Benjamin Franklin was one of the Founding Fathers of the United States of America, and a brilliant inventor, author, businessman, and statesman.
Among his many inventions were bifocal lenses for glasses, the lightning rod for houses, and the concept of the public library. He discovered and articulated the principal of "conservation of charge" in electricity, which is foundational to even the most modern technological computing inventions.
He was one of the committee who drafted the Declaration of Independence and one of its signers.
Franklin is depicted on the US $100 bill, and as such is featured in an illuminating joke about economics, brilliantly explained in a recent weekly commentary by noted economist Brian Wesbury.
In the joke, two economists see a $100 bill lying on the ground, and pass it by -- saying to one another, "It can't possibly be a real $100 bill, or else somebody else would have already picked it up!"
As Wesbury insightfully notes, this joke illustrates a blind spot in economic theory: it treats the world "in terms of very impersonal forces that sum the actions of all people" and entirely overlooks the unexpected. In this mistaken way of thinking, there can never be any new inventions or businesses or new value to add to the world -- "if it could be done, someone would already have done it," the typical economic theory seems to say.
We have stated more than once before that this is exactly what is wrong with most economic theories and models -- they have no way of predicting the next unexpected innovation that will change an industry or add to human knowledge and happiness. This is a tremendously important concept for investors -- and entrepreneurs -- to understand.
Benjamin Franklin himself is a wonderful example of this principle, through his numerous innovations and inventions and businesses that added value to his customers -- and through his thoughts and writings on human liberty, which added tremendous value to future generations and ultimately to the world.
Free enterprise allows every individual to add to his own happiness and that of others, by being free to provide as much value as he wants, and thereby make money when others voluntarily pay for it. This is a fundamental human freedom, and we discussed it in our previous post on free enterprise.
We also can't help but note that Franklin was the fifteenth of seventeen children of Josiah Franklin. As such, he is also a wonderful refutation to the zero-sum idea that (in the words of the United Nations Population Fund) there is a "link between population and poverty." As we explained in this previous post on the subject, every person is a potential asset, not a potential liability, because every person is a potential inventor, innovator, or contributor to the good of not only himself but of others.
The next time you look at a $100 bill, or celebrate the Declaration of Independence, take a moment to think about Benjamin Franklin, and the many ways he illustrates the best principles of the concept of free enterprise.
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