Business Innovation 'Made Us Human' and Moves Us Forward

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That said, I'm not sure I want to see entrepreneurs hugely cosseted by government. In a sense, I want entrepreneurs to be left to sink or swim, because 90 percent of new ideas are bad ideas that mustn't be allowed to swim. But I do want the obstacles taken out of their way.

What kinds of obstacles?

In my own locality, the hurdles are in terms of permits, planning permissions, and real estate laws. Suppose you're doing something that's new: There's the threat of someone coming along and banning it. Why does anyone ever bother to become an entrepreneur, I sometimes wonder.

But even though there are risks with new technology, we should be taking into account the potential benefits, too. There's a huge risk in not taking advantage of change.

There's always debate between government regulation and unfettered free markets. Where do you come down on that?

I believe in the necessity for regulation and government. But what does history tell us about what stops entrepreneurship, too much government or too little? It's always too much. After the earthquake, people were saying that Haiti has too little government. But when you listen to expatriate Haitian entrepreneurs, they were saying they couldn't go back and do business there because it takes far too long to satisfy all the government regulations.

Over the course of history, it seems that one society would make progress for a while and then innovation would get squelched and move somewhere else. What happened?

Yes. We see that entrepreneurial flame burst out someplace and then it dies down and starts up somewhere else; it kind of jumps around. My argument is that what stops it is basically a sort of predation. Innovation and free trade generates so much wealth that it becomes too tempting for people to just steal it rather than make it. Chiefs, priests, and thieves kill the goose that lays the golden eggs.

China's Ming emperors are a classic example. There was this fascinating innovative period in China when all the really exciting stuff happened. But the dynasty that follows inherits a very wealthy free-trade area and just shuts it down. They made rules about how you couldn't leave your hometown, you couldn't own a ship, it became illegal to voyage overseas, you had to send an inventory to an imperial bureaucracy every month. Can you think of a more efficient way of shutting down an entrepreneurial economy? Emperors are generally very bad for entrepreneurship.

How does that relate to our recent recession?

Well, the Ming emperors shut down a huge chunk of the human race in 1400, but they couldn't shut the whole world down. Nowadays, we're so globalized, I wonder if we could have a global shutdown of trade.

But even looking at this recession, it may plunge the world into a Japanese or even an Argentinian-style recession for a long time. But when you look back at past recessions and you plot the numbers, they're just pauses in the upward trend of the larger graph. And that's because of innovation.

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.

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