Monday, July 29, 2013

Academics vs Entrepreneurs

Whenever there's an economic meltdown, a drop in employment, or a cosmic shift in trade, I get irked when the news media brings in some random academic to comment on the situation, instead of calling in a business owner or entrepreneur.
Academics, teachers, instructors and schoolma'arms are vital. Ignorance is bad. Knowledge is good. But for reasons I don't understand, someone with a doctorate in, say, Business Administration or Marketing gets more media respect than someone with real-world experience in Business Administration or Marketing.

Here's the difference in the two fields as I understand it.

Academics try to learn all that they can in a given field of study. The course is laid out for them. The path is well-marked. If they can jump a given set of hurdles, they'll receive a piece of paper stating that they successfully jumped the hurdles.

While there are risks involved in academic life, they are minimal. The goal is to reach a state where risk is avoided altogether, a condition known as tenure. All teaching considerations are secondary to getting tenure. Achieve that, and no students, colleagues, or administrators have to be satisfied with your performance, or what you produce. You have one of the most secure situations on the planet.

Entrepreneurs only have a vague idea what hurdles they'll have to jump, and where those hurdles are located. They don't know how much government interference they'll run into, or how much resistance they'll get from competitors. They don't know if their product will sell. No one told them that there would be a guaranteed market for "Product X". The customer generally doesn't know that they want "Product X" until the entrepreneur provides it. The entrepreneur doesn't have to please a committee, a grader, or an evaluator, but has to please millions of customers. (Note: Crony Capitalists are not entrepreneurs. Someone who starts a business because his congressman mandated that all consumers must use "Product X" is just another parasite. The green energy scams are a good example.)

If the entrepreneur is successful, he can't make a career out of providing "Product X" for the rest of his life. Copycats will be there. They'll come up with improvements. Variations. Replacements. Each success is statistically unlikely, but the entrepreneur has to pick up the dice and tries to roll a winner every day. Instead of security or tenure, the entrepreneur lives for risk, and you live a better life because of it.

One other thing.... the vast majority of academics are subsidized by government. Successful entrepreneurs are punished with higher and higher taxes, and have to listen to sermons from leeches about "giving something back". Here's my favorite Robert Heinlein quote:

“Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty. “This is known as ‘bad luck.’”
Detroit's academics are doing just fine, thank you. But entrepreneurs are scarce.


Anonymous said...

Truer words never spoken. As a paranoid small biz type, I laugh at the presumed "security" of those tenured positions and hold only contempt for them. But there are plenty of private enterprise versions as well in the bigger corporates. "Executives" who are essentially politicians waging an endless campaign to get the next job. I despise them as well.

Ex-pat in Oz

MingoV said...

There are other considerations regarding the media's selection of experts. Academics are selected for expert commentary because they are readily available. Also, people from private businesses are believed to be biased, while academics (wrongly) are considered to be neutral. Finally, viewers are more likely to believe academics.

In some cases the academic is the best choice. Two fields come to mind: engineering and medicine. Most engineering faculty have outside consulting contracts. Most medical school MD faculty also practice medicine. (I did that but never gave an interview.)