Creativity and greed
Tom Friedman, writing in yesterday’s New York Times, claimed that “the sheer creative energy that comes when you mix all our diverse people and cultures together” is the basis for the U.S.’s competitive advantage. According to Friedman, “We live in an age when the most valuable asset any economy can have is the ability to be creative.”
I agree that creativity is critical for a country to be dynamic and competitive. Since no group of people are inherently more creative than any other, I also agree that the more diverse the population, the greater the likelihood for creative ideas to flourish. However, Mr. Friedman overlooks the importance of risk taking and greed in converting ideas into successful companies.
The U.S. is the most innovative country in the world because it has a remarkable venture capital and risk-taking infrastructure. Creative ideas alone will rarely lead to successful companies. Investors must be willing to support these ideas and new companies. Investors must be willing to take chances since most new companies fail.
What motivates such investors – the pursuit of high returns to compensate for the high risks. Many will call this greed, but without investors seeking high returns and willing to take the risks, creativity will wilt and economic dynamism will evaporate.
U.S. venture capitalists are by far the most sophisticated. Some of the leading venture capital companies have reached the stage where they create a business model and then find a management team to drive the model. Venture capitalists in most other countries have difficulty understanding business models, let alone creating them.
Moreover, it took a long time, but meritocracy matters for venture capitalists in the United States. Good people and good ideas are what matter, not family connections and social class. In many other parts of the world, meritocracy is still a foreign concept.
Self-reliance and the frontier mentality also have played a role in making the U.S. the leader in creativity and the commercialization of new ideas. Government has played an important role, especially through the budgets of the Department of Defense and NASA. However, the U.S. Government has not tried to identify and promote the industries of the future, and create national champions, at least nowhere to the same degree as most other countries. Individualism plays a more important role than collectivism in the U.S. than is the case in most other countries.
The desire to succeed and get rich drives the competitive engine in the United States. Success is measured by money.
Interestingly, there is a movement underway in the U.S., spurred by Bill Gates and Warren Buffett, for the very rich to leave most of their wealth to charities. These two men have each given more to charity in a very short period of time than have all of the “leading” families in Europe collectively during the past 500+ years.
Greed does serve several positive roles, and without greed, creativity would not flourish. Friedman and the world would not have the “Broadway tunes, great books, iPads and new cancer drugs.”
The opinions expressed in this blog are personal and do not reflect the views of either Global Brief or the Glendon School of Public and International Affairs.