Quote for the Day

I came across an interesting quote in a new book by Nobel Prize winner in economics, Edmund Phelps.  This was in his new book entitled Mass Flourishing.  The context is a discussion of the conditions necessary for what he calls “dynamism” in an economy, or innovation and entrepreneurship.  Here it is:

“The more opportunity that an idea has to be evaluated by someone who can appreciate it, the less likely it is for a good idea to be passed up for funding. (To let the king pick all the creative projects for financing would be a recipe for making a monochromatic country).” (p. 38)

We can translate that into something like this:  If the government alone gets to pick all the winners and losers, many new and possibly beneficial ideas and innovations will be lost.  Rather the market should be allowed in most cases to decide what is the most innovative.  That way leads to the greatest prosperity and, beyond that, flourishing.

I might add that within any organization, the greatest scope of ideas ought to be permitted, encouraged, to emerge from an open environment that encourages innovative thought.  Then those ideas should be taken seriously.  Not all will be accepted of course, but to choose one from among dozens considerably increases the chances of getting the best one than allowing only one to emerge without any actual competition.

 

4 thoughts on “Quote for the Day”

  1. This is great quote!! It makes so much sense. How many good ideas or innovations are out there that simply aren’t given the chance for success? A very logical quote and observation.

  2. It seems to me that Edmund Phelps must be a huge believer in Laissez-faire economics. Normally Laissez-faire economics would be applied to more tangible topics such as taxes and subsidies imposed by the government but Phelps seems to be applying this to thinking and free thought. There was a great point raised about allowing the greatest number of ideas to come out in order to make a more quality decision. It is hard to make a decision about anything without first knowing the whole scope of options possible. Limiting ideas would seem like the enemy of entrepreneurship as it would further discourage people from thinking outside of the box.

  3. I definitely agree with this quote! Not only will markets choose the best ideas, they will weed out the most efficient ideas as well. People through the market will pick the winners and losers. While the government is necessary, there is a fundamental disconnect between the people in Washington and the markets. To illustrate this point, remember when the government attempted to pick winners for green energy and other alternative energy companies. Unfortunately, despite government funding, many of these green companies failed. The government literally just wasted tax dollars on a sinking ship.

  4. This quote makes so much sense because it puts the power in the hands of the people. The free market concept is successful because people have the freedom, and the incentive, to innovate and create. The government has a role to play, too. The key part of that role is to protect people’s rights to encourage exactly what Phelps is referring to. This quote reminds me of the government bail-outs. Instead of letting the market chose winners and losers to promote innovation and efficiency, the government intervened and ended up wasting tax dollars to save failing companies.

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