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Sunday, June 17, 2012


Foundation of Economic Education

The Entrepreneur and the Profit and Loss System


  John C. Sparks

  For the purpose of illustrating this idea, let us suppose you had lived in 1900 and somehow were confronted with the problem of seeking a solution within 54 years to any one of the following problems:

  1. To build and maintain roads adequate for use of conveyances, their operators, and passengers.

  2. To increase the average span of life by 30 years.

  3. To convey instantly the sound of a voice speaking at one place to any other point or any number of points around the world.

  4. To convey instantly the visual replica of an action, such as a presidential inauguration, to men and women in their living rooms all over America.

  5. To develop a medical preventive against death from pneumonia.

  6. To transport physically a person from Los Angeles to New York in less than four hours.

  7. To build a horseless carriage of the qualities and capabilities described in the 1954 advertising folder of any automobile manufacturer.

  Without much doubt you would have selected the first problem as the one easiest of solution. In fact, the other problems would have seemed fantastic and quite likely would have been rejected as the figments of someone’s wild imagination.

  Now, 54 years later, let us see which of these problems has been solved. Has the easiest problem been solved? No. Have the seemingly fantastic problems been solved? Yes, and we hardly give them a second thought.

  It is not accidental that solutions have been found wherever the atmosphere of freedom and private ownership has prevailed wherein men could try out their ideas and succeed or fail on their own worthiness. Nor is it accidental that the coercive force of government—when hooked up to a creative field such as transportation—has been slow, plodding, and unimaginative in maintaining and replacing its facilities.

  Does it not seem odd that a privately-owned automobile company found it expedient to sponsor a national contest with tremendous prizes and to conduct its own search in order to correct the faults of the publicly-owned and inadequate highway system? The highway dilemma has become more and more acute until someone other than the public owner seeks an answer. If the points of ownership had been reversed in 1900—that is, motorcar development in the hands of the government, and highways left to private individuals— we would today likely be participating in a contest sponsored by the privately-owned highway companies to suggest how to improve the government’s horseless carriage so that it would keep pace with the fine and more-than-adequate highways.

  How could roads be built and operated privately?

  I do not know. This is a subject to which none of us directs his creative attention. We never do think creatively on any activity pre-empted by government. It is not until an activity has been freed from monopoly that creative thought comes into play.

  But go back to 1900. Could any of us then have told how to solve the six problems to which solutions have been found? Suppose, for instance, that someone could at that time have described the looks and performance of a 1954 automobile. Could any of us have told him how to make it? No, no more than we can describe how privately to build and operate highways today.

  What accounts, then, for the 1954 automobile and other “fantastic” accomplishments? Government did not pre-empt these activities! Instead, these have been left to the area of free, uninhibited, creative thinking. Millions of man-hours of technically skilled, inventive thought have been at work. And the end is not yet. Nor will there be an end if the inhibitory influence of government is confined to its proper functions of protecting equally the life, liberty, and property of all citizens; if men are free to try their ideas in a competitive and voluntary market.

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