Austrian Economics and the Entrepreneur
THE AUSTRIAN: How did you first discover the Mises Institute?
NATHAN BOND: I believe it was sometime around 2008 following the housing bubble. I was in my early 20s at the time and trying to make sense of the situation, and the Mises Institute as well as fellow travelers in Austrian economic circles seemed to be the only ones who had any truly developed (or at least convincing) work on why booms and busts even happen. From there, I was immediately taken in by how engaging the material was and refreshed to discover an economic methodology that puts the emphasis on human behavior and the choices of individuals rather than a bunch of aggregates.
TA: Why did you decide that the Mises Institute was something you wanted to support?
NB: Primarily because I was dismayed that the Austrian school generally isn’t even presented as an alternative to the Keynesian or Chicago schools in your typical econ course (let alone the media). I am amazed at how many econ majors I run into that haven’t even heard of Austrian business cycle theory for instance. Whether you agree with the Austrian school or not, part of the role of education, in my opinion, is to at least present the different viewpoints and the Mises Institute plays an important role not only keeping the Austrian tradition alive but continuing to advance the discipline as an alternative to the mainstream view.
TA: As you know, the field of business is something very different from the field of economics. Can business owners learn something from economics that they can’t learn from studying business?
NB: I believe so, yes. I would say, one of the things that having a basic knowledge of economics has helped me with as an entrepreneur is to assist in understanding what my role truly is in the overall context of the global economy. This helps clarify decisions and gives me confidence to act with conviction in the best interest of my customers, employees, and company. I talk to a lot of entrepreneurs that feel conflicted about basic business decisions that I honestly think are just due to misconceptions about trade, development, and what role business plays in society. For instance, I think the concept of “social entrepreneurship,” which is very popular with my peers, is a great example. The implication, to some extent, is that “regular” business is not “social” or does not add value to society. This framework can lead to questionable decision making on the part of the small business startup who feels an unreasonable expectation from the outset. I do want to clarify that I have no problem with the concept of “social entrepreneurship.” My only concern would be as far as it implies that “traditional businesses” aren’t providing a valuable social function.
TA: Is there something about Austrian economics that is of particular value?
NB: Having an interest in the Austrian school certainly encourages one to be more cautious when making long-term capital decisions. This could work against the entrepreneur or investor as well, however, so I’m hesitant to say this is necessarily a good thing.
I will say, one truly beneficial aspect of Austrian insight that comes to mind is that it greatly encourages respect for the employee/employer relationship. The Austrian school is unique in how it humanizes economic relationships and helps one understand that an employee is an entrepreneur who is selling their goods (in this case their labor) to an employer. Main-stream economics almost belittles the employee’s role in the relationship, but the Austrian school views it more intentionally as a strategic partnership. Having this in mind has helped me understand the motivations of the people around me and given me a deeper respect for all the parties at play.
TA: How has the business cycle affected your experience as an entrepreneur?
NB: We actually started Rifle in 2009 so it was just after the housing bubble blew up. It was an interesting time for our industry but we were largely unaware at the time of what had just happened. Trade show attendance was markedly down from the previous years and a lot of companies had decided to either call it quits or write off a massive amount of receivables due to the number of their customers (largely retailers) declaring bankruptcy or just disappearing. We were fortunate to be starting in that climate, as it would have been difficult to have the rug pulled out from under us right after gaining some momentum. It also put us in the mindset to remain careful in our growth strategy to be able to withstand a sudden downturn when it inevitably occurs again. This hasn’t been put to the test as of yet, however, so I can’t say how successful that strategy has been.
TA: Has Austrian economics helped you better under-stand how the government’s response (i.e., stimulus, taxation, regulation) to economic busts has impacted you and your business?
NB: Absolutely, and perhaps in a counterintuitive fashion. I think a lot of people would assume someone like myself would use this as an opportunity to complain about taxes, but the reality is, while taxes definitely hinder the ability for a company like ours to invest back into our business and our people, much of the system actually benefits us and hurts those lower on the economic ladder. There is no doubt in my mind that QE, for instance, has propped up the economy and artificially benefited us, at least temporarily. Keynesians might see this as a good thing, but Ludwig von Mises’s great master-builder analogy reminds us that the act of propping up just brings more pain later.
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