supply vs demand

Supply Vs Demand: Equal Factors in Innovation?

Back when I was actually studying entrepreneurship in school… I studied a lot of theory based stuff. But hey, that’s what you do in school – study theory!

One of the things that really opened my eyes about how politics plays a role in the economy was learning about John Maynard Keynes and Friedrich August Hayek. They were two prominent economists of the Great Depression era with sharply contrasting views. The arguments they had in the 1930s are revived whenever we have a global financial crisis (or every 10 years).

Keynes suggests that more spending is the answer to reviving an economy, while Hayek believes that artificially pumping the gas on the economy yields worse busts. He believed that stimulus packages were nothing more interference in a naturally occuring rhythm. 

This year marks the 10 year anniversary of Stimulus Act of 2008. Recently, the Trump administration has been talking a bit about tariffs and trade wars. If any of it imposed, we might see some wild fluctuations in the stock market. So maybe it’s a good time to bring this subject up again?

On August 28th, 2011, I posted this piece about the Keynes and Hayek. If you look at the entrepreneurial space using both of their perspectives, then you can come out ahead regardless of what the government stimulates. Or, on a larger scale, you can see how companies like today’s Tesla create a market which other companies can support in the future. 


I have a chameleon personality by any definition of the phrase. Every source that hints to what my personality should be suggests that I have a gift in seeing the world in a balanced manner. Every personality test I’ve taken has jumped around with a result. When I took the Myers-Briggs test, one day I’d be an introvert – another day I’d test as an extrovert.

Heck, forget the sun sign of when I was born – the planets and moons were in alignment for me being a well balanced person too!

Missing out?

Funny enough, most people don’t have a chameleon personality. While mine is no means perfect (most of the time I’m too busy trying to please everyone!) most people are biased in one perspective or another and don’t consider the other side of the coin. The problem with this is that they’re probably missing opportunities.

Remember true intelligence can be defined by the ability to understand two conflicting points of view and make your own decision. So… QUESTION EVERYTHING!!

Case in point: I recently viewed a couple of videos regarding the current economy and two conflicting ways in how to solve it. Most people will see the problems in the economy from one perspective or another and thus the solution is as simple as doing what “is right” to one point of view.

Part 2:

 

Personally what I get from both of these videos and their perspectives is that demand (Keynes perspective) is just as important as innovation and providing the right supply (Hayek) to the economy. Without demand, income doesn’t exist. Without innovation and supply, then no one will buy anything because there’s nothing to buy. It’s a yin and yang sort of deal. Too much of one might give us results we don’t want. For examples, government subsidies have saved many farmers. However, because we’ve relied on it as much as we have, the soy and corn industries have a stranglehold on modern agriculture.

A More Practical Example

If you see both sides of the deal like what I’m talking about, you’ll realize that you can make your cake and eat it too.

One group of smart entrepreneurs are those that are marketing green technologies. Whether you believe Al Gore or not, there is a lot of interest in being green. Part of being green is producing Earth friendly fuels. So those that are building businesses in the green fuel sector are not only good for the environment, but they’re also smart in that they’re cashing in on a GREAT opportunity!!

Not only are they going the Keynes route by being supplemented by the government, but they’re also practicing a bit of the Hayek route in that cars with engines that can utilize the fuel will be created soon.


Action Steps

So now that you see these two perspectives, how can you use this knowledge in your own business? Is there a pool of money you can tap into before you start actual work? It doesn’t have to be government reliant. Maybe working with a nonprofit and doing their ads? (As an example, Google gives grants to nonprofits.)

Then, once that space is created, how might you be able to capitalize on it?

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