A news service for the people of Michigan from the Mackinac Center for Public Policy

Suppose you were tasked with selecting the best candidate for creating one of the biggest and most influential record labels of all time. Would the following individual's application be at the top of your list?

  • Born in Detroit
  • Dropped out of high school in 11th grade to become a professional boxer
  • Boxed until drafted for the Korean War in 1950
  • Opened a record store after returning from Korea in 1953
  • Worked on the assembly line at Ford's Lincoln-Mercury plant
  • Quit his job at the plant to become a professional songwriter
  • Secured an $800 loan to start a record company out of a house in a crowded residential area in Detroit

The resume above belongs to Berry Gordy, founder of Motown Records.

There is a valuable property rights lesson from his story. Few would have chosen this business model as viable, because playing music at all times of the day and night in a crowded residential area may concern a few neighbors. In fact, Gordy did receive several noise complaints in the early days of Motown. Undeterred, Gordy was a smart guy and solved this issue by purchasing all the surrounding homes in the neighborhood and turning them into offices. Only a system of private property rights would allow such a business model to emerge. Today, with modern zoning laws and countless other regulations and taxes, it would be next to impossible to start a record label with the same business model as Motown Records.

Gordy's eventual success could have only emerged out of a system in which he was allowed to put his own property at risk in order to achieve a goal. If the decision were left up to a central authority or licensing agencies, Gordy would have never even been granted the opportunity to try. Although it is true that many individuals fail in their entrepreneurial ventures (Gordy's initial record store business is a perfect example), it is also true that these failures breed innovation by enabling any individual to risk their own property to serve their fellow man.

This just goes to prove F.A. Hayek's point that: "It is always from a minority acting in ways different from what the majority would prescribe that the majority in the end learns to do better." In short, when the minority is restricted from acting differently from the majority, the minority is restricted on their respective ability to innovate. A system of private property rights is the only system that grants each individual the ability to act freely and unrestrained by the views of the majority. 

Kurt Bouwhuis is the Property Rights Network intern. He may be reached at bouwhuis@mackinac.org.

Meet James Hohman, Assistant Director of Fiscal Policy at the Mackinac Center. James discusses his latest project, an analysis of Proposal 1, the proposal on personal property tax reform that will appear on the August 5th ballot. Read more about Proposal 1 here: http://www.mackinac.org/20246


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