Entrepreneur Day

‘Contraption’ by Hanna Thoren

Labor Day, the first Monday in September, is an American holiday that was first celebrated in 1882 and an idea that spread with the growth of labor unions

What use are so-called “challengers” for the White House in 2012 if none in the current field of Republicans is competent enough to challenge Barack Obama’s fundamentally flawed belief about American jobs and workers on this Labor Day?

Hope is Not a Strategy

Peppering his 2006 manifesto with labor-related jargon – phrases like “information age” and “industrial economy” – in The Audacity of Hope to say anything that could get him elected, Obama foreshadowed the harmful change to come under his administration.

“Workers are going to need some form of higher education to fill the jobs of the future,” Obama said, confirming his flawed belief in perpetuating an underclass of labor among other factors of production to be exploited in our exceptional tradition of capitalism.

Opportunity Costs of Labor

The following, brief definitions of jargon the people who labor need to understand most may be the easiest way for me to show you how Obama is not only flawed but also misguided in continuing to spread a belief, shared by his current Republican challengers, about the need to create jobs for Americans merely to fill:

  • capitalism A social and economic system in which individuals own the means of production and maximize profits, and in which resource allocation is determined by the price system. Karl Marx argued that capitalism would be overthrown because it inevitably led to the exploitation of labor.
  • factors of production The inputs or resources used in the process of production. Land, labor, and capital are the three primary groups used in analysis of factors, with the entrepreneur often counted as the fourth.
  • land Taken to include, in economics, all natural resources, including the sea and outer space. One of the factors of production, land is distinguished from the others in that its supply is more or less fixed. Since the productive power of land is conceptually distinct from that of capital, land is a factor of production only in its natural, unimproved state.
  • capital Assets that are capable of generating income and that have themselves been produced. Capital is one of the four factors of production, and consists of the machines, plant, and buildings that make production possible, but excludes raw materials — land and labor. All capital is itself, however, the product of land and labor, and can be seen as holding the stored value of them. In more general usage, capital is any asset or stock of assets — financial or physical — capable of generating income.
  • labor A factor of production. The term not only includes the numbers of people available for, or engaged in, the production of goods or services but also their physical and intellectual skills and effort (i.e. human capital).
  • entrepreneur An economic agent who perceives market opportunities and assembles the factors of production to exploit them for profit in a firm.
  • profit The residual return to the entrepreneur. In traditional economic theory, profit does not include any of the return to land, capital, or labor (factors of production), but is the surplus remaining after the full opportunity costs of these factors have been met (i.e. total sales revenue minus total costs).

From Labor to Entrepreneur Workforce

The working class celebrated on Labor Day only began to rise in the 19th century, after James Watt’s improved steam engine was applied to the factory production of textiles at the beginning of the Industrial Revolution, according to legendary management expert Peter Drucker.

The nuclear family had long been the unit of production. On the farm and in the artisan’s workshop, husband, wife, and children worked together. The factory, almost for the first time in history, took the worker and work out of the home … the Industrial Revolution in its first half century only mechanized the production of goods that had been in existence all along. It tremendously increased output and tremendously decreased cost.

Similarly, the Information Revolution’s widespread impact on the workforce is now beginning to be felt in the economy. “The Information Revolution is now at the point at which the Industrial Revolution was in the early 1820s,” Drucker wrote in his 2002 book, Managing in the Next Society, describing similarities between the most dominant revolutions to be felt so far in the tradition of America’s workforce (Table 1).

Table 1. Basic similarities and differences between Industrial and Information Revolutions.

Revolution Industrial Information
Economy Manufacturing Knowledge
Primary Capital Steam engine Computer
Main Commodity Textiles Ideas
Dominant Workforce Labor Entrepreneur

Two Sides of the Same Proverbial Coin

But the current Republican field of challengers to Obama are just as flawed with their belief about a solution for jobs in the economy: whereas the latter is captive to labor unions that continue to give him campaign money, the former want to change the system in favor of the corporate entrepreneurs who give them money. Both sides belong to the same proverbial coin, engaged in a divisive and outdated tug of war for the same profits.

The economy will continue to change for the worse if either side succeeds in perpetuating divisive change in the American workforce through such a flawed belief.

What Must Be Done for American Profit

Instead of continuing with a strategy of hope that jobs created by entrepreneurs trickle down for labor to fill, what’s needed is a paradigm shift in belief that’s consistent with the best of America’s exceptional success through capitalism in the global economy.

It’s not enough to believe training labor to be innovative with new manufacturing skills will revive an Industrial Revolution that matured in the 20th century. Because it’s no longer merely about how to supply work but increasingly about what work the economy demands.

America must innovate to succeed in the knowledge economy, training labor to be innovative through entrepreneurial skills, so that all the people in society are trained to profit most from the new ideas that will drive economic growth through the 21st century.

References

Graham Bannock, Ron Baxter, and Evan Davis, The Economist Dictionary of Economics, Fourth Edition (Princeton: Bloomberg Press, 2003).

Peter F. Drucker, Management Challenges for the 21st Century (New York: Harper Collins, 1999).

Peter F. Drucker, Managing in the Next Society (New York: St. Martin’s Press, 2002).

Ronald Grey, “‘How’ and ‘What’ Jobs,” Ronald Grey for President 2012, http://ronaldgrey.com/2010/07/19/how-and-what-jobs

Karl Marx, Das Kapital: A Critique of Political Economy (Washington: Regnery Publishing, 1996).

Barack Obama, The Audacity of Hope: Thoughts on Reclaiming the American Dream (New York: Crown Publishers, 2006).

Rick Perry, “Issues: Jobs,” Rick Perry for President 2012, http://www.rickperry.org

Mitt Romney, “The Issues: Job Creation,” Mitt Romney for President, http://www.mittromney.com

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