Noticeably absent from the list of worthy citizens who were acknowledged in the Australia Day honours were the entrepreneurs.
Entrepreneurial talent is scarce; not everyone wants to take the risks; not everyone has the ability or inclination. Yet it is an essential element in our prosperity.
The role of the entrepreneur is crucial - not only to correct disequilibria in the market place but to discover opportunities. We need to admire those who risk their capital, their time and their skills to provide the products and services that the rest of us enjoy.
The miracle of pricing is that it enables individuals to be part of a world-wide supply chain, each prospering by doing their bit without any need to control the work of others. It is, in effect, a brilliantly efficient way of transmitting information.
For those of us in business, the setting of prices is a major function. In some businesses, prices are set and remain constant for long periods. In others, such as grocery or airlines, prices are in a constant state of flux. Because pricing is so much part of our daily concern, few of us take time to ponder the wider economic function of prices....
In Australia, over the past fifty years, average household income, in constant prices, more than doubled. We live in one of the freest and most prosperous societies in the history of mankind. Why should we be so lucky?
Prior to 1800, most people lived subsistence existences. Dirt poor, their lives a drudgery, they suffered high rates of child mortality, starvation in poor seasons and ever present violence. It had been that way for centuries. As Hobbes put it, life was solitary, poor, nasty, brutish, and short.
Since then, the wealth of the average person has increased twelve-fold. (See Mark Ro...