Risk Return and the Founding Fathers

Benjamin Franklin (1706-1790)

As a general proposition, as risk increases potential investors demand a higher return. Thus, only projects with the potential to deliver that higher rate of return will be able to obtain funding. By providing legal monopolies for certain types of activities (inventing, writing, music, etc.) we are increasing the potential return, and thus the amount of resources that will be devoted to those types of activities. By setting the stage for patents and copyrights in the Constitution Art. I sec. 8), the founding fathers acknowledged the "positive externalities" created by such activities, and set the stage for a nation, which would devote more of its resources to such innovative and creative activities. Of course many of the founding fathers were not strangers to the arts and sciences. Benjamin Franklin, who presided over the drafting of the constitution was considered by many to be the greatest inventor of his time.

		January 18, 2005 *Risk, Return and the Founding Fathers*
	Benjamin Franklin (1706-1790) As a general proposition, as risk increases potential investors demand a higher return. Thus, only projects with the potential to deliver that higher rate of return will be able to obtain funding. By providing legal monopolies for certain types of activities (inventing, writing, music, etc.) we are increasing the potential return, and thus the amount of resources that will be devoted to those types of activities. By setting the stage for patents and copyrights in the Constitution Art. I sec. 8), the founding fathers acknowledged the "positive externalities" created by such activities, and set the stage for a nation, which would devote more of its resources to such innovative and creative activities. Of course many of the founding fathers were not strangers to the arts and sciences. Benjamin Franklin, who presided over the drafting of the constitution was considered by many to be the greatest inventor of his time.