To the politician, Business exists to provide jobs and pay taxes. But, as one economist noted, important jobs with life or death consequences (and presumably a correspondingly high employee self-esteem) could be created overnight by placing the unemployed in charge of busy intersections and turning off the automated traffic lights. This easy change, if mandated, would create many jobs but would destroy wealth. “Broken Window” economics creates jobs in the short term, but what about tomorrow?
To the naive, Business exists to 'get' money. By this poor standard, cat burglars, grifters and extortionists could meet the definition of businessman. An immature child of a financially secure home might think in terms of of how to get 'his share' of the family pie, but the adult that characterizes “distribution of natural abundances” or “rationing of scarcities” as the fundamental economic issue is destructively wrong.
To the entrepreneur, business is the only tool that can create substantial new wealth. Its somewhat obvious how machinists, welders, and even artists and writers create values – but how does the businessman do it? There are three essentials, and one is fundamental.
Businesses take long-term risks with capital, and innovate. If successful, they cause energy, materials and, most importantly, time to be used more effectively. Failing businesses waste everyone's time and money, and destroy wealth. Successful innovators are always reformulating in order to extravagantly 'waste' the least expensive and most abundant commodity in order to recycle, conserve and spare the most precious. This has always been the nature of enterprise and has never needed the pious urgings and second-guessing of under-employed eco-worriers.
New jobs and new markets for existing products and services are natural consequences of expanding wealth. Our distracted American business culture sometimes loses sight of this. They forget that every serious, sustainable and profitable product and service makes their customers, suppliers and employees wealthier. (A sale should always be ´win/win´). Other than the frivolous, why do you buy any product or service? It's good for you! “Working America gives at the office.”
In addition to innovation, a successful business must “milk the cow”,or if you prefer: “Feed the goose and collect the golden eggs.” More than one brilliant business innovation has been frittered away by leaders who measured the importance of correct, consistent and capable operations by their own lack of interest. Operations savvy is about more than just ´cutting costs´. Looking for the proverbial "one less olive per jar", nickel and dime-ing customers on fees, and squeezing employees, is a parody and a misdirection.
Finally, there is a complex and fascinating third element in the creation of wealth. Its proper discussion exceeds the scope intended for this brief article. I will mention it only to hold a place for future discussion, and that is the power of conceptual integrity to create wealth. If you are intrigued with this teaser, I will leave with you the two words that are the key: “Know Thyself.”
