All Commentary
Thursday, February 1, 2001

Courage Overlooked

Courage Is Often Found in Business Executives and Entrepreneurs

Courage is universally admired, and rightly so. One reason is that a courageous person says what he truly feels regardless of the consequences. A result is that those who deal with a courageous person know where they stand with him. Another reason for admiring the courageous is that they can be counted on to get things done. Trepidation does not deter brave men and women from making hard choices or undertaking difficult actions.

Of course, being courageous does not alone render someone admirable. We do not admire an armed robber just because he knowingly put his life in danger to steal, or the KKK spokesman who willingly endures public ridicule for his racist pronouncements. But those who voluntarily incur personal peril, difficulty, or embarrassment to do what is good and right do deserve our praise. We rightly applaud the firefighter who risks his life to save another, the elected official who owns up publicly to his misdeeds, the test pilot who performs a critical but hazardous maneuver in a new airplane, and the many other people who put their own well-being in jeopardy to do what should be done.

Obviously, situations in which people have the opportunity to act courageously are many and varied. Some situations involve literally risking one’s life; others involve risks only to one’s material well-being; yet others involve neither physical nor material dangers but personal embarrassment or unease. And while almost everyone will rank the courage of someone who risks his life to save another higher than the courage of, say, a person who publicly admits an embarrassing truth about himself, the fact is that even the lesser varieties of courage deserve our recognition and praise.

One venue for the courageous is business. The commercial and industrial world isn’t typically thought of as a theater for courageous actions, but in fact it is. Taking and implementing many seemingly ordinary business decisions require genuine courage.

Consider a seemingly mundane example: firing an employee. For those of you (like me) who have actually had to fire a person whose services are no longer required, you know that the task is difficult. It takes courage to look someone in the eye and explain to him that he no longer has a job. The difficulty is not the result of fear that the dismissed employee will react with violence, or even that he will bring legal action against you. Rather, the difficulty is that for most people delivering bad news to someone—particularly when that someone is likely to blame you for his misfortune—is a deeply disagreeable task. (One of the questions that prospective managers are routinely asked in job interviews is “Have you ever fired someone?” The reason for asking is that business people understand that dismissing employees is an especially unpleasant chore and that many people who would otherwise make good managers in fact won’t because they lack the courage to fire people when appropriate.)

Willingness to fire employees is necessary not only to run a successful business, but also to the success of the larger economy. Some employees prove to be incompetent, others have jobs that have become obsolete, while still others have to be fired because of their misdeeds. If no managers possessed the courage to dismiss employees who should be dismissed, every business would be beset with massive and growing inefficiencies. Wages would be low, outputs would be small and of poor quality, and eventually, each firm would rind itself into bankruptcy. Consumers and workers would be poorly served. Our prosperity would be non-existent. But partly because there are managers with the courage to fire employees when necessary, our economy is a fluid and mighty engine of prosperity.

Firing employees is only one task requiring a business executive’s courage. Another is making investment decisions.

The future is uncertain. But entrepreneurs and executives must regularly decide how to structure their firms for the future. These decisions involve committing thousands, or hundreds of thousands, or even hundreds of millions of dollars to buy new machines, new factories, new outlets, more research and development, and countless other kinds of capital that enable firms to produce the goods and services that most of us take for granted.

M.B.A. textbook models and Hollywood stereotypes completely overlook the courage required to commit to such investments. Spending large sums of money is not easy, given that the outcome of such decisions can never be known in advance. If the decision turns out to be profitable, it’s easy to look back and conclude that success was inevitable. But because all investment decisions are made in the face of genuine uncertainty, to commit to spend such money is to take real risks. If the decision proves to be mistaken, the entrepreneur or executive responsible suffers personally.

To make such decisions requires courage. Without it, enterprise and industry could not exist. Every one of us would be mired in abysmal poverty.

Proclaiming the courage of business people will not win the applause of the intellectual and political classes, whose members completely misunderstand enterprise and the market order; they see enterprise and commerce as processes guaranteeing a privileged few the opportunities to extract guaranteed profits from the backs of the toiling masses. Because they have never run businesses, academics, politicians, and pundits are ignorant of the hard work and difficult decisions that every successful business person carries out routinely.

The intellectual and political classes are so blinded by the narrowness of their experiences that they see courage only in clamoring for greater state regulation. For example, they regularly classify Senator John McCain as “courageous” because he calls for greater central planning of political elections. This fact is odd. McCain’s support for “campaign finance reform” is hardly courageous given the overwhelming and fawning press support for such “reform.” But the same pundits who cheaply toss the term “courageous” at Senator McCain never describe as courageous the pharmaceutical executives who regularly commit millions of dollars to drug?development efforts that stand a good chance of failing, or the retailing executives who announce a major restructuring of their operations.

Again, I don’t suggest that the courage required to run a business is as lofty as is the courage of, say, those Germans who during Hitler’s reign of terror hid Jews in their homes. But the time has come to stop looking on business people as being, at best, necessary devils. The time has come to reflect more maturely on all the qualities it takes to start and to manage a successful enterprise. These qualities are many. They include patience, prudence, determination, clear-headedness, flexibility, honesty—and courage.

We’re all fortunate that so many people who have these qualities become entrepreneurs and business executives.

  • Donald J. Boudreaux is a senior fellow with the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University, a Mercatus Center Board Member, and a professor of economics and former economics-department chair at George Mason University.