On the Matters of Entrepreneurship
By Raphael-Seraphin Kutota Basisa
As I began to drop some ink on this topic, coincidentally, there is in the air, the 2015 city of Charlotte Mayoral candidates debate; a great opportunity, as I reckoned, to gauge the temperament on my persisting assessment that even the very advanced economies have not yet understood how to synergize entrepreneurship into the local economy and get it to contribute into widespread development. As the moderator opened the floor for audience questioning, I posed the question to the panel of 4 candidates present - one Republican and three Democrats: What will you do deliberately as an elected Mayor to induce economic development other than the traditional recruitment of faraway mega brand-named corporations? Some of these companies, as often documented, it is part of their strategies to boost their bottom line by milking public money around the country if not around the world. They move their headquarters, well constituted entities, place to place and at times, perhaps may hire a janitor or a half security guard from the local constituency... or perhaps position a factory somewhere at some location to let local politicians think that can score them some points. Once the money are spent, they begin to announce their usual massive layoffs or plant closings… Such maneuvers are not isolated incidents. They have occurred and reoccurred time and again everywhere you can guess. They layoff massive numbers of workers, shutoff plants, and move to the next public subsidy. They capitalize in doing business with empty bag of promises on their legally airtight contracts that they pressured the local official to sign under duress.
During the responses that the members of the Debate panel were providing, one panelist outlined the data that 78% of the jobs of the future will be borne by existing or being created local small to medium companies (local enterprises: start-up's and as young as 5 years old or less by local entrepreneurs) - an ever more potent data than I gathered on previous literature on the same matters. I was always informed that up to 61% of the jobs of the future will be created by existing, local entrepreneurs. Even though the whopping 17% difference in statistics collected from different sources: The claim was that 78% data point resulted from a study sponsored by the City of Charlotte on trying to quantify the impact of entrepreneurship within its boundary while the 61% data is often presented to reflect the national average - Both numbers are tremendous and cannot be ignored. But, totally to the contradiction of this known fact, during the last recession, the George W. Bush's Administration as well as the Barack Obama's Administration both dispensed billions of dollars to the mega Banks, Wall Street Fund houses, and Blue Chip old economy manufacturing companies (Chrysler Corporation, for example), including some Goofy and Loony supposedly creative financial businesses such as Insurance companies (like AIG), etc... Who were at the bottom of the structural for the biggest financial blunder of the modern era in the first place dealing with the humungous monstrous financial system they created, but nothing for the entrepreneurs. Completely unable to phantom what logic was being used by both the Republicans and Democrats which seemingly, their views on the matters should have been at 180 degrees toward the opposite poles, rather, just like an easy puzzle, they both crashed into the same trap - "The Brand name Dilemma." I deliberately used this example to outline the power of the brand in human psyche, even at the very high echelon. Even worse, these same mega corporations were time and again caught divvying the cash infusion to save the national economy (If not the international one) from total collapse. They pie each other and amongst one another bonuses, fringe benefits, and much more... I wondered why the stimulus funds that were supposed to permeate all the way to the lower levels did not.
At a certain point in the future, the country or the locality which will figure-out how to harness the power of Entrepreneurship will deal such a punch in the raising of the standard of living for the remaining of humanity outside the proverbial 20% of folks living in the West and consuming 80% of the resources (the other six billion people on Planet Earth) and mitigating poverty and other deprivation as we know it - The dilemma is not simply one for the developing economies of this world, it is of concern for the entire planet. I posit that evidencing that anywhere in the world you go, politicians, economists, and other professionals of that matter all dwell in developing their notable economies and raising the standards of living, taming poverty by creating modern employment as means for everyone to self-sufficient their families via wages earned through work. But, on the unfortunate side on that dimensional equation is, every socio-politico-economic entity around the planet is depending on the very same finite number of those same mega brand name corporations (this same companies that are internationally known as the "Multinationals") to uplift them out of their rot... That is a statistical impossibility that cannot be achieved... Thus, if we are to achieve some kind of moderate impact in the bettering of humanity outside of the West (this is simply assuming that these Multinationals have been facilitating and permeating "the greatest good to the largest numbers" to be achieved in Western countries - A statement which I can with certainty certify to be false).
My friends, please believe me that Entrepreneurship is and has continued to be the most misunderstood economic development tool in many nations’ toolkit in space and time. In my opinion (based on my years of research on the subject yielded), there are three facts that always plays against:
The first one, I already outlined: The mega corporations carry a heavy stigma on the minds of all politicians and their economists advisors without exception - They are serious automatic attention grabbing beacons from afar, thus, causing for more other band name corporate to consider the lure for the locus intending to attract them. At one time, a high profile local political candidate told me that each time these brand name corporations announced their customarily massive number of employee layoffs, it creates a serious dip in local economies that politicians feel a must to mitigate to impulse public opinion. All of that is because those major layoffs hit the news waves very hard like the sky is falling. Our modern societies have grown accustomed to rely and depend on wages emanating from these companies that we become so worry of their disappearances or so ignorant that we benefit them more than they benefit us - simple intersection of human perceptions while reality is seriously telling us a different story - these corporations are only creating at maximum, 20% of the jobs, but they absorb 80% of the public subsidies allocated for this genre of affairs - something must be wrong with this calculus.
80/20 rule is not natural:
Whether you believe in the evolution (act of nature) or creation (act of God), both of these approaches come to intersect together under one premise that both God and Nature presume that and function under the premise that fairness, equity, Justice, and stability should be the basis for normal conditions. As an overall general norm, those four adjectives are mathematical expressed as 50/50 ratio statement. That is to say, any combination other the one that must be a deliberate skew, artificial interference of the intentions of that of Creator or those of Nature. Thus, under no circumstances, there should be a possible way whereas 80/20 proportions can exist without any external pressure, deliberate coercive schemes, or an unwanted forced application into a system.
I can go through countless examples to put these concepts into context. Because I know most people grasp Chemistry well, let me try to use the solubility of table salt in water as an easy example. If one mixes a tea spoon of salt into a glass full of tap water at normal room temperature. You can be anywhere in the world and any time in history and future, the amount of salt in solution in water will always be the same unless you cause some vigorous stirring (mechanical agitation), and/or change the temperature of the water, and/ change the pressure of the surrounding. Even though you can do that to affect an increase of the amount of dissolved salt, but once you release the system back into its normal equilibrium state, the dissolved excess salt will precipitate out of solution so that the balance concentration of water-salt at normalcy can be reestablished. That describes the work of Nature and the same is replicate into all natural processes.
If you observe the many phenomena that behaves in accordance to the 80/20 rule, you will quick come to discover that they cannot be let alone to normally achieve their equilibrium point. An external continual manipulation will have to be kept in place to sustain that process going in that fashion. I call that "The Hijack Duress". Without this stress being applied unto a system, another opposing natural systemic process will emerge and return the system into its equilibrium – that is the force of fair, equitable, just, and stability.
The Global economy, for instance, is good sampling of an 80/20 system under many aspects - one of its most obvious example is the distribution of goods (e.g. raw materials). How is it possible that 20% of the people in the Western countries are currently consuming 80% of the world's resources? Physically that is something that is very incomprehensible as to mean that this 20% bunch are of an extreme insatiable greed as their normalcy while the remaining 80% to have only 20% allocated to them are in extreme starvation (another normal? Can they be two different normal conditions prevalent at the same time?): So, which one is the optimum? The 80/20 or the 20/80? Those in the Extreme greed or those in the extreme deprivation? Unless it can be proven that the 80% are not human beings the same way as the 20% or that the 80% group are simply some sort of beings not endowed with comparable humanly faculties as the 20% group. Therefore, if those two assumptions aren't true, then neither of the two extremities are natural, just, fair, nor equitable. Human beings cannot stay naive for very long. As a result, they will, at a point, realize that they are being deprived by actions of certain other people, or certain other motives and thus soon or later will revolt to reclamation of equitable share of resources so that they wouldn't starve alive. Only if a pressure is kept on the top of the lid that things wouldn't boil over. Perhaps this could be a good place to examine the root causes for the continual turmoil in the low income countries in the attempt to mitigate poverty for example. Nowadays, with the advent of climate change, the unwanted consequences of the imbalances caused by the unfair share of resources will be more compounding and acute for a wide population. Already, the blame is seen being shifted to the prior.
The second factor is that, because of their inherent small size, often a one-man band inherent nature of the entrepreneur, there is a persisting dumbfounded fear that these entrepreneurs will grab the public subsidy and flea into the oblivion... because they often do not possess valuable assets, serious vesting into the community, and perhaps few more other negativities that they are not easily collateralized by the funder. Nothing is far from the truth than that!!
The third one is what I have labeled as "The Stakeholders' Dilemma:
There are two forms of the dilemma under this banner:
The Lobbyist Dilemma:
“No one told us that this group was in need of help” - This is a usual dilemma. Decision makers and law makers need to see that the issue is being championed by somebody they are accustomed to dealing with (Lobbyists). Otherwise, they won’t respond favorably to the issue. Most entrepreneurs are more like independent individuals working themselves to the hilt to give their businesses a chance for success. Thus, often, they have little time to get together and collectively bargain against an institution that requires certain types and way for things to be presented to them for you positive results. Members of the general public (the lay people) often approach politicians and decision makers unsuccessfully because they do not understand the language that this specific group speaks – the language of large numbers. To the contrary, professional lobbyists are adept and very keen to this fact. The same way, the rich, the affluent, and the mega brand name corporations are successful because of their deployment of the professional lobbying.
The Initiative Dilemma:
“No one will benefit from promoting the issue” - It's in no interest to no one specific. Those responsible to make it public information, to present it as an important matter that deserve immediate attention are not benefited directly, thus, do not fund the effort. It got to benefiting somebody in someway for him or her to find it worthwhile to invest in its marketing to the broader general public to drum up stronger public support. Most entrepreneurs are regular Joe’s before they make it big. They are so busy with their work, that little else is priority. The memory space and the time to make these kinds of initiative and commitment isn't just there. Therefore, the prevailing conditions of all of them persist collectively remain unchanged for decades at the time.
Entrepreneurship does not occur in vacuum:
In a recent article, a African entrepreneurs pointed out that it is about time that those young Africans who departed the continent years ago to gain western education and business know how to consider going back to contribute to its economic development. Although the idea sound very enticing at first, but, the thing is that even the best entrepreneurs rely upon local conditions: “They cannot exist in vacuum.”
Local economies, educational systems, infrastructures, institutions such as the legal system to protect property rights, political climate, etc... are essential in their success. But, the status quo in most of the countries are such that it is not conductive for them to take that kind of gamble unless they are aware and experienced on how to navigate rocky waters. Unless they are, I would not suggest that they take that risk. Mitigating this sort of existing shortcomings is not for everyone.
But on the other hand of the equation, the idea that entrepreneur should come to the rescue may be very plausible in the example of Africa. The entrepreneur may represent the ultimate competitive advantage that this continent is in need: Competitive advantage is that he or she creates a job for him or herself first, for his or her family, and then for other members of the general community. Further, as they will grow in size and become more stable as the older and established business entities, they will spread that good to broader general public, to many other nations, for a longtime span into the future. The entrepreneur is a resource creator. As most African nations are in business growth mode of the economic business cycle, their presence there will be essential (We explained this in contradiction with the resource protecting inherent of established business enterprises of the stable and/or declining economic business cycles of the developed nations).
It should come across all of us as a complete unfairness since most, if not a great deal of today's mega corporations, yesterday, were themselves growth oriented entrepreneurial entities - but, as they grew and gained power, they began to adopt strategies that will put newer entrepreneurs in awkward position.
I hope that those who will come to read these writings will not construe me for someone loaded with anti-big business rhetoric. Rather contrary to that, as one of my Critic voiced, I believe that, for the sake of economic development, we need both types of businesses: the small entrepreneur and the mega enterprises for the wellbeing of the community.
November 3, 2015