FROM THE OFFICE OF PUBLIC AFFAIRS

May 24, 2004
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The Honorable John W. Snow Prepared Remarks Entrepreneurship Summit New York, NY

It's an honor to be here today with my colleague Chancellor Brown and some of the most innovative entrepreneurs in our world today to talk about something that is critical to our economies and our way of life: entrepreneurship.

In both the United States and Britain, we celebrate entrepreneurs for the unique role they play. In the U.S. we have found that the vast majority of our net new jobs are created in the small business sector, and that is enormously important, particularly in times like we've had recently, when we are in an economic recovery.

When President Bush designed his tax cut plans, he kept small business as a priority, and it has paid off. America's entrepreneurs benefited from the lowered burden of taxation and have responded with unprecedented growth and very strong job creation – 1.1 million jobs have been created over the past eight months.

In spite of its importance and our respect for it, we have no formal theory of entrepreneurship. Economists, who love to produce deterministic models, have been unable to model entrepreneurship.

The fundamental question about entrepreneurs remains unresolved: Is their central role to initiate change or do they respond to it? Probably both.

The basic question we face is how to increase the number of entrepreneurs, to spread the spirit of entrepreneurship; and how do we do it? That is what we need to understand better. That is why we have gathered here today.

Some things we know already: Entrepreneurs are essentially individualistic and self-reliant. They are people who trust their own judgment, so a culture that stresses individuality, independent judgment, self-reliance and self-confidence is certainly likely to be favorable to entrepreneurship. So is a culture that celebrates creativity and the joy of creativity.

We also know that entrepreneurship requires vision. It requires seeing what other people don't see, identifying opportunities and dreaming. I think the ability to dream and dream big lies at the heart of entrepreneurship. The lines of the famous poem apply – 'to strive, to seek and not to yield.' That is the spirit of entrepreneurship.

Entrepreneurs are the unique players in the drama of capitalism and we have no settled theory to explain them. Unlike most branches of economics, we have no mathematical models to predict or explain entrepreneurship. That is entirely understandable I suppose since economic models are essentially deterministic and innovation, entrepreneurship and creativity are decidedly random, uncertain and unforeseeable.

Schumpater talked about the entrepreneur as the 'prime mover' whose role was to innovate; the spark plug of change, the initiator of the new order of things, the rare souls who make a big difference in the way others -- most of the rest of us -- lead our lives.

The entrepreneur's innovations take many forms from new products and services to new technologies to new forms of organization to opening up new markets. What they all have in common is the game-changing nature of their activities.

When entrepreneurship is afoot, the world is in change; new products, new services, new technologies and new organizational forms are replacing the old. The replacement occurs because in some objective sense it is superior, it is better, it has won the war of ideas, the war of market acceptance and the war of market competition. In the process it creates wealth; wealth for the entrepreneur – the Henry Ford, the Andrew Carnegie, the Thomas Edison – as well as wealth for those who invest in the ventures they create and those who are employed by those ventures.

Other commentators on entrepreneurship, people like Professor Hayek and Professor Kirzner, view the entrepreneur's other essential role as exploiting information, information whose message they, and they alone, decipher. The information they exploit reveals opportunities for the better products, better services, better technologies, and better forms of organization.

Entrepreneurs come in all shapes and sizes and backgrounds. What they share is the ability to dream, to think big, to see opportunities and to make judgments against a backdrop of massive uncertainty. They are not managers, whose strength is analytical methods. Managers deal with risk. Risk can be measured, risk can be calculated, risk can be traded and priced through insurance markets.

But there are no analytical methods to resolve fundamental uncertainty. There are no rules to determine the outcome were uncertainty prevails. Uncertainty and the rarefied good judgment to deal with it is the province of the entrepreneur. The entrepreneur has no certain decision rules to look to, no maps, no calculus. There can be no map because the entrepreneur is going where no one else has gone before.

Like anything that exists naturally, we cannot re-create or mimic entrepreneurship. And we may not be able to ever fully understand it, much as we cherish it.

We do believe, however, that we can foster an environment that enables entrepreneurship to flourish. So I hope that our discussion today will shed more light on this phenomenon: the sources of entrepreneurship, the obstacles to entrepreneurship and what can be done to foster and encourage more of it.

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