Thursday, August 09, 2007

The Businessman's Hall of Fame

The New York Times, without intending it, has published the businessman's hall of fame. By ranking these great business figures in order of the wealth they created, the NYT has allowed us to honor the greatest businessmen of the past 200 years, ranked by the measure of their achievement.

Wealth is the measure of the businessman, for what is wealth than the measure of the value of the products he has made? Wealth comes from profit, which is the difference between value received for a product less the cost of manufacturing it. If consumers everywhere pay more for the personal computer or the Model T Ford then it cost to make it, that difference is an objective measure of the value created. If the product is so popular that millions of PC's and Model T's are sold, then millions of customers have benefited from the entrepreneurial ingenuity of the businessmen.

I honor the wealthiest businessmen. They are those who have created the most beneficial, useful, enjoyable products that all of us enjoy. Hats off to Bill Gates (the 5th wealthiest) and Warren Buffett (the 16th wealthiest), for making the software for the fabulously useful personal computer on which I am writing this, and for providing capital to America's most efficient companies, respectively. Hats off to John D. Rockefeller, the leader of the Hall of Fame, who created the modern oil industry, the seminal industry that continues to fuel our industrial economy.

Hats off to all of the Hall of Famers. In a future world, we will see sculptures of your figures in a real world Hall of Fame. Schoolchildren will learn your stories, and emulate you, and some of them will add themselves to your august glory.

[Hat tip to NoodleFood for the link to the New York Times article.]

4 comments:

Noumenalself said...

GB:

I agree with the spirit of your post, but I take issue with the following:

If consumers everywhere pay more for the personal computer or the Model T Ford then it cost to make it, that difference is an objective measure of the value created. If the product is so popular that millions of PC's and Model T's are sold, then millions of customers have benefited from the entrepreneurial ingenuity of the businessmen.

Not all profit is a measure of objective value. It is a measure of what AR called "socially objective value." That means that it is an objective measure of what many people voluntarily judged to be valuable. But it remains the case that many people can make erroneous judgments about what is valuable. E.g., AR's example of Elvis Presley (whom I actually like, but you get the point). It's possible for people to get rich selling worthless products, if the public who buys them have irrational standards.

But I agree with you that in most cases, wealth is a measure of objective value, because most of the great businessmen produced products with genuine value (including, I think, everyone on this list).

NS

Galileo Blogs said...

NS,

I agree completely with your comment. In fact, I very much like Ayn Rand's formulation "socially objective."

Her term clears up a confusion that has plagued economists, who end up describing value as "subjective" because it is individually determined in the marketplace. I was trying to get away from that term, but "objective" is clearly going too far in the other direction. "Socially objective" captures the concept perfectly.

As for the businessmen in the Hall of Fame, one could argue for excising #28, Collis Huntington, who built the Central Pacific Railroad relying on massive subsidies.

I am also unsure of #9, Jay Gould. I read a biography of him once a long time ago that was favorable, but I would want to study him further to make a determination.

Everyone else looks like a good contender. A historian could also make a case for including Huntington and Gould. I will defer to a well-reasoned historical argument on them.

Thank you for your observation.

As an aside, a virtue of the NYT comparison is that it attempts to focus on the magnitude of the businessman's achievement relative to the economy of his day. This makes it easier to compare "how good" Bill Gates was, say, next to John D. Rockefeller. Of course, there are innumerable other factors that make such a comparison very difficult, chief among them are the income and capital gains taxes, which really did not exist before World War I. Antitrust regulation is another factor that has stymied 20th and 21st century entrepreneurs in comparison to their forebears.

GB

softwareNerd said...

Interesting how a "picture: can sometimes highlight an aspect of data. Consider the chart showing years on the Y-axis. Ignore the people, and look at each horizontal 50-year "slice". The years 1850-1900 had a crowd of wealthy folks not seen in the next century.

Galileo Blogs said...

That is a telling observation. That half century really was the Golden Age of Capitalism. Our entrepreneurs today operate under a welter of political controls that the great industrialists of the 19th century never had to endure.

Those controls make it harder for them to create wealth of the same magnitude.