We learn early to be frightened of failure, but is it really so bad? This article in Forbes discusses significant failures that turned into massive successes:
The author could also have added Abraham Lincoln, who suffered many failures:
When you say the word “economics” to people today they usually think of supply, demand, and money. After teaching myself quite a bit of economics I’ve come to realize it’s actually a set of mental models, a set of tools, used to understand systems of behavior.
Adam Smith is widely credited as the father of economics, but he would not have considered himself to be an economist. He was considered in his time to be a moral philosopher. He was interested in human behavior generally, and used certain techniques to help him understand and predict behavior. Modern economists like Gary Becker and Stephen Leavitt have applied the tools of economics to areas as varied as family dynamics, or the naming of babies.
I recently stumbled upon this rather interesting podcast (see http://www.econtalk.org/archives/2006/08/the_political_e.html ), which uses a few economic tools to think about the incentive systems involved in war. One of the interesting conclusions is that dictators are far more likely to start wars than the leaders of a democracy, but once embroiled in a war dictators are far more likely to back out if things don’t go well, whereas democratically elected leaders try to double their bet and hope for the best. Understanding why this happens doesn’t require an economics degree, but an economics toolset is useful in thinking through the way the incentive systems for war work.
For any organization to thrive it is important that they have access to the best creative capital. The best artists, authors, actors, inventors, business leaders, and political leaders, aligned with the missions of the organization. This is true of clubs, of companies, of countries.
For some time America has had significant advantages in this regard. An open market, an affluent market, with regulation that are relatively narrow in scope, with relatively free exchange of speech and ideas, and with relatively open immigration policies, has brought the world’s creative capital to America’s door and let it thrive.
Thanks to the rapidly dropping cost of transporting atoms (global trade), the even more rapidly dropping cost of transporting electrons (the globalization of information and knowledge work), and the changing economic policies of much of the rest of the world (as other countries move to free market principles, India and China in particular), the historic advantages America has had with respect to creative capital may be diminishing. In ten years it may be better to be a really good student in the rest of the world than a good student in America. And the rest of the world has alot more students.
There are many changes that would help a country thrive in the future. Some changes require policy decisions that are insightful or difficult politically.
There is however a simple policy prescription that would greatly increase a country’s competitiveness in the world: have more of the future creators align their interests with the country.
Creating open, attractive, minimal friction immigration policies for any capable, intelligent, driven individual seem like a must. What country will be the first to really discover this?
When companies like Intel are led by a Hungarian immigrant, and Google are started by the sons of Russian immigrants, it behooves politicians to rethink their approach to such immigration. While there is a raging debate among economists and citizens as to whether the immigration of low skilled immigrants helps the economy, there’s not much debate amongst anyone that having a few more Andrew Groves (the leader of Intel for many years) or Vinod Khoslas (founder of Sun Microsystems and a very successful venture capitalist) would be helpful.
Closing the borders likely wouldn’t work. The rest of the world, having adopted many of America’s philosophies, may move beyond America if America closes its borders. Opening our borders, our paths of citizenship, to the creators, the producers, the entrepreneurs, may.
