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Home Publications Blogs Beat the Press Robert Samuelson Reports on Incompetent Business Owners

Robert Samuelson Reports on Incompetent Business Owners

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Wednesday, 13 August 2014 23:11

Every now and then someone inadvertently says something that is truer than intended. Such is the case with a quote that appears in Robert Samuelson's column today.

The piece is devoted to bemoaning the reduction in entrepreneurship which Samuelson somehow thinks is tied to slower job creation. (This relationship is pretty damn weak, but no reason to waste time here.) At one point Samuelson list five possible reasons for the decline in entrepreneurship. Number one is:

"Schools — K-12 plus colleges and universities — aren’t turning out enough skilled workers. 'I have jobs,' said one Texas entrepreneur. 'I just don’t have the talent to fill them.'"

This entrepreneur is likely closer to the mark than he or she realized. The way you find skilled workers is by offering higher wages than your competitors. There are undoubtedly people in the country who have the skills that this entrepreneur needs. If he can't get them to work for him then obviously he is not offering a high enough wage, or as he said, "I just don't have the talent to fill them."

Of course it is possible that this entrepreneur could not afford to offer a high enough wage to attract the skilled workers, but then he really doesn't have the jobs. This would be like someone complaining that they couldn't get a doctor to treat them, without noting the fact that they were only willing to pay $30 an hour. The problem in that case is that the person is unwilling to pay the going wage for doctors.

This story is about as simple as economics gets. If there were a shortage of skilled workers then their wages would be rising. As it is, there is no major group of workers who are seeing rapidly rising wages, therefore it is not plausible that there are shortages of skilled workers.

The problem is likely just what Samuelson quotes the entrepreneur as saying, he lacks the talent to properly run a business.

(Btw, if Samuelson is really looking for causes for the decline of entrepreneurship, the collapse of anti-trust enforcement should probably be on his list.)

Comments (7)Add Comment
Out of the mouth of babes ...
written by Squeezed Onion, August 14, 2014 3:22
Entrepreneur at restaurant: "The food they serve here is terrible and over-priced. And the portions are so small!".

What does this entrepreneur entreprendre, anyway? Noodging? It's not the first time a schlemiel claimed to be a schlimazel. Still, it's good for a laugh.

Samuelson should go do a little bit of on-the-ground mom-and-pop-style entrepreneurship instead of puffing smoke rings from his La-Z-Boy.
Samuelson Thinks Entrepreneurs are "Persons"
written by Last Mover, August 14, 2014 6:01

Same stale supply side message from Samuelson - the government stifled entrepreneurs with uncertainty, taxes, structural unemployment and all the rest of it.

He knows exactly where the would-be entrepreneurs are. They were strangled in the their cradle or left dangling at end of a short leash jerked around by the economic predators who came to own them outright through economic suppression.

Practically all of America is now run on a platform of monopoly, monopsony, oligpoly and oligopsony private market power for which the only countervailing power is government itself.

In Samuelson's tiny mind along with much of the rest of brainwashed America, there is no difference between a proactive government that controls and offsets market power versus a passive government that plods along and performs the dull yet essential duties government must to have a nation at all.

In their tiny minds there is only the government-private simpleton dichotomy. When they say "get the government out of it", that is code for "turn it over to the economic predators, whether through deregulation of the private sector or directly through government itself via regulatory capture.

Back in the day, even the most vehement conservative would agree that an objective impartial referee is necessary to have a game of competitive sport. No more. The new standard is to eliminate the referee altogether and let the "free market" set the rules.

For the sock puppet simpletons, government is not there to create a level playing for real entrepreneurs to enter America's castles of overwhelming market power, teetering top heavy monsters with so much economic power and waste combined, even conservatives are starting to ask if the resulting inequality is responsible for the chronic economic stagnation of America.

Pining for the days of real entrepreneurs is as absurd as wishing for the return of homesteading in America with 40 acres and a mule.

Persons who could be entreprenuers need no longer apply, despite the extraordinary high prices that should be attracting them into the market. The only persons qualifed to apply anymore are corporations, and Samuelson can't figure out why they can't produce anything anymore that adds value.
Most startups underpay
written by Dave, August 14, 2014 7:17
Most startups pay below average wages because they can't afford to pay market wages. They usually make up for it in stock options. So if this entrepreneur can't find people to work for him, it is probably because he can't convince them that they should take a long-term equity stake in lieu of market wages.

I don't think Samuelson has ventured outside of his home lately.
Incompetent economists
written by Ecomedian, August 15, 2014 1:40
There is a well-documented shortage of primary care physicians. Their pay is not going up.

The "simple as economics gets" story about labor supply and demand fails with real-world data.
...
written by liberal, August 15, 2014 8:16
Ecomedian wrote,

There is a well-documented shortage of primary care physicians. Their pay is not going up.


That's not a relevant example. Health care (not just insurance, but health care itself) is so screwed up and so rife with market failures that it's its own special case.
Incompetent Ecomedian
written by JimV, August 15, 2014 11:09
I opened the comments for this post just to give an attaboy for the clever and accurate re-interpretation of "lack of talent", but have been sidetracked by the sheer idiocy of Ecomedian's comment above. Off-hand, quickly, here's some of the things wrong with it:

1) No data source is given for the claim.

2) The claim, if it were true, would be cherry-picked from among a vast number of cases which do strongly support the conventional economic principle that to get better talent businesses have to pay higher wages - look at the bidding wars for free-agents in sports, for example.

3) It is commonly reported that health care costs in fact rise much faster than most other costs in the USA. 75 years ago a family-practice doctor might be paid with two chickens for a home visit. Try that now. (Mine gets about $300 every three months in exchange for 15 minutes spent taking my blood pressure, listening to my chest with a stethoscope, and renewing my blood-pressure medication prescription, after I have waited in his office for an hour-and-a-half past my appointment time.)
Education
written by Seamus, August 16, 2014 6:21
I wonder if Texas' poor education system has anything to do with lack of qualified applicants for this 'entrepreneur'.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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