First, what is an entrepreneur? Some define an entrepreneur as someone who starts a new business. But this doesn’t capture the whole picture. Entrepreneurship is an ongoing process by which individuals attempt to forecast what consumers will want in the future and then organize production to satisfy those demands.

This might sound bland, but it’s immensely important. Without people thinking about what consumers might want, nothing will get done—our economy will just be a lump of raw materials, tools, and factories. Entrepreneurs are the men and women that act now to create value for consumers in an uncertain future.

The key point here is that entrepreneurs are acting in the face of uncertainty. Entrepreneurs that consistently make profits prove themselves capable of forecasting the constantly changing demands of consumers.

Now we can see why entrepreneurs are so vital in today’s economy. Taking action in the face of uncertainty is precisely what entrepreneurs do. So who could be better qualified to meet our changing needs in these very uncertain times?

And we do, in fact, see entrepreneurs adapting and expanding their services for the needs of health-conscious consumers. As my colleague Corianna Baier noted in a recent post:

Most stores now have curbside or delivery options, gyms and restaurants are moving things outdoors, and socially-distanced concerts are the latest form of entertainment. There is also plenty of innovation in education, with pods facilitating or replacing virtual learning.

However, entrepreneurs need the freedom to innovate and act on their ideas. The immense number of regulations in Missouri hinders their ability to adapt to our needs. The more Missouri dictates what can be done in education, restaurants, and public meeting places, the less freedom entrepreneurs have to provide for our needs.

Missouri faces a difficult challenge. The COVID-19 crisis has changed our behavior and the goods and services we need. Entrepreneurs have already adapted to these changes and will continue to innovate in order to provide for our needs. Shouldn’t we celebrate these men and women and allow them the freedom to serve us in this uncertain economy?

The post Entrepreneurs, Not Governments, Solve Uncertainty appeared first on Show-Me Institute.

Economics must not be relegated to classrooms and statistical offices and must not be left to esoteric circles. It is the philosophy of human life and action and concerns everybody and everything. It is the pith of civilization and of man’s human existence.

This quote by Ludwig von Mises in his magnum opus, Human Action, is a plea to the common citizen to learn economics. At first glance, it might seem exaggerated. Is economics really relevant to everybody and everything? And is it really the essence of civilization?

In fact, it is. As Mises argues elsewhere in the book, society is simply the cooperative interaction of different individuals. But how does this cooperative interaction come to be? Human nature is selfish, so why don’t we just fight each other to get the things we want?

The answer, according to Mises, is the division of labor. By specializing in tasks and exchanging goods, each individual actually benefits more in the long run than if they were to fight each other. Division of labor is cooperation. This is the foundation of economics. It’s also the foundation of civilization.

However, the fact that the division of labor is more productive is not, in itself, sufficient for cooperation to take place. Each individual must also recognize this fact. Without understanding the benefits of cooperation, individuals would give in to their short-term instinct of plunder. Thankfully, humans are rational beings and eventually realized that cooperation and exchange are better than barbarism.

However, cooperation through the division of labor—the foundation of civilization—is constantly under attack by socialists who want to dismantle the market system. This market system based on property rights is nothing but the extension of the division of labor and exchange.

This is why Mises makes his plea for everyone to learn economics. If people lose this insight about the benefits of cooperation and give into short-term instincts for plunder and control, our society would suffer greatly.

Mises summed it up nicely in Human Action:

Everybody thinks of economics whether he is aware of it or not. In joining a political party and in casting his ballot, the citizen implicitly takes a stand upon essential economic theories.” Giving into rhetoric without examining economics yourself is “tantamount to the abandonment of self-determination and to yielding to other people’s domination.

Don’t let the political winds sway you. Don’t let ideas go unchallenged. Learn economics yourself. The teachings of Ludwig von Mises are a great place to start.

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For a better understanding of these issues, we can look to Friedrich August von Hayek, the great twentieth-century Austrian economist. In 1945 Hayek published his essay, “The Use of Knowledge in Society,” in which he challenged the idea of central planning.

First, Hayek pointed out that the issue is not whether there should be a plan or no plan. The issue is whether there should be one plan by a single central authority, or millions of plans by the millions of people coordinating in the open market.

But having millions of plans by millions of different people seems chaotic. In order for all those plans to be effective, they would have to take into consideration all the relevant knowledge about the availability and possible uses of different resources. In a decentralized system, how is the relevant knowledge being coordinated? The answer, according to Hayek, is the price system.

Prices convey important information. Higher prices tell us that a good is relatively scarce; lower prices tell us it’s relatively abundant. This information then shapes the way people plan for the future and how they allocate their own resources. For example, say steel suddenly becomes scarcer. This will cause the price of steel to rise, telling everyone else in the economy that their use of steel needs to be economized.

Some businesses that use steel might reduce production or find cheaper alternative methods of production. Consumers of products that use steel might reduce their consumption. Other producers of steel, seeing higher revenue potential, might try to find ways to expand output and bring more steel to the market. The actions of all of these different people and companies are coordinated because of the information they gained from prices.

There’s no need for a central authority to gather all the relevant information to create a single plan. In fact, much of the relevant knowledge cannot be conveyed to a central authority at all.

Characteristics such as quality and an employee’s ability to learn cannot be precisely measured. Therefore, any datasheet given to the central authority will not give a full picture of the economy. Furthermore, all of this information is constantly changing, so that even the information that is quantifiable becomes obsolete by the time it reaches the central planner. Prices solve both of these problems. People’s implicit, unquantifiable knowledge can be reflected in constantly changing prices.

Hayek’s insight is significant when we think about modern policy issues. The government cannot know how best to set up a healthcare system, how to regulate production, or what wage employees should be paid.

Missourians should keep this in mind when the government pretends to have these answers. While it may be reasonable for the government to make adjustments when the market can’t provide—such as public goods and addressing negative externalities like pollution—more often than not, the best policy is to leave it to the market.

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According to the law that was passed by the state legislature and signed by the governor in 2018, every school district is required to inform families about their right to participate in MOCAP. It should be made clear in the “parent handbook, registration documents, and featured on the home page” of the district website. However, a majority of the districts are not complying with the law.

Only 57 out of the 556 school districts and charter schools in Missouri provided information about MOCAP on their websites. Of the 57 districts that do have this information posted online, only a handful made it easily accessible. Dallas County R-I is one of these outliers; it announced the program on the front page and link to a particularly informative explanation. But most websites bury the information. For example, Plato R-V only has a one-sentence message at the very bottom of the page in a hard-to-read gray font and provides no link to further information.

Ninety percent of Missouri districts are not complying with the requirement at all. MOCAP passed into law 18 months ago, and that should have been plenty of time to update websites and inform parents. Show-Me Institute analysts have written about instances of districts attempting to block students from using MOCAP, and the problem persists.

Online options can be a haven for students who face complicated medical situations, bullying, or have specific academic needs. MOCAP can also provide the opportunity for students to take classes that their local district doesn’t offer.

However, families can only reap the benefits of educational opportunities if they are aware of their options. MOCAP should be celebrated, but implementation is key. Every district should have this information on its homepage so that families who can benefit from course access are aware of the opportunity.

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