Because an entrepreneur is like a chef. He organizes labor & materials and cooks up a product or service to fill needs. Without him (or her) nothing happens. Government interference can cause any entrepreneur to shut down or move.
Imagine this scenario:
There is a small town with 10 healthy, unemployed boys who just graduated high school . They have no special training or skills. The richest guy in town is a farmer who inherited 500 acres. The farmer raises pigs, beef, chickens, fruits, vegetables, etc. — sells them at low prices to wholesalers from a nearby big city. He works his own farm, makes a good living.
Nine of the ten unemployed boys watch sports, get their girlfriends pregnant, drink a lot of beer, and complain endlessly that there are no jobs or opportunities in that particular town.
One of the ten boys ( let’s call him Ernesto Entrepreneur) is more ambitious than the others. EE watches cooking videos on his PC, reads books like my own Think Like A Tycoon. With big ambitious entrepreneurial plans he goes to the owner of a vacant store (the wealthy farmer) and proposes he will rent the store that has been vacant for years. He offers a contingent deal:
The farmer will get a 5% share of gross future sales from EE’s proposed restaurant. If this restaurant is successful, EE proposes, this future rent will be a lot better than the NOTHING that the farmer has been receiving for the last 5 years. He also proposes to the farmer, that the farmer supply him free sample ingredients. EE says he will be cooking the best cuisine that this town ( even the whole province) has ever experienced.
He sells this idea to the farmer by cooking a few ultra-delicious sample meals for the rich farmer.
Ernesto then scrounges (for free) tables, chairs, pots, pans. EE paints a sign on his new restaurant saying “Chez Ernesto -Gourmet Restaurant” Ernesto markets his restaurant & a “special connoisseur’s 30 course tasting dinner” online. Soon he gets a Michelin Star. His restaurant tables are reserved for 6 months in advance. He is written up all over the world.
He helps the farmer produce higher quality produce which EE buys for 3 times the prices the farmer was previously selling his stuff. EE opens a factory to produce frozen delicacies for export. The farmer is delighted to be getting a big rent in a town where all the other stores are vacant. More importantly EE is expanding and consuming great quantities of first class produce from the farmer who has increased his wealth by many times.
The town has turned around and gone from near total unemployment to full employment. The nine unemployed classmates of EE have become waiters, sou-chefs, and factory supervisors earning good wages. They are able to marry, buy homes, SUVs and wide screen TVs
Ernesto himself has become a multi-millionaire.
Now a new mayor is elected. She feels that wealth is not being re-distributed properly so she imposes big taxes on EE’s restaurant and on the rich farmer to fund re-distribution to the workers who “deserve more!”.
Facing confiscatory taxes, Ernesto decides to shut down his now 3 star restaurant and move it and his factory to a more hospitable environment. The town takes over the “Chez Ernesto -Gourmet Restaurant” Like any government run enterprise, it quickly fails. The town goes back to where it was.
The moral of this tale is that an entrepreneur is like a chef. He organizes labor & materials and creates products & services to fill needs. Without people like them, nothing happens. Take away the entrepreneur’s incentive by redistributing wealth, and you will only redistribute the entrepreneurs. For examples in real life, look at any communist/socialist country- Argentina, Cuba, Zimbabwe, Venezuela, North Korea, Red China, the USSR. During their repressive communist eras, their brightest and best entrepreneurs went abroad, found success for themselves, and made many others wealthy.
Lest you think my above story is entirely fiction, it is in fact a composite story of real people including my neighbor:
Paraphrased Excerpts from current Review of “the world’s 50 best restaurants”
Mirazur, in Menton, France, near Monaco, is an idyllic spot to enjoy the food of the skilled chef Mauro Colagreco. He takes inspiration from his Argentine- heritage …
About the chef: Colagreco left Argentina & headed to France in 2001 In 2006, he established Mirazur, earning his first Michelin star within a year and a second in 2012.
What’s on the menu: With ingredients coming from Colagreco’s own backyard farm …Diners can expect a feast of flavoursome products from just-picked heirloom vegetables to sparklingly fresh seafood. Courses might include monkfish with topinambur puree and Piedmont hazelnuts, or anchovy fillets … Colagreco’s signature oyster with tapioca, shallot cream and pear is a modern classic in the making. Other projects: Colagreco has been in France for almost 20 years and recently celebrated the 10th anniversary of Mirazur. He also owns Grand Coeur, a brasserie and restaurant in Paris.