Entrepreneurial Errors in a Kaleidic Democracy

Abstract

Economic activity is a stream of interconnected experiments, where some are bound to fail. Such failures are costly and policy makers might aspire to mitigate them, particularly during economic crises. The mitigation can happen in two ways: through further entrepreneurial experimentation in the market process or through the political process. When the goal is to minimize uncertainty during economic crises, profit-seeking entrepreneurship should dominate political action. This is because while people easily understand that the goal motivating entrepreneurs is to stay in business and to keep revenues above costs, the goals driving bureaucrats and politicians are less predictable.