The definition of confusion, according to one old joke, is Father’s Day in Newark, New Jersey, but now that in our enlightened times everyone in Newark knows their father, the new definition of confusion is this Start-Up Chile judge in Iceland:
I have accepted to be a judge in the selection process of the next batch of early stage companies that will be locating to Chile to bootstrap and build their company. I think it is a fantastic initiative to drive entrepreneurship and innovation through collaboration….
As much as I like the initiative, I am not sure if I like the structure. Governments are feeders, they cannot be leaders in efforts like this. I think the leadership for such initiatives need to come from Entrepreneurs. I like grass root movement that brings together different stakeholders who have their own sustainability mechanisms that contribute and enable the ecosystem. I don’t believe forced innovation and entrepreneurship works….
I think central planning, Government and initiatives like the one above are important and necessary drivers but not sufficient to enable a sustainable startup ecosystem. I believe every stakeholder needs to have the right incentives and Goals, remember goals have to be SMART – Specific, Measurable, Attainable, Realistic and Timely. The goals of the program seem a little skewed for my taste, does having a greater number of companies bootstrap from Chile improve innovation in Chile? Not sure that is obvious. I have more questions than answers about programs like this. I like simple Accelerators like TechStars or Y-Combinator, there is an economic engine… but it needs a push out of the door, which is what I have been proposing we do in Iceland.
So, who pushes products out the door, politicians and functionaries or the serfs they rule? What is produced if the agenda of the serfs is different than the government? If the quoted muddle above is representative of how Icelanders think, I understand why the country is insolvent. Unfortunately, the same confusion afflicts Europe, North America, and Argentina, and it’s a shame that judges in Start-Up Chile have no skin in the game. For many people, economics is vexing because it is not intuitive.
Economist David Henderson explains, “Information is valuable and costly, and most information that’s valuable is inherently decentralized.” Henderson’s pillars of economic wisdom:
1. TANSTAAFL: There ain’t no such thing as a free lunch.
2. Incentives matter; incentives affect behavior.
3. Economic thinking is thinking on the margin.
4. The only way to create wealth is to move resources from a lower-valued to a higher-valued use. Corollary: Both sides gain from exchange.
5. Information is valuable and costly, and most information that’s valuable is inherently decentralized.
6. Every action has unintended consequences; you can never do only one thing.
7. The value of a good or a service is subjective.
8. Creating jobs is not the same as creating wealth.
9. The only way to increase a nation’s real income is to increase its real output.
10. Competition is a hardy weed, not a delicate flower.