 Hey, Kevin here. Welcome back to Invisible Hands. Say, have you ever wanted to open your own artisanal flavored toothpick store? Sure, we all have. Being an entrepreneur sounds awesome, but what most people don't know is that entrepreneurship is also an extremely important part of any market economy. Finally, something that's actually fun. I'm glad you're excited, Fiona. So, Kevin, after I get out of school, I want to be an entrepreneur. Really? Yeah, that way I can be my own boss and be independent. That's great. You know, there's so much more to being an entrepreneur than just setting your own schedule. Entrepreneurs play an incredibly important role in the economy. Don't ruin this for me. Nice, actually right. And it's awesome. Entrepreneurship is about finding new and valuable ways to help people. It's about discovering opportunities, innovating around problems, and creating value. So I guess I should think about entrepreneurship not just as an activity, a job people can do, but as a whole way of thinking. Yes, entrepreneurship as a way of thinking emphasizes innovation, drive, and creativity. It's about having the vision to identify and discover unmet needs, and then acting to satisfy them. Entrepreneurs are both problem solvers and wealth creators. In the pursuit of profit, entrepreneurs combine the factors of production, land, labor, and capital to produce goods and services people want and need. It's risky because they only succeed if their solutions are actually valuable to other people. But if they are successful, that's how wealth is created. Let's talk about that. In economics, the idea of wealth isn't what most people think it is. It's just money, and like being able to hang out with Taylor Swift whenever you want, right? No, that would be cool though. It would be. Wealth is a measure of the value of economic goods, and as you know... Value is subjective. Yes, I know already. Exactly. So while money can represent someone's wealth, that's just an abstraction. Their real wealth is all of the stuff they actually value. Like my laptop. That, but it's also your apartment, your bike, your complete set of 1989 Don Russ Diamond King's baseball cards. That's just what you value. The food in your fridge, even your education. It's all the stuff that makes your life better. The important thing to understand is that wealth isn't something that just naturally exists in the world. It must be created. Wait a minute. What about natural resources? If food counts, isn't an apple on a tree wealth too? Well, no. Someone still has to spend the effort climbing the tree and picking the apples before they can be consumed. That work, planting, harvesting, gathering, hunting, arranging, building is how we create value. And entrepreneurs play a key role in value creation. Yeah, entrepreneurs create value for themselves by creating value for others. That's what's exciting about entrepreneurship. It's really important to me to earn a living by improving people's lives. That's good, because entrepreneurship is the essential foundation for economic growth. Really? That's a lot bigger than I thought. I'm not kidding. Societies that encourage entrepreneurship through economic freedom tend to see much faster growth than those that don't. Plus, entrepreneurial discoveries and insights build on one another to create new and better products and processes. Entrepreneurs can even create entire new industries. In less than 20 years, we've gone from phones that barely text to phones that can run your entire life. Thanks, Steve Jobs. In fact, entrepreneurship evolves so quickly that by the time you're watching this, that phone is probably obsolete, too. True. And that also creates opportunities for entrepreneurs to make other products and services like cases, screen protectors, and apps. So entrepreneurship creates opportunities for even more entrepreneurship. Yes, and it's an ongoing process. Societies that embrace entrepreneurship allow the old industries to get replaced as entrepreneurs think up new ones. Each time this happens, it creates more jobs, produces more wealth, and allows individuals to exercise their creative talents in totally new ways. Like how I got to make videos on YouTube for a living. That wasn't even possible only a handful of years ago. That's what economist Joseph Shumpeter called creative destruction. Old jobs and industries are destroyed whenever entrepreneurs create new and better ones. It's like the market's own circle of life. Now that I know how important a role I'm going to play in the economy, I'm ready to get out there. Can't wait to be my own boss. As an entrepreneur, you may not have a boss, but instead, if you're successful, you will have many, many bosses. Your customers. In a free market, your customers have the power to choose whether or not to buy your products, and at what prices. And that's what creates the right incentives and gives you the necessary information to respond rapidly and effectively to your customers' needs. It sounds like you're saying prices, profits, and losses are actually signals that tell businesses what to do. That's exactly right. Those price signals, how much people are willing to pay for your products and whether or not you earn profits or losses, are the feedback mechanism that will tell you if you're doing a good job creating value for other people. But remember, that's only possible in a market where you and your customers are free to make your own choices. By the way, what's your business idea? Artisanal flavored toothpick store. What? I'll be your first customer. We think entrepreneurship is a good thing, and it is. We should encourage more entrepreneurship by celebrating entrepreneurs and encouraging economic freedom. So what about you? Do you want to be an entrepreneur? Leave a comment telling us what business you want to start. Learn more about entrepreneurship at courses.feed.org and check out the Foundation for Economic Education for tons more resources on how entrepreneurial thinking can radically improve your life. Even if you don't want to start your own business. Thanks for watching!