Innovators like Cornelius Vanderbilt outdid political entrepreneurs like Robert Fulton two centuries ago. Who will win out today?
The red tape is piling up, and every new half-baked stimulus scheme comes with new holes that must be looped. Entrepreneurs will need to learn an entirely new skill in order to thrive in the Era of Metastasizing Government - the art of Regulation Navigation.
Of course, being good at dealing with and circumventing bureaucracy is nothing new. Here in NYC, if you want to open a bar or a nightclub for example, one of the first people you hire is your Expediter - aka the guy that gets things done and delivers to you your liquor license against impossible odds. Business operators who wish to thrive in this environment better learn a thing or two from the expediters or face complete and total paralysis.
Market entrepreneurs like Rockefeller, Vanderbilt and Hill built businesses on product and price. Hill was the railroad magnate who finished his transcontinental line without a public land grant. Rockefeller took on and beat the world's dominant oil power at the time, Russia. Rockefeller innovated his way to energy primacy for the U.S.
Political entrepreneurs, by contrast, made money back then by gaming the political system. Steamship builder Robert Fulton acquired a 30-year monopoly on Hudson River steamship traffic from, no surprise, the New York legislature. Cornelius Vanderbilt, with the slogan "New Jersey must be free," broke Fulton's government-granted monopoly.
He argues that we could very well be looking at the Golden Age of the Political Entrepreneurs and I fear that he may be correct.
This does not mean that we aren't innovating - new developments in technology are coming at a machine gun clip. Rather, the concern is that many of these ideas may be suffocated in the womb by restrictions and paper-pushing before they have a chance to see the light of day.
I hope we see a lot more Vanderbilt and a lot less Fulton in the coming recovery.
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