“If I asked customers what they wanted, they would have said, a faster horse.” — Henry Ford
This week in my unique course, “Libertarian CEOs” at Chapman University, we talked about Friedrich Wieser’s “great man” theory. The Austrian economist argued that all great companies achieve success because a single creative individual leads the way.
The late Steve Jobs, the creative genius behind Apple Inc., is a perfect example of Wieser’s great man theory… and of Say’s law, “supply creates demand.” He had his own vision of what Apple’s products should be like.
Jobs said, “My passion has been to build an enduring company where people were motivated to make great products. It’s great to make a profit, but profits are secondary.”
Thus, Jobs’ job (to use a turn of phrase) was not directly to make money or to create jobs, but to satisfy and challenge consumers like never before.
He had a vision of what consumers wanted before they wanted it. That’s the key point of Say’s law, named after the great French economist J. B. Say. (See chapter 2 of my book, “The Making of Modern Economics,” which is available from Amazon.) The research and production phrases must come before the consumer buys. The entrepreneur is the catalyst for new products and new production processes.
Consumers bought the new Apple products — iPhones, iPads, etc. — in droves, even after Steve Jobs passed away two years ago. Tim Cook has surprised his critics. Interestingly, Cook, like Jobs, defied the conventional wisdom and produced the iPhone 6 even though consumers said they didn’t need a new one. Apple charged Chinese customers high prices for their iPhone 6, despite marketing experts who said that the Chinese couldn’t afford it.
Last month, Apple reported the best quarter ever for a publicly traded corporation. Imagine selling 34,000 iPhones every hour, 24 hours a day, during the quarter. The tech firm earned $18 billion in the quarter — more than any company ever in a single quarter — on revenue of $75 billion. Back in 1999, when Microsoft ruled the world, nobody thought Apple had a chance to one day have a market cap of nearly $700 billion, twice the size of Microsoft. The stock price is up 65% in the past year.
Yes, consumers had to buy the new Apple products to improve the bottom line. But what came first? Consumer demand was latent until the creative Apple engineers came up with the new, better products. That’s what Say’s law is all about. Production comes first, then consumption. “The sale of X created the demand for Y,” according to Say’s law.
Apple executives hire engineers, jobs are created, products are built, consumers buy and then everyone benefits — workers, investors and consumers.
You Blew It! Obama Refuses to Acknowledge Bad Religion as Source of Terrorism
President Barack Obama is willing to criticize the Crusades by the Christian zealots in the 11th century, but he refuses to identify the recent attacks in France as “Islamic” terror. This week he stated, “It is entirely legitimate for the American people to be deeply concerned when you’ve got a bunch of violent, vicious zealots who behead people or randomly shoot a bunch of folks in a deli in Paris.” But it wasn’t just any deli in Paris, it was a kosher deli run and solicited largely by Jews. And the zealots who attacked the kosher deli were Islamic extremists.
Now I can understand a president who doesn’t want to smear an entire religion. No doubt the majority of Muslims are law-abiding citizens who desire a better life for themselves and their families and who hate violence and extremism as much as Christians do. But the fact remains that there is a significant part of the Islamic faith that advocates a violent jihad against its perceived enemies in the West, which must take responsibility for their actions and end the violence.
In case you missed it, I encourage you to read my e-letter column from last week on Eagle Daily Investor about why the latest B2B and GDP data are bullish. I also invite you to comment in the space provided below my Eagle Daily Investor commentary.
Good investing, AEIOU,
Presidential Fellow, Chapman University
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Kim Githler Makes Surprise Announcement
Kim Githler, the president of the MoneyShows and a long-time friend, invited me to lecture before 100 college students at Money Show University last week. I apparently created quite a stir.
Kim attended two of my lectures. When I mentioned my upcoming FreedomFest conference, July 8-11 in Las Vegas, she announced to the entire audience, “This year I’m coming!” She’s coming because we’re taking FreedomFest to a whole new level, with the Paul Krugman-Steve Moore Dream Debate of the Century, as well as the $50,000 American Dream Award for the best business idea of 2015. I hope you will join us. We’re getting a huge response with more than 1,000 attendees so far. Steve Forbes and John Mackey (Whole Foods Market) will be there all four days.
After my lecture, Harvey Backmender from Connecticut, a long-time subscriber, came up and said, “Barnum and Bailey said they were the greatest show on earth. But I think FreedomFest is the greatest show on earth! I can’t wait to be there.” And Marty Cummins of Florida added, “FreedomFest is the highlight of the year for me. And my 92-year-old mother says that FreedomFest is what is keeping her alive!” He’s planning on bringing a dozen friends. Register at http://freedomfest.com/register-now/ or call Valerie or Hayley toll-free at 1-855-850-FREE. Make your plans now.