“You Didn’t Build That”

Wednesday, July 18, 2012 9:19 pm Daniel J. Summers

I enjoy economics. I've enjoyed studying theory, debating with others, and when I had to choose an elective for my degree a few years ago, my economics class was among my favorites. I also enjoy how sound economic policy squares with my world and political views; it's quite the harmonious union. The run-up to the presidential election every four years, though, is a painful time for those of us who have looked at the numbers and believe that the free market gives the best possible outcome. There are always the fringe or down-ballot candidates, like Fauxcahontas of the North, who are way out in left field. Over this past weekend, though, this lunacy came out right at the top of the ticket.

The transcript for the video clip is below; if you want to watch it for yourself, you can see it in this article. (I tried to embed it, but I couldn't make it look right.)

We created a lot of millionaires; and, you know, there a lot of wealthy, successful Americans who agree with me - "cause they want to give something back. They know they didn't… If you've been successful, you didn't get there on your own. You didn't get there on your own. I'm always struck by people who think, “Wow, it must be because I was just so smart.” There are a lot of smart people out there. “It must be because I worked harder than everybody else.” Let me tell you something - there are a whole bunch of hard-workin' people out there.

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested roads and bridges - if you've got a business, you didn't build that. Somebody else made that happen. The Internet didn't get invented on its own; government research created the Internet so that all the companies could make money off the Internet.

Let's get the “you didn't build that” thing out of the way up front. There is a case to be made that the “that” refers to the roads and bridges, not to the business that was build. Neither reading of it changes what I believe is the real issue with these words, though if “that” is the business, it only confirms my analysis. And, although it is tempting to go to snark with this (“We created a lot of millionaires.” Yeah, but you started with billionaires!), that won't be productive; I'll try to keep that to a minimum.

We will start with the millionaire line, though. Who is the royal “we” he is talking about? His administration? America? From his other speeches, and the context later in this one, he is likely referring to the government. So, the government created millionaires? If we take that at face value, and your net worth is less than a million dollars, why didn't the government pick you to be a millionaire? This illustrates the lack of substance in that statement. America, as a nation, has seen many people attain a net worth of one million dollars or more; but, to say she created it is a different thing altogether. It was definitely not the government who created them!

But, this flows into the point of the speech. American government, by creating roads and bridges, maintaining an educational system, and developing technology, created the environment in which such success could occur. On this point, I agree. Building out infrastructure led to expansion of our nation, and as families are spread across the nation, and commerce is transacted around the globe, infrastructure needs to be maintained and upgraded. Where the government has a vested interest in that infrastructure, they should be involved at the appropriate level.

Where this goes astray is the next logical step people like our 44th President want to take from that. The next step - well, it's right there in his speech, that horrid phrase “give back.” (I've written about that before, though I don't think I've dedicated an entire post to it. Great, another post for the draft pile.) Implicit in that phrase is that the entity that should “give back” did not earn or deserve what they have acquired, or that they got it for free. That's not the way businesses work (which he would know had he ever… aw, darn, that snark is hard to hold back). Business owners:

• Have an idea for a product or service for which they believe they can convince people to trade some of their money
• Put in the work to develop the product or train people to provide the service
• Develop a plan to provide that product or service
• Secure the necessary infrastructure to run the business (physical, accounting, legal, etc.)
• Risk a great deal of their or their investor's money or, in some cases, their homes and cars, in the process

Now, if we look at that list, it backs up the “you didn't get there by yourself” line. Who all do we see in that list above? Employees, designers, architects, lawyers, accountants, human resources, communications, logistics, and investors would be a quick list. These are the people who “gave you some help.” But, did they give you the help? Very few people involved gave their help. The materials were not given, they were purchased; employees did not volunteer, they were paid; communications and logistics didn't “spot” the business free service, they charged this business their going rate for those services.

No, I am not picking at words - this phrase was chosen precisely because of its meaning. If a business owner does all of the above, and ends up with less than $250,000, they won't raise the liberal's ire. However, if they end up with $10M, they must have ripped off someone to get that, so we get this “give back” nonsense. Never mind that they contracted with each employee or service provider for a price agreeable to them, and they contracted with their customer to provide the good or service at a price that was agreeable to them. Never mind, too, that they were the last to get paid; before they saw any money, they took care of the government (taxes), then employees (payroll), then contracted costs (business-to-business, professional support, etc.), and then maintaining inventory/training (keeping the business sustainable).

“But what about teachers? Don't they count?” Well, what about them? They contracted with the government or a private institution to teach for a given amount of money. Teachers don't work for free either; just because their paycheck comes from the government doesn't make their efforts any more or less valuable.

At various points in my educational career, I had to study different companies. I also worked to type others' research papers at one point, and got to see a lot more interesting things about many different companies. Nearly all large companies have benefits like continuing education or charitable contributions (including skimming off the top for United Way). They offer matching retirement account contributions. They sponsor volunteer events in the community. When you look at the owners of these companies, you find contributions to charities, churches, and foundations. If that isn't “giving back,” what is it? (As an aside, I much prefer the phrase “pass it on;” it's a conduit, not the Dead Sea.)

It is class warfare. By definition, the middle class is in the middle. They are employees, not owners. They get a paycheck. They volunteer at their school, their church, or other civic organizations. They go on vacations every so often, and they have fun playing with their kids. They are not being ripped off; they are living a comfortable life (particularly when contrasted with the rest of the world) because of the fruits of their labor. But, to hear this speech, you'd think our country was filled with a bunch of greedy, evil business owners, ripping off the public to accumulate great wealth to their own exclusive use. (Yes, there have been those, and they have rightly come to legal, and sometimes even physical, consequences. The presence of abusers does not nullify the principle.)

Sure, there are a lot of hard-working people; not nearly as many as there used to be, but they are there. However, if you work really hard at an unsuccessful venture, you are not going to be more successful; you may delay the failure of the effort, but it will come around. No one on the right is saying that people aren't working hard; it is the left who are saying that those who are successful did not.

Now, let's take a look at that famous line - “you didn't build that.” If the “that” is the business - well, I think the above pretty much covers that. If the “that” is the roads and bridges, though, then yes, he's probably right. However, did the bridge cause the business owner to succeed? If so, then what about the guy living under the bridge - did the bridge cause him to fail? If the bridge has some magical economic power, we must recognize that its power affects different people in different ways. Government is no less infallible than business (in fact, it's usually more fallibl… sit down, snark boy); if government is to be credited with all these “millionaires we created,” it must be blamed for those below the poverty line. The only time it's blamed for that is when there's a Republican in the White House, though.

The Internet - ah yes, that powerful conduit that enables greater middle-class rip-offs than ever before. The Internet was developed by DARPA. Care to venture a guess as to what the D in that acronym stands for? Defense. Yes, the Internet grew out of a defense research project. Just as NASA isn't all about space, defense isn't just about guns and bombs. The very department that Obama wants to gut is the one that gave us the Internet. It would be funny if it weren't so sad.

So - if you built a business, you didn't build it on your own; but, that doesn't mean you ripped off those who helped you build it. Rather, your building of a business created a better life for those helped you build it. Maybe our next president will understand that; hopefully it won't take him 4 years to get here.