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Michael Jackson: A Lesson in Economics

Brian Wesbury 1 July 2009 10 Comments

Two economists are walking down the street when one thinks he sees a $100 bill on the ground.  He points and says “is that a $100 bill?”  The other economist says, “No way.  It can’t be. If it were real somebody else would have already picked it up.”  Corny joke, right?  But it sure helps explain the theory of efficient markets.

More than that, it explains how most economists think of the world.  Typically, in terms of very impersonal forces that sum the actions of all people.  It’s as if the aggregation of all our actions combined – in the form of supply and demand – somehow negates the existence of opportunity and individual achievement.

The good news is that, ultimately, real economic growth is about much more than the components of GDP, such as consumption, home building, and business investment.  It’s about the productive decisions and behaviors of individuals.  Really, it’s about entrepreneurs.

The reason this comes to mind is the recent death of Michael Jackson.  Regardless of what one thinks of his music or his life choices, it is easy to recognize how enormously productive Jackson was.  He broke all the records for album sales, put MTV on the map and propelled music videos into the mainstream.

He created something out of nothing.  And the product of his talent, hard work, and creativity, focused on pleasing the ears and eyes of consumers around the globe.  If Jackson – or any entrepreneur, for that matter – had asked a certain kind of economist whether he should pursue this line of work, this innovation, he would have been told it was foolhardy.  “If there really was a market for that kind of stuff, someone would have done it already,” they would say.  But this is in a static world.

In reality, the economy is dynamic.  And what allows that dynamism, what creates the environment for entrepreneurship is the institutional framework – property rights, the rule of law and even the level of common trust among citizens.  These factors cannot be quantified or easily measured, and so are often overlooked.

And yet without these social attributes great talent goes wasted around the world.  The US is blessed in countless ways, but do we really think we are just “lucky” to have so many talented people who live here?  Would Michael Jackson have been just as successful if he had been born in France or Ghana?  Of course not.

The good news is that singers like Shakira (Columbia) and movies like Slumdog Millionaire, written by an Indian, suggest the environment necessary for success is spreading – even to the developing world.

Economic laws can either enhance or undermine the vibrancy of an economy, helping or hurting individual incentives and the flow of creative ideas.  Policymakers everywhere need to keep this in mind.  There are $100 bills on sidewalks all across the world.  What matters is whether people have the incentive to pick them up.

**
Brian Wesbury is a regular columnist for the Chicago Daily Observer.  You can read more from Brian Wesbury at ftportfolios.com

10 Comments »

  • Sasha (author) said:

    Sasha…

    This may digress from the topic but i didn’t know where to ask. I bought my girlfriend and ipod and have been looking for cheap music for her. I found some good songs on Walmarts music service but when I downloaded they will not upload to her ipod, ap…

  • Dustin Dalton said:

    The main thing that I have learned from this article is that if you have an idea, voice it. Don’t be afraid to just because you think it has already been done. Michael Jackson made himself from nothing. His ideas and innovations made him millions. Maybe if we just voice our ideas and try new things, it would make our country and our world a better place.

  • Madeline is cool said:

    Jackson is a prime example of how America is one of the very few nations where you are free to do almost anything to go from a nobody to an icon. He didn’t just market to consumers in hopes of being profitable, He created a fan base while changing the look of music, dance art and to some people life. He came out with the title “King of Pop” and an insane large fortune.

  • Chris Edwards said:

    Jackson is such an inspiration to not only people who love music but, for people who look up to him. The “King of Pop” started to aspire music at an early age and even though he was a young boy, the ladies still adored him with a passion. Michael Jackson change the look of music and dance because of his ability to learn at an early age.

  • Andrew McCullough said:

    Micheal is a great example of the American dream. You don’t have to be born into wealth to make a difference. Jackson not only earned enough for himself, but to help others who need it. Starting young he raised to the top of the music industry. He not only sang music, he used his life to help and insprie others.

  • Stephanie Franks said:

    Michael Jackson is probably one of the most sucessful artists in America still. He’s not only a great icon, but he’s a great example of what you can accomplish in this world. If he was in any other country i guarentee he wouldn’t be as sucessful as he has been here. America is probably one of the most free countries in the whole world and that has made him more of a sucess. He donated to big charities and he did alot of world work to try to make America a better place. Overall, i think Michael Jackson is a world wide hero to all.

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