Key Question:
A: Build a sturdy framework upon which you can depend.
Q: What are the three legs?
A: The rule of law, the private ownership of property and the moral habits of people.
Q: Why is the balancing act so daily? Why does everyone have to work so hard to keep our system in tack so we continue paving the path from poverty to prosperity for every American?
A: Ignorance is our biggest enemy. For example, if you don't obey the laws as a business owner, you could lose your business and the employees you have will be out of work. You can't pretend you don't know the rules. If you open your doors for business, it is your duty to educate yourself.
We did an entire episode on Employee Stock Ownership. This is a excellent financial tool that will allow you to share ownership in your company with key employees or with all employees. Most people can't start and operate a business because they don't have the drive to do it. However, every person can own a piece of a business just as every American can and should own their own home.
We've already said it here and not just in this episode: Success in business depends upon honesty. Every generation has to be taught this because our human nature causes us to try to do the easy and expeditious when prosperity depends upon us all doing the right thing, which is often the hardest thing.
In the words of one of our favorite small business owners, Albert Black, we must, "teach, preach, coach and counsel" to preserve and improve our conditions. We can't rest. We can't expect other to do it. We are the sovereigns.
Think about it
When Novak says as an owner of property or of a business, you are a sovereign, how does that make you feel? Does it make you want to stand up taller and work harder? Do you use your position as owner to teach and mentor?
Clip from: Capitalism: Path to Prosperity
Washington, DC: What are the essential foundations of life, liberty, freedom, and human rights? The USA as a working experiment is a good model to study. Here we can study the earliest documents and concepts and see how these also became the foundations for American capitalism. Within this structure, we can see how just about any family can get on a path to economic independence.
Meet Michael Novak, a man whose life study is of the foundations of government systems that work. And here he discovered small business has the heart and spirit that sustains and nurtures democratic capitalism. Michael Novak strikes deep into the heart of public debate about what works and what doesn't work within economic systems, and he says that small business owners are demonstrators. They're on the front lines, risking and fighting the good fight every day. Small business owners take lofty principles and reduce them to nitty-gritty practice.
As a people, the debate about capitalism should no longer be the domain of economists. We all need to grapple with the first principles of ethics, economics, and government. Virtually overnight globalization is a reality and belief systems are butting against one another, often shredding civility and undermining any inherent ethics and morality.
Each of us needs to engage in the historic debate about economic models. What works? What is good for people? Is this singular focus on "Return to Shareholders" a truncation of capitalism? Do we need to be looking at a more balanced model that includes more than the growth of the bottom line?
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American Enterprise Institute
Michael Novak, Author
1150 Seventeenth Street, N.W.
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Year Founded: 1947
Build Your Business As A Three-Legged Stool
HATTIE: (In the Studio) We talk about our economic system so little. Michael Novak says that democratic capitalism can be thought of as a three legged stool.
One leg is the rule of law. Democracy, the government, public servants. I like to think of them as referee's. they have on the black and white shirts and they're running up and down the field trying to make sure the bad guys are corrected or thrown out of the game. As a business owner, I feel that sometimes some are bureaucrats who are heavy handed, controlling, demanding and sometimes downright irritating. But we do need them.
The second leg of the stool is a market economy based on private ownership of land and businesses.
In his book, The Spirit of Democratic Capitalism, Novak says: (Voiceover) 'The new capitalism is not a matter of adventure or privacy but of continuous enterprise, planned and organized, evaluated for profit and loss.'
And this is the key point: 'The invention of the market economy in Great Britain and the United States, more profoundly revolutionized the world between 1800 and the present more than any other single force. After five millennia of blundering, human beings finally figured out how wealth may be produced in a sustained systematic way.'
The third leg of the stool is morality. Novak says that truth, fair play, trust and respect for others are key. We think this is the least understood and the most important of the three. There is confusion. Novak is saying that business people have to be moral to succeed. Historically we've been seen by the elites, academics, journalists, and bureaucrats as greedy and self-serving. And of recent, too much of business has been just that.
Next, Michael Novak explains that there is a difference between greed and self-interest.
