Caution can take over

November 20, 2010
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IBJ Letters To The Editor

I understand and agree [with Mickey Maurer’s Nov. 1 column] that pace, discipline and focus all are important for any entrepreneur to employ when they are managing their enterprise.

However, you have not discussed what I believe is the “real” issue. The question is whether an entrepreneur (in which category I would include developers) needs to keep enough liquidity to survive a normal recession (most certainly yes), a Great Recession (I would not have thought so until the last couple of years) or another Great Depression (I would hope not.)   

If we believe, as Joseph Schumpeter, an Austrian-American economist, discussed many years ago that entrepreneurs are the engines of economic growth, then as a society we may lose out on opportunities for such growth and as a result job creation (which our country desperately needs) if entrepreneurs become too conservative.

This could occur as a result of their holding back substantial amounts of cash and/or reducing their activities in order to prepare for a future extreme downturn rather than making financial and entrepreneurial capital investments in activities that they know and understand.

In fact, if entrepreneurs do not return and/or are not able to return to reasonable risk-taking in the near future, we may have to wait a long time before our country will have higher levels of economic activity and renewed job growth. In such a situation I believe those that have the capacity to be entrepreneurs will have failed to provide their services and resources to our country at a time when the country needs and could be well-served by such activities.  


Bruce Cordingley


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