Michael Jackson, Entrepreneur

Ref : http://www.forbes.com/2009/06/29/michael-jackson-entrepreneur-economics-opinions-columnists-opportunity-success-shakira.html?feed=rss_news

Brian S. Wesbury and Robert Stein, 06.30.09, 12:01 AM EDT
The culture and politics that made his success possible.

Two economists are walking down the street when one sees a $100 bill on the ground. He points and asks, "Is that a $100 bill?" The other economist says, "No way. It can't be. If it were real somebody else would have already picked it up." Corny joke, right? But it sure helps explain the theory of efficient markets.

More than that, it explains how most economists think of the world. Typically, they think in terms of very impersonal forces that sum up the actions of all people. It's as if the aggregation of all our actions combined--in the form of supply and demand--somehow negates the existence of opportunity and individual achievement.

The good news is that, ultimately, real economic growth is about much more than the components of gross domestic product, such as consumption, home building and business investment. It's about the productive decisions and behaviors of individuals. Really, it's about entrepreneurs.

This comes to mind in light of the recent death of Michael Jackson. Regardless of what one thinks of his music or his life choices, it is easy to recognize how enormously productive Jackson was. He broke all the records for album sales, put MTV on the map and propelled music videos into the mainstream.

He created something out of nothing. He used his talent, hard work, and creativity to please the ears and eyes of consumers around the globe. If Jackson--or any entrepreneur for that matter--had asked a certain kind of economist whether he should pursue this line of work, this innovation, he would have been told it was foolhardy. "If there really was a market for that kind of stuff, someone would have done it already," they would say. But this is a static view of the world.

In reality, the economy is dynamic. And what allows that dynamism, what creates the environment for entrepreneurship, is the institutional framework--property rights, the rule of law and even the level of common trust among citizens. These factors cannot be quantified or easily measured, so they are often overlooked.

And yet without these social attributes great talent goes wasted around the world. The U.S. is blessed in countless ways, but do we really think we are just "lucky" to have so many talented people who live here? Would Michael Jackson have been just as successful if he had been born in France or Ghana? Of course not.

The good news is that singers like Shakira, who is from Columbia, and movies like Slumdog Millionaire, based on a book by an Indian novelist, suggest the environment necessary for success is spreading--even in the developing world.

Economic laws can either enhance or undermine the vibrancy of an economy, helping or hurting individual incentives and the flow of creative ideas. Policymakers everywhere need to keep this in mind. There are $100 bills on sidewalks all across the world. What matters is whether people have the incentive to pick them up.

Raising tax rates, regulating business and redistributing income can all interfere with these incentives. Americans know this, but politicians often listen to economists who don't. With so many big items--like health care, cap-and-trade and large tax hikes--on the table, the decisions of the next few years will help determine whether the U.S. produces more Michael Jacksons, or not.

Brian S. Wesbury is chief economist and Robert Stein senior economist at First Trust Advisors in Wheaton, Ill. They write a weekly column for Forbes.