The following is adapted from a speech given by Bob Luddy at the Coolidge Presidential Foundation Gala on December 11, 2017 in New York City.
For most of human history, tyrants, scoundrels, and barbarians denied God’s freedom, but God created us to be free. America’s Founders understood this, fleeing tyranny, declaring political and economic freedom, and enshrining these values in our Constitution and culture.
Calvin Coolidge was the great successor of our Founders, maintaining many of their principles. He respected human dignity and Judeo-Christian traditions, he was courageous, and he practiced saying, “No.” He fostered a limited government that was stable and predictable. Ultimately, he understood and supported the freedom and the liberty to live, worship, and create as the foundations of prosperity and peace.
Coolidge lived in the Progressive Era, but he was countercultural, leading many to believe he was irrelevant. Unlike others, he recognized the importance of entrepreneurship in solving America’s problems; he believed that private initiatives fueled economic growth. He didn’t support any aggrandizement of government.
To quote Coolidge, “The chief business of the American people is business.” Entrepreneurship is the engine of our nation. Business leads to prosperity and reflects a higher morality: “Wherever we can read human history,” Coolidge wrote, “the answer is always the same. Where commerce has flourished, there civilization has increased.”
At its heart, America is entrepreneurial; the freedom to create is the core of the American system. Immigrants from around the world depart their native countries to become American entrepreneurs, creators, and leaders. As a result, the world today is more peaceful, and — no surprise here — the world economies are mostly robust. There is peaceful exchange.
Coolidge knew that what really improved economic development was the expansion of human creativity and self-reliance.
Let’s briefly explore: Are Coolidge’s entrepreneurs heroes or villains?
During Coolidge’s tenure, the economy boomed because of human creativity. Coolidge knew that successful entrepreneurs are excellent capital allocators.
Warren Buffett is one of the greatest capital allocators of our times. He has created more jobs than legions of economic developers. He plans on giving his $100 billion to charity, but Buffett’s greatest contribution will be his work as an economic driver and job creator.
Today, every American industry is engaged in Joseph Schumpeter’s “Creative Destruction.” Clayton Christensen, professor at Harvard, describes how disruptive innovation allows for the transformation of entire industries from the bottom up, bypassing the status quo, and establishing a new standard. Think of steel, taxis, groceries, hotels, retail, smart phones, and computers. Old bastions of industry such as Kodak, IBM, and US Steel are being replaced by start-ups from the later part of the twentieth century. Nucor, with mini mills, is now the largest steel company. Mini mills were considered to be a non-threat when first introduced. Ken Iverson, former CEO of Nucor, was an innovator and courageous leader.
Similarly, containerized freight reduced the cost and time of worldwide transport. Did this idea come from a university, think tank, or government? No, it was the idea of a simple North Carolinian, Malcolm McLean, who transported freight to ports. McLean never went to college, yet he possessed critical skills such as alertness, which is taught to us by Dr. Israel Kirzner and is the foundation of entrepreneurship.
Silicon Valley dominates information technology and, with its concept of Exit, disrupts every single industry. Amazon has disrupted the entire retail industry, but it has also essentially disrupted all industries with a new way of thinking about ultrafast service and very low prices.
Modern day entrepreneurs execute what Jean-Baptiste Say taught us in 1813, namely, “supply creates demand.” Many economists dispute this concept but the facts are overwhelming. Henry Ford learned this lesson twice, first when he created the Model T and revolutionized automobiles, and second, when Chevrolet was introduced and creatively destroyed the Model T. Henry could not believe what was happening, but he missed an important economic principle: All value is perceived, and the user is king of the market.
The success of disruptive, world-changing, contributive companies can only be possible with minimal regulation and cooperative government.
Today’s start-ups are incubating the future economy. Entrepreneurs learn how to do the hard things or they fail. Growing a company is long and arduous but necessary to improve our world and our future. Everyone wins when the entrepreneur serves the user.
The Founding Fathers had it exactly right, and Calvin Coolidge proved how well America works by following the philosophy of the Founders. In the words of my mentor, Dr. Bill Peterson, “Entrepreneurs are every inch the hero.”
Entrepreneurs are the servants of the users, improving our lives by providing solutions to customers’ needs and challenges. In the process, they create jobs, which can be life-changing and become the cornerstone of family life and civil society. America and Coolidge have proven that the greatest freedom leads to the greatest possibility for innovation.
Think of the ways Uber, Amazon, Apple, Facebook, Starbucks, Airbnb, and many others have changed life as we know it. These companies are largely unregulated. We now enjoy many modern and efficient conveniences as well as a higher level of quality for products and services.
America created the free society, which provides the opportunity for prosperity. Coolidge’s leadership provided for limited government, allowing our greatest resource, namely our citizens, to create and flourish. America has the strongest economy in the world but it is imperative that we support our entrepreneurs. They will deliver a prosperous future; entrepreneurs truly create the future world.
Let’s heed the words of Calvin Coolidge in his very abbreviated annual address to the Massachusetts Senate in 1915: “Honorable Senators: My sincerest thanks I offer you. Conserve the firm foundations of our institutions. Do your work with the spirit of a soldier in the public service. Be loyal to the Commonwealth and be brief; above all things, be brief.”