During an interview on ABC this past August, YouTube’s Chad Hurley talked about the trouble he and co-founder Steve Chen experienced when they tried to e-mail friends a video of a dinner party they attended in January 2005. Their difficulties led to the creation of YouTube, which allows Internet users to share original videos “worldwide.” As Hurley put it in the interview, “We thought, a lot of people were gonna have the same problem. And so we started working on a solution for this problem right away.”
Hurley’s words deserve special attention given this week’s announcement of YouTube’s $1.65 billion acquisition by Google. Hurley and Chen, like most members of the 2006 Forbes 400, are problem solvers of the first order. While many will decry their windfall, not to mention the fact that the Forbes 400 is now exclusively a billionaires club, rational minds will celebrate. Indeed, contrary to the class-struggle assertions suggesting an estate tax is necessary so that the rich can “give back,” the success of Hurley, Chen, and the majority of the Forbes 400 makes it clear once again that they’ve given back in spades.
Absent the profit signal, there’s no way of knowing who among entrepreneurs is doing the most to improve how we live. Profits are a way of keeping score, and the greater the profits, the more problems that have been solved. Von Mises referred to this process as the removal of “uneasiness” — which is what members of the Forbes 400 do all the time. Simply, they make our lives better.
As the respective heads of Fidelity Investments and Franklin Resources, Ned Johnson and Gregory Johnson offer investors low-cost access to some of the best money managers in the world. Ameritrade founder J. Joseph Ricketts provides investors with low-commission-cost access to stocks and bonds. According to Lorraine Spurge, author of Portraits of the American Dream, Forbes 400 member Michael Milken was responsible for “nearly all the job growth in the decade of the 1980s.”
Or how about publisher Patrick McGovern, creator of the hugely successful For Dummies series? Or Min Kao and Gary Burrell, designers of increasingly affordable global positioning system (GPS) technology? Or Carnival Cruise founder Micky Arison, who has made luxury seafaring affordable to the masses? When Hurricane Katrina struck last year, Arison freed up three Carnival ships to provide housing for 7,000 Katrina refugees. These people remove uneasiness in spades.
If you were around in the 1970s, you no doubt remember having to wait six-to-eight weeks to receive items you ordered over the phone. Thanks to FedEx founder Fred Smith, your acquisitions today can be at your doorstep tomorrow. Thanks to Howard Schultz, coffee drinkers now have 12,000 Starbucks to patronize around the globe. As opposed to exploiting consumers, Schultz opens five new stores a day in the cause of consumer convenience and profit.
And how about those behind-the-scenes “money men” who provide the venture-capital firepower to future members of the Forbes 400? YouTube was made possible through funds provided by Sequoia Capital, while Google was supported by Sequoia and Kleiner Perkins. The capital provided by both venture firms came from pension plans funded by average Americans, university endowments, and yes, savings offered up by the working and idol rich.
It is through access to capital that the supposed “have nots” become “haves.” On the other hand, inheritance taxes discourage saving while stimulating immediate government consumption of the capital that otherwise would be available to entrepreneurs. To insure the largest capital base for the problem-solvers of the future, the estate tax should be abolished.
– John Tamny is a writer in Washington, D.C. He can be reached at jtamny@yahoo.com.