — i.e., human — systems where control is not an option. It's a bit messy and hard to characterize with precision, but it's nonetheless real. It starts with imagination — imagining a future in which customer dissatisfactions are addressed and resolved. Their world is made better. This is proactive creativity on the entrepreneur's part, triggered by existing highly dispersed knowledge, including tacit knowledge, held by the entrepreneur and others. The entrepreneur designs a business model that might be able to resolve the identified customer dissatisfactions in the future and assembles resources that he or she believes, in the right combination, could accomplish the task. There's no correct way; the entrepreneur draws on the realism of Austrian economics to best understand the challenges and how to address them. The entrepreneur then advances with her or his own form of experiment. It's not controlled in a closed environment. It's a hard commitment of resources in a definite format to make a value proposition to customers. The experiment consists in ascertaining the customer's response: like or dislike, buy or not buy, use and enjoy or use and reject? The experiment does not end there. It is continuous — receive the result, decide on how or whether to change the proposition, and try again. Gut feeling or intuition or personal subjective heuristics all have roles to play in entrepreneurial decision making. Austrian economics captures these phenomena in the concept of judgment under conditions of uncertainty. Organizing for the exercise of judgment. Since judgment is the ultimate generative energy in producing value for customers, and since it's personal and individual, how do firms grow? If judgement rests with a single entrepreneur, such as a founder, growth can't scale, and will quickly reach its limits. Austrians have the organizational design solution: delegated judgment. Austrian leaders are able to design and implement non-hierarchical organizations in which every employee is empowered to exercise entrepreneurial judgment. They do so by substituting value codes for authority. Value codes are the unwritten codes (although they might be found in the employee handbook) and conventions of “how we do things around here”, how we generate value for customers, the mission and purpose and internal methods of the firm. Additional Resources "Austrian Entrepreneurial Principles" (PDF): Mises.org/E4B_128_PDF Austrian Perspectives on Entrepreneurship, Strategy, and Organization by Nicolai J. Foss, Peter G. Klein, and Matthew McCaffrey: Mises.org/E4B_127_Book

Strategy is not the formulation of a plan. It is emergent from a process of exploration and discovery. Austrian economics is the best guide for entrepreneurial firms to put in place the methods and organization that unleash the power of emergence. Matt McCaffrey joins Economics For Business for a detailed exposition of the Austrian approach to Business Strategy. Key Takeaways and Actionable Insights A firm is a vehicle for entrepreneurial action to generate value. All businesses and all firms are entrepreneurial. They start from — and continue with — an aspiration to generate value for both customers and the firm, and they act on this intention by assembling assets (resources, people, cash, machines, software, etc.) that are required to realize and deliver value. The goal is to bring a good or service to market that is valued by others. Value is the ultimate goal. There are clear conditions for this action to take place. There must be a decision-making authority for the firm, because someone (or some collaborative group) must decide how to select and assemble just the right combination of resources and make a specific product or service from the assembly. We call that decision-making authority the entrepreneur. A second condition is that someone or some group must bear the uncertainty of the action. It may not turn out the way that was expected. It may not be profitable. Less value may be generated, or none at all. This bearing of uncertainty is also the role of the entrepreneur. It's hard to get the operations of the firm just right, because of complexity and change. Why is all this so hard, and the outcome so uncertain? Two reasons: change and complexity. The subjective valuations of customers, who decide what is more valuable and what is less valuable, are changing and reshuffling continuously, depending on situation, mood, the choices of others, and a myriad of other influences. These changes can become trends, fads, segments, and competitive advantages and disadvantages. Continuous change contributes to the complexity of the resource assembly puzzle: there are innumerable ways in which resources can be combined and recombined in a firm, and getting the assembly just right is a difficult challenge that is never perfectly resolved. Therefore, the Austrian view of capital as a flow is a fundamental contribution to rethinking firm strategy. The resources assembled in an entrepreneurial firm are not valuable in themselves, but because they produce a good or service that the customer values and is willing to pay for. This value — translated into revenue through the customer's willingness to pay — flows back to the firm as income. The flow of income is affected by each element in the firm's capital combination and by the degree to which the combination is well-integrated for the value generation task. Customers drive the capital formation task. The entrepreneur is engaged in a never-ending process of combining different capital goods to find the combination that is the most serviceable in generating value. Treating capital as a value generating flow helps entrepreneurs in practice to manage the persistent process of applying resource combinations in the market to ascertain what value they generate. It's dynamic process with no pauses. There are four implications for firm strategy — and they all contrast starkly with the traditional business school view of strategy. The business school view of strategy takes the form of sophisticated data-fueled top down planning models. Only a few special minds can take on this intellectually and computationally difficult challenge. Historically, the list of models has included Michael Porter's Five Forces Model (a model of industry structure and how to create barriers to entry and competition); SWOT analysis (a model of strengths, weaknesses, opportunities and threats from the firm's point of view, with strategic implications for the management of each element); PESTEL analysis of the business environment (political, economic, social, technological, environmental, legal factors) and how they affect firm performance. The common thread for these models is that they are implemented top-down: the strategists apply the tools, draw conclusions, and instruct the rest of the organization how to act. Matt McCaffrey's contrasted this top-down strategy approach to the Austrian strategy approach across four dimensions. Learning versus Rational Design The top-down models attempt rationalization: they view strategy as a rational design problem, to shape a distinctive internal competence to seize an external opportunity and evade external threats. This approach overlooks the crucial problem of learning. In circumstances of uncertainty, unpredictability, complexity and change, learning is the essential method of making progress. Changing conditions can never be known fully enough or fast enough by people at the center (in the strategic planning department) compared to front line employees. Firms must find a way to make use of this front line knowledge, through learning. Dispersion versus Centralization To enable the freedom to learn and to apply learning, decision making must be dispersed through the organization. A single mind or single planning unit can not centralize all the knowledge and can't centralize decision making. A strategic plan is not feasible. Organizational design and decision-making processes must be decentralized and dispersed. Implementation versus Formulation. A comprehensive plan is impossible. Firms must seek a more adaptive framework. Processes and methods and forms of organization must be capable of adaptation to unforeseen events and new information. Continuous deliberate adjustments must be made in the light of new circumstances, which may arise every day. Therefore, Austrians see strategy as emergent not formulated via a planning process. Adaptive firms implement entrepreneurial actions, and then adapt to the learning, new knowledge and new circumstances that present themselves as a consequence. Structure versus Strategy The business school approach is that strategy must be fully formulated, and only then can it be used to shape the structure and processes of an organization. Austrians take the opposite approach: the structure of the firm (its organization, processes and interfaces with the external environment) shapes strategy. Hayek used the term “structure of production”. This structure can be changed, but not instantly or seamlessly. Structure and strategy influence each other to some extent, but business schools tend to make strategy prior: that a firm is organized in response to the CEO's vision. Austrians understand that this is not realistic because it's not possible to restructure an existing organization every time a new vision comes along. There's a high cost to structural change, and strategy must adjust. Emergent strategy is based on business rules. What, then, replaces top-down strategic planning? Austrians use the term “rules”. Rules are an internal device to help managers and employees make decisions on the spot in response to learning and new knowledge. Matt McCaffrey gave an example: whenever there is a break in the supply chain, repurpose old capital goods and bring them into the production process as a low cost way to fill the gap. It's a broad and simple rule, and it enables decision making to go forward at the point of the supply chain break. People close to the action can use their local knowledge to solve the problem within the guideline of the rule. Another example was given by Bob Luddy, CEO of CaptiveAire, who set the rule for his firm to always have the best price in the marketplace. It's a simple rule that requires tremendous local knowledge about prices of systems and components, of competitive offerings, and about turnaround time (a cost element of price) among many others. Sales and marketing people as well as engineers can make decisions following this rule. Rules sustain firm uniqueness. Business school strategists often focus on competitive advantage as the goal of strategy. But the concept of competitive advantage comes from neoclassical economics and the depiction of markets as bounded cage-fights for market share between similarly-resourced rivals. Austrian strategy focuses more on firm uniqueness. A firm's distinctive rules can result in a unique mode of delivering value, and a unique perception in the eyes of customers. A brand is a set of rules that generates such a unique perception. The ultimate distinction: strategy is exploration. Strategy is emergent, not planned. Strategy is entrepreneurial. It's a continuous process of learning through action and discovery. Sometimes, firms discover things they really wish they hadn't. That's part of the process through which, eventually, strategy evolves. It's emergent. Over time, a firm can adopt some simple rules that seem to bring some order, but adaptation to new circumstances is always required. Profit is the signal that adaptation is successful. We use the term explore and expand to capture the Austrian approach to strategy. Firms are always exploring, seeking ways to improve performance. When some experiments yield promising results, they can be expanded. Explore and expand is a trade-off: how much of the available resources should be allocated to each type of activity. Entrepreneurs manage the trade-off in order to succeed. There's no strategic plan from on high to make the trade-off for them. Additional Resources "Emergent Strategy Process Map" (PDF): Mises.org/E4B_127_PDF Austrian Perspectives on Entrepreneurship, Strategy, and Organization by Nicolai J. Foss, Peter G. Klein, and Matthew McCaffrey: Mises.org/E4B_127_Book "Entrepreneurship and Firm Strategy: Integrating Resources, Capabilities, and Judgment through an Austrian Framework" by Matthew McCaffrey and Ulrich Möller (PDF): Mises.org/E4B_127_Paper1 "'When Harry Met Fritz': Rules as Organizational Frameworks for Emergent Strategy Process" by Nicolai J. Foss, Matthew C. McCaffrey, and Carmen Elena Dorobăț (PDF): Mises.org/E4B_127_Paper2

My guest today is Peter G. Klein, Carl Menger Research Fellow of the Mises Institute and W.W. Caruth Chair and Professor of Entrepreneurship at Baylor University's Hankamer School of Business. Peter joins me to discuss the phenomenon many know as "woke capitalism". We discuss where it came from, what it means, it's relationship with the early "Progressive Era", the massive support the left now has for giant corporations, and more. Peter really does a good job at explaining both the cartoon version of what the Progressive Era was and then what the Progressive Era actually was. Find more of Peter's work here: ...and here: To get more info on Renegade University Live TEXAS right in my town of Lockart, click here: Sponsors: Zippix Toothpicks ( ): Enter code BUCK at checkout for 10% off your order! Lorenzotti Coffee ( ): Enter code BUCK at checkout for 10% off your order! Paloma Verde CBD ( ): Enter code BUCK at checkout for 25% off any purchase over $75! ...and join their mailing list for an additional 10% off! Visit my website: Donate to the show here: Audio Production by Podsworth Media: Leave us a review and rating on iTunes! Thanks!

In this plenary address from the 2021 Austrian Economic Research Conference, Samuel Bostaph, an economist and historian of economic though discusses how Ludwig von Mises preserved and developed the work of Carl Menger. The Ludwig von Mises Memorial Lecture, sponsored by Dr. Don Printz. Recorded at the Mises Institute on March 19, 2021. Includes an introduction by Peter G. Klein. The Austrian Economics Research Conference is the international, interdisciplinary meeting of the Austrian School, bringing together leading scholars doing research in this vibrant and influential intellectual tradition. The conference is hosted by the Mises Institute at its campus in Auburn, Alabama, and is directed by Joseph Salerno, professor of economics at Pace University and academic vice president of the Mises Institute.

The Henry Hazlitt Memorial Lecture, sponsored by Yousif Almoayyed. Recorded at the Mises Institute on March 19, 2021. Includes an introduction by Peter G. Klein. The Austrian Economics Research Conference is the international, interdisciplinary meeting of the Austrian School, bringing together leading scholars doing research in this vibrant and influential intellectual tradition. The conference is hosted by the Mises Institute at its campus in Auburn, Alabama, and is directed by Joseph Salerno, professor of economics at Pace University and academic vice president of the Mises Institute.

Principles of Austrian economics have immediate applications in business. Clay Miller, a deeply experienced and highly successful global tech entrepreneur, makes the case via five principles drawn from five easily-accessible sources of Austrian economic theory, with many accompanying examples. Principle 1: The distribution of knowledge requires disaggregated thinking. Source: "The Use Of Knowledge In Society," F.A. Hayek: Mises.org/E4E_92_Hayek Hayek wrote this paper as part of a research program into the problem that economics tries to solve. He defined it as a knowledge problem. Knowledge “never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess”. The implication he drew was for central planning by governments and their departments and committees that would attempt to plan production or set prices. Such central planning is impossible because dispersed knowledge can not be aggregated and so the planners never have enough knowledge on which to base a plan. Quote “The statistics which such a central authority would have to use would have to be arrived at precisely by abstracting from minor differences between the things, by lumping together, as resources of one kind, items which differ as regards location, quality, and other particulars, in a way which may be very significant for the specific decision. It follows from this that central planning based on statistical information by its nature cannot take direct account of these circumstances of time and place…..” Application In our Economics For Business project, we have the opportunity to help entrepreneurs apply the same principle to business knowledge, or data. Too much aggregation can obscure information that is really important and most useful for improving business performance. Here's an example. A frequently used KPI (Key Performance Indicator) is average revenue per customer. It's calculated by aggregating all customer revenue into one number and dividing by the number of customers. For this to be actionable intelligence, it is necessary to assume that spending by each customer is very uniform. But consider the case where average revenue per customer is $190 for a customer base of 10 users, composed of 9 who spend $100 each and one who spends $1,000. The KPI does not suggest that each new customer you acquire will spend $190. In fact, it's more likely they'll spend $100. And, in fact, what you would really like to know is the profile of the $1000 customer and whether that profile, applied in recruiting new customers, would enable you to recruit more $1,000 spenders. You really want to choose metrics that can provide insight into individual customer behavior — like the nature and motivation of the one $1,000 spender. Similar Austrian thinking would apply, for example, to Google analytics, which can profile the type of customer interacting with your website or app, and observable behavior such as conversion rate by page visited, or abandonment rate for specific pages. These are disaggregated statistics that can help you serve customers better. Austrian thinking is rigorous in seeking to identify cause and effect, and to ensure that correlation is not mistaken for causation. A simple example is restaurant data that exhibits a 30% increase in customer traffic on Tuesdays. There's a correlation between day-of-week and traffic increases — but it's not causation. Tuesday does not cause the traffic increase. What does? It requires digging to find out, perhaps, that a local firm offers a perk to office workers to pay for them eating out on Tuesdays. As Hayek would say, this is specific knowledge of time and place, more likely to be qualitative than statistical, embracing the subjectivity that's central to Austrian economics. Principle 2: Consumer Sovereignty requires that entrepreneurs are directed by their customers. Source: Bureaucracy, Ludwig von Mises: Mises.org/E4E_92_Mises This book focuses on the inefficiencies and ineffectiveness of bureaucratic organizational structures and processes. In a chapter titled Profit Management, Mises defines the Austrian concept of consumer sovereignty. Understanding and applying this concept is central to entrepreneurs' capability to create effective value propositions for their offering, brand or business. Quote “Thus the capitalist system of production is an economic democracy, in which every penny gives the right to vote. The consumers are the sovereign people. The capitalists, the entrepreneurs, and the farmers are the people's mandatories. If they do not obey, if they fail to produce, at the lowest possible cost, what the consumers are asking for, they lose their office. Their task is service to the consumer. Profit and loss are the instruments by means of which the consumers keep a tight rein on all business activities.” Application Consumers are the ones driving production. It's up to business managers to make sure that every decision is towards bettering the value proposition offered to customers. For example, the décor in a restaurant should be chosen not because the owner favors it or because an interior designer decrees it, but for the purpose of enhancing the value experience of those consumers the owner wants to attract and to serve. This requires empathy. Consumer sovereignty and entrepreneurial empathy go together. Because consumers are the ones valuing what is produced, they are the ones ascribing value to the product or service the entrepreneur produces. The entrepreneur needs to anticipate what they value, and to do so requires ever-greater closeness to the customer. Clay described the value provided by simple but tasty barbecue restaurants in his home state of north Carolina, in a décor of plastic and paper and small booths. But that wouldn't attract the customers who prefer fine dining in a five star restaurant. The customer decides what experience they value. Startups can usefully anticipate consumer preferences by creating an imaginary perfect customer, and thinking through the value they want and the value the business can facilitate for them. Once in production, get as much feedback as possible on the actual value experience and the customer's feeling about it. Every decision made inside the business needs to be for the purpose of and directed towards improving the customer value proposition and value experience. Principle 3: Human value scales are complex and ever-changing and entrepreneurial empathy is required in order to reach an understanding of customers' value dynamics. Source: Human Action, Ludwig von Mises: Mises.org/E4E_92_Mises2 Human Action is the magnum opus of Austrian economic theory. Every chapter will yield great insights for business. Clay selected value scales as a topic. Quote “It is customary to say that acting man has a scale of wants or values in his mind when he arranges his actions. On the basis of such a scale he satisfies what is of higher value, i.e., his more urgent wants, and leaves unsatisfied what is of lower value, i.e., what is a less urgent want. There is no objection to such a presentation of the state of affairs. However, one must not forget that the scale of values or wants manifests itself only in the reality of action. These scales have no independent existence apart from the actual behavior of individuals. The only source from which our knowledge concerning these scales is derived is the observation of a man's actions.” Application When a person makes a decision to purchase your product or service, they conduct a quite complex evaluation to integrate your offering into their scale of values. And the values and the scale is constantly changing. Consumers are not static robots. Their circumstances change, their preferences for saving or spending change, their time of life or even time of day demand rearranging of value scales. A consumer may have a high preference for Krispy-Kreme donuts. But then they go on a diet. Their value scale changes. Losing weight and increasing fitness are now higher values than enjoying a donut. If you are the Krispy-Kreme donut franchisee, it's important to be aware of the value scale change, and to empathize with the customer. Maybe you could develop a promotion called “Cheat Day” that rewards them with a donut treat after a week of exercise and donut restraint. As Wayne Gretzky used to say, skate to where the puck is going to be, not where it is now. How can you understand value scales? One interview with a customer — what a researcher would call deep, rich qualitative information — can be worth much, much more than survey data. Mises said that we can only know an individual's value scales by observing an individual's actions. Having them answer a survey question such as “How highly do you value this item?” or “What price would you pay for this item?” does not indicate how they would fit the item into their value scale. They may say they would pay $250,000 for a Ferrari, but, when they weighted the experience of owning the Ferrari versus the opportunity cost of foregoing other experiences, would they actually make the purchase? The survey answers won't tell you. Entrepreneurs are rewarded for estimating correctly what the customer values and creating the appropriate value proposition. Principle 4: The market is a discovery process, with uncertainty on both sides of market exchanges. All entrepreneurial actions are tests, with no certain outcomes. Source: Competition And Entrepreneurship, Israel Kirzner: Mises.org/E4E_92_Kirzner This is a seminal work on entrepreneurship. One of the major themes is that markets are a process of discovery. That insight directs entrepreneurs to think in dynamic, process terms. The entrepreneur experiences uncertainty in what he or she is producing, because they are not sure of what customers will value in the future. The customer is uncertain, too, because they're unsure of how they'll value what the entrepreneur produces. Whenever we, as consumers, feel trepidation about “pulling the trigger” on a purchase, we are experiencing this uncertainty. Meanwhile, the producer is anxiously discovering the receptiveness to his or her value proposition. Quote “The market process, then, is set in motion by the results of the initial market ignorance of the participants. The process itself consists of the systematic plan changes generated by the flow of market information released by market participation — that is, by the testing of the plans in the market.” Application Kirzner points out that every plan an entrepreneur has, every value proposition, every offering made to prospective customers can only be a test, a trial. Nothing in the market can be certain. Entrepreneurs are trying to anticipate what customers are going to value, and they can never be sure in advance. That's why entrepreneurs use empathy, to imagine, if they were the customer, what type of experience the customer would be looking for. Entrepreneurs must imagine what customers might enjoy in the future. They must seek the customer's agreement that, “Yes, your product or service delivered what you promised and made me feel better.” One implication of Kirzner's principle of “market ignorance” is for branding. If a brand has accrued a certain level of market reputation, consumers will feel less ignorant. They will feel they “know” a brand that's been producing for 100 years, that is symbolized by the 3-point star that can be seen everywhere, and that is trusted and approved by many other consumers. A brand represents the stored experience and the stored reputation of many customers. Principle 5: All entrepreneurship is for social good, and more social good is achieved by subjecting business to the marketplace test of profit and loss. Source: Austrian Perspectives on Entrepreneurship, Strategy and Organization, Peter G Klein, Nicolai Foss, and Matthew McCaffrey, "Austrian Perspectives On Entrepreneurship, Strategy and Organization": Mises.org/E4E_92_Perspectives In Chapter 4 of this book, the authors discuss the concept of social entrepreneurship. This is an idea that seems to be gaining traction, especially among millennial business owners and millennial entrepreneurs. The idea is that business should be focused on something more than profit and loss. It should provide some “social value”, making the world better. Klein, Foss and McCaffrey provide some robust Austrian thinking with regard to social entrepreneurship. Quote “However, these metaphors (“social value”, etc) often imply a false conflict with traditional entrepreneurship. For example, the contrast between conventional market entrepreneurship and social entrepreneurship implies that the former is somehow not social, or even anti-social. This is misleading, however; for example, Austrians would respond that Mises's calculation argument demonstrates that the entrepreneurial market economy is profoundly social. Entrepreneurs, by bearing uncertainty in an effort to satisfy consumers, work ceaselessly to improve the welfare of all members of society, and their work in turn strengthens bonds of cooperation between individuals and communities, while at the same time disincentivizing conflict and exploitation. This is social behavior in its most fundamental form.” Application Steve Jobs improved society greatly by inventing the iPhone. The impact on society was considerable — better communication and information sharing, and higher productivity for billions of people. Every venture — including social ventures — must grapple with basic economic problems. Taking on a social mission does not relieve the firm of the pressures of the marketplace. Social enterprises are business organizations, and if they earn revenues through the sale of goods and services, they must apply judgement to allocate scarce resources in the face of uncertainty. Genuine participation in the marketplace requires them to be subject to the profit and loss test. Klein, Foss and McCaffrey make the point that “social value” is incalculable. What's good for one individual is not the same as for another. Individuals value things subjectively. When a business pleases one group, it may be adversely affecting another. Profit is not evil. It's impossible to make a profit without serving your fellow man. You are doing good for society by being an entrepreneur, by producing things that people want and value. You forego your own consumption by investing in your business, and so you are making a sacrifice to serve others. And if social entrepreneurs are not subjecting themselves to the profit and loss test — if they are supported by charity or grants — then they are not receiving the signals form consumers that they are allocating scarce resources in the way that consumers — i.e., society — prefers. The ethic of entrepreneurship is to serve, and to make others' lives better, and to receive the approval and reward of customers via the profit and loss mechanism of the market. Downloads and Extras Mentioned in the Episode: "The Use Of Knowledge In Society," F.A. Hayek (American Economic Review, Vol. XXXV, No. 4, September 1945; pp. 519–30): Mises.org/E4E_92_Hayek Bureaucracy, Ludwig von Mises (Yale University Press, 1944): Mises.org/E4E_92_Mises Human Action, Ludwig von Mises (Mises Institute, 1999): Mises.org/E4E_92_Mises2 Competition and Entrepreneurship, Israel Kirzner (Liberty Fund, 1978): Mises.org/E4E_92_Kirzner Austrian Perspectives on Entrepreneurship, Strategy and Organization, Peter G Klein, Nicolai Foss, and Matthew McCaffrey (Cambridge University Press, 2019): Mises.org/E4E_92_Perspectives

Many universities now offer courses in entrepreneurship, as students have been inspired by tech entrepreneurs such as Elon Musk and Mark Zuckerberg. But what exactly is entrepreneurship and who qualifies as an entrepreneur? Is entrepreneurship essential for economic growth? To help answer these questions, Economics Explained host Gene Tunny invited Professor Peter G. Klein on to the program. Peter is W. W. Caruth Chair and Professor of Entrepreneurship at Baylor University in Texas. He is also Carl Menger Research Fellow at the Mises Institute. TimestampsUse these timestamps to jump right to the highlights:2:25 – what is entrepreneurship? Entrepreneurship as a mindset 6:50 – Was Donald Trump an entrepreneur?15:50 – Schumpeter’s theory of creative destruction19:20 – Peter’s Entrepreneurial Judgment model (check out Peter’s book co-authored with Nikolai J. Foss Organizing Entrepreneurial Judgment and Peter’s Murray N. Rothbard lecture The Present State of Entrepreneurship Research on YouTube)26:15 – Gene mentions Cal Newport’s point that Steve Jobs thought the big value add of the iPhone was you could have your phone and iPod in the one device and didn’t foresee just how important all the apps would be (check out Newport’s great book Digital Minimalism) 35:15 – discussion of best places to be an entrepreneur, in which Peter tells Gene that Australia may not be as bad as he thinks, and Austin, Texas is attracting people who are leaving Silicon Valley39:05 – Peter says entrepreneurs are “absolutely front and centre in the process of economic growth” 44:15 – Peter refers to "the allure of fine tuning the economy" regarding frequent tweaks to R&D tax incentives  The episode was recorded via Zoom video conferencing on the 12th of February 2020.

Peter G. Klein, PhD Will the randomized control trial bring more clarity and certainty to economic science? Is “evidence-based economics” something to be hailed as a welcome innovation or should it be appraised with a more sober attitude? To examine this topic and discuss the relative place of randomized trials in economics and medicine we have as our guest Peter G. Klein, W. W. Caruth Chair and Professor of Entrepreneurship at Baylor University’s Hankamer School of Business. Professor Klein is also the Carl Menger Research Fellow at the Ludwig von Mises Institute. He obtained his PhD in Economics from the University of California Berkeley, and his BA from the University of North Carolina Chapel Hill. His field of interest is in the area of the economics of entrepreneurship and business organization. He taught previously at the University of California, Berkeley, the University of Georgia, the Copenhagen Business School, and the University of Missouri, and served as a Senior Economist with the Council of Economic Advisers. He is the author of 5 books and numerous peer-reviewed articles. GUEST: Peter G. Klein: Twitter and academic web page LINKS: Klein, P. “New Nobel Winners Are Latest Bad Science for Economic Theory” (Article on the Ludwig von Mises Institute website). RELATED EPISODE: Ep. 30 Beyond EBM: Case-Based Reasoning and the Integration of Clinical Knowledge (with guest Mark Tonelli, MD) SUPPORT THE SHOW: Make a small donation on our Patreon page and join our discussion group or receive a free book. WATCH THE SHOW: View the episode on our YouTube Channel Support this podcast

[Scroll down for English]Professor Peter G. Klein het onlangs by Sakeliga se Beleidsradar aangesluit om Suid-Afrika se ekonomiese beleidsomgewing te bespreek. Regstellende Aksie, Swart Ekonomiese Bemagtiging, herstelbetalings (“reparations”) en selfs die idee van ‘n ‘belasting op witmense’ is onder oë geneem. Prof. Klein het onlangs die hoofaanbiedinge by Sakeliga se seminaar: Ekonomie vir Besluitnemers behartig. Prof. Klein is onder andere die bekleër van die W. W. Caruth-leerstoel en professor van ekonomie by Baylor Universiteit se Hankamer School of Business in die VSA. Hy is ook die Carl Menger-navorsingsgenoot verbonde aan die Mises Institute, ‘n vryemarkgerigte opleidingsinstelling in die VSA. Volg prof. Klein se skryfwerk by die volgende skakel: https://mises.org/profile/peter-g-klein Volg hom op Twitter: https://twitter.com/petergklein Die gasheer vir hierdie episode is Gerhard van Onselen senior ontleder by Sakeliga. ___Professor Peter G. Klein joins the Policy Radar to discuss the South African economic policy environment. We consider Affirmative Action, Black Economic Empowerment (BEE), reparations and even the idea of a “tax on white people”. Prof Klein presented the keynote lectures at Sakeliga’s 2019 seminar: Economics for Decision-makers. Among other affiliations, Prof Klein is the W. W. Caruth Chair and Professor of Entrepreneurship at the Hankamer School of Business at Baylor University. He is also the Carl Menger research fellow at the Mises Institute. See more of his writings here https://mises.org/profile/peter-g-kleinFollow him on twitter https://twitter.com/petergklein The episode is hosted by Gerhard van Onselen, senior analyst at Sakeliga. Note: Introduction appears in Afrikaans.

Show Summary: It’s a liberty showdown of epic proportions! In a fierce battle for survival, Johnny and Raylene have defeated the nonpartisan putdowns, and hacks by using their weapons of logic and reason. Sending the group of non-partisan’s running away with their tail between their legs after attacking their Ship, Liberty One! Not compromising principles or liberty, Johnny and Raylene have just arrived on earth to assist Mike Boudet, but unbeknown to them, Commander Peter G Klein from the planet Mises, has assisted Mike Boudet with The Coase Cannon which renders “that when there are conflicting property rights, bargaining between the parties involved will lead to an efficient outcome has thwarted the main communist deluge! The state on earth has passed a bill to eliminate free speech and has authorized the most dangerous assassin Red Ronnie with his crew the red diaper babies to strike him down. Hidden in the shadows on earth are the Pholosopher and her band of rebels Volunataryists has plans to strike back. Peter G. Klein is Carl Menger Research Fellow of the Mises Institute and W. W. Caruth Chair and Professor of Entrepreneurship at Baylor University’s Hankamer School of Business. His research focuses on the economics of entrepreneurship and business organization, with applications to innovation, regulation, and economic growth. Will Johnny and Raylene with the help of Commander Klein help stop Ronnie red and the red diaper babies? Will the Pholosopher find herself pitted against the state? Stay tuned to hear Peter G. Klein on Episode #39 of Blast Off with Johnny Rocket. About The Guest: Peter G. Klein is Carl Menger Research Fellow of the Mises Institute and W. W. Caruth Chair and Professor of Entrepreneurship at Baylor University’s Hankamer School of Business. He is also Senior Research Fellow at Baylor's Baugh Center for Entrepreneurship and Free Enterprise and Adjunct Professor of Strategy and Management at the Norwegian School of Economics. His research focuses on the economics of entrepreneurship and business organization, with applications to innovation, regulation, and economic growth. Klein has authored or edited five books and has published over 75 academic articles, chapters, and reviews. See here for his website at Baylor University.He taught previously at the University of California, Berkeley, the University of Georgia, the Copenhagen Business School, and the University of Missouri, and served as a Senior Economist with the Council of Economic Advisers. He is also a former Associate Editor of The Collected Works of F. A. Hayek. He is an Associate Editor for two academic journals and on the Editorial Board of the Quarterly Journal of Austrian Economics and several other publications. He lectures regularly at the Mises University, Rothbard Graduate Seminar, and other Mises Institute events.Klein received his Ph.D. in economics from the University of California, Berkeley and his B.A. from the University of North Carolina, Chapel Hill. He co-founded the popular management blog Organizations and Markets. --- This episode is sponsored by · Anchor: The easiest way to make a podcast. https://anchor.fm/app Support this podcast: https://anchor.fm/blastoff/support

What’s wrong with “net neutrality”? Economist Peter Klein joins us to discuss the bad economics behind this fashionable idea. Articles Mentioned “,” by Peter G. Klein “,” by Thomas J. DiLorenzo (PDF) Episodes Mentioned : No, Marx Was Wrong (Peter Klein) : Was Marx Right? (Peter Klein) Related Episodes : Could There Have Been an Internet without the State? (Richard Bennett) : Net Neutrality: A Libertarian View (Berin Szoka) Guest’s Facebook Guest’s Twitter Guest’s Professional Page Guest’s Blog Special Offers I’ve just released another free eBook: 14 Hard Questions for Libertarians — Answered.  to get your copy! Like the new TomWoods.com? It was designed by my friends at Studio 1 Design. They’ve agreed to give my listeners 10% off any design projectthrough .

A debate between Gary North and Walter Block. Moderated by Peter G. Klein. Recorded at Mises University 2011.