The following is only a sketch of the complete argument since that would take pages to write and time I don’t have.
The most basic law of economics is that prices are determined by supply and demand. An entrepreneur naturally chooses to provide goods or services to a market niche where a high potential demand faces a low supply so that he can sell his goods/services at high prices. An employee on the other hand imposes on himself a limit of one customer. He artificially limits his market and thereby reduces the price he can get for his skills. Although he can potentially quit his job and work for someone else this is associated with additional transaction costs in comparison to self employment. That the company indirectly markets the employee’s skills to a larger market does not alleviate this price reduction since it’s not the companies interest to maximize employee’s salaries.
So why would anybody choose employment over self employment? It is because most people lack the fundamental skill to market their own skills and a market of one customer is still better than zero. The important question now is why people lack this skill. That is a complex thing, but one factor is that our culture does not encourage risk taking, sales talk and other important entrepreneurial skills. There is still a strong bias of preferring a “honest worker” over a “capitalist pig” which simply prevents most people from developing their marketing skills.
And that is what is meant by the original quote. Imagination is based on culture and our culture cripples people’s potential to imagine what it would be like if they were entrepreneurs instead of workers.
The most basic law of economics is that prices are determined by supply and demand.
Another basic law of economics is that wealth can be created by specialization.
An employee on the other hand imposes on himself a limit of one customer. He artificially limits his market and thereby reduces the price he can get for his skills.
A firm dealing exclusively in government contracts, on the other hand, imposes on itself a limit of one customer. It artificially limits its market and thereby… ?
So why would anybody choose employment over self employment? It is because most people lack the fundamental skill to market their own skills and a market of one customer is still better than zero.
So why would anyone hire a programmer instead of just writing the code themselves? It is because most lack the fundamental skill of crystallizing their requirements into machine-readable form. The important question now is why people lack this skill.
I think I get it now. There seems to be a confusion about what specialization means. It means specializing in the service you provide, not in the customers you provide it to. Market segmentation is only a tool to identify how to specialize your service. But no sane company would refuse to deliver to a paying customer simply because he doesn’t fit into their target audience.
And there is a difference between computer programming and basic marketing. The former is a specific skill with a smaller area of application while the latter is a very general skill, and what is more one that stems from a basic human trait, namely the formation of relationships. Of course, not everybody needs specific marketing knowledge as taught in business administration.
Finally, I’m not arguing against working for a single employer in general. Quite the contrary. When you’re relatively new to your field of work you almost certainly lack the experience to be a successful entrepreneur and should first learn the trade under the relative security of employment. What I am arguing is, that if a huge number of people do not gain the confidence from experience to form their own idea of the service they want to provide and market it to a relevant audience something seems to be wrong, because taking responsibility for your life and forming relationships is an essential part of growing up.
The following is only a sketch of the complete argument since that would take pages to write and time I don’t have.
The most basic law of economics is that prices are determined by supply and demand. An entrepreneur naturally chooses to provide goods or services to a market niche where a high potential demand faces a low supply so that he can sell his goods/services at high prices. An employee on the other hand imposes on himself a limit of one customer. He artificially limits his market and thereby reduces the price he can get for his skills. Although he can potentially quit his job and work for someone else this is associated with additional transaction costs in comparison to self employment. That the company indirectly markets the employee’s skills to a larger market does not alleviate this price reduction since it’s not the companies interest to maximize employee’s salaries.
So why would anybody choose employment over self employment? It is because most people lack the fundamental skill to market their own skills and a market of one customer is still better than zero. The important question now is why people lack this skill. That is a complex thing, but one factor is that our culture does not encourage risk taking, sales talk and other important entrepreneurial skills. There is still a strong bias of preferring a “honest worker” over a “capitalist pig” which simply prevents most people from developing their marketing skills.
And that is what is meant by the original quote. Imagination is based on culture and our culture cripples people’s potential to imagine what it would be like if they were entrepreneurs instead of workers.
Another basic law of economics is that wealth can be created by specialization.
A firm dealing exclusively in government contracts, on the other hand, imposes on itself a limit of one customer. It artificially limits its market and thereby… ?
So why would anyone hire a programmer instead of just writing the code themselves? It is because most lack the fundamental skill of crystallizing their requirements into machine-readable form. The important question now is why people lack this skill.
I fail to see your point.
I think I get it now. There seems to be a confusion about what specialization means. It means specializing in the service you provide, not in the customers you provide it to. Market segmentation is only a tool to identify how to specialize your service. But no sane company would refuse to deliver to a paying customer simply because he doesn’t fit into their target audience.
And there is a difference between computer programming and basic marketing. The former is a specific skill with a smaller area of application while the latter is a very general skill, and what is more one that stems from a basic human trait, namely the formation of relationships. Of course, not everybody needs specific marketing knowledge as taught in business administration.
Finally, I’m not arguing against working for a single employer in general. Quite the contrary. When you’re relatively new to your field of work you almost certainly lack the experience to be a successful entrepreneur and should first learn the trade under the relative security of employment. What I am arguing is, that if a huge number of people do not gain the confidence from experience to form their own idea of the service they want to provide and market it to a relevant audience something seems to be wrong, because taking responsibility for your life and forming relationships is an essential part of growing up.