Who Built That Prosperous Society?

In the hope that not everyone has become bored with the debate about President Obama’s statement that “If you’ve got a business — you didn’t build that,” I thought I would add my own two cents.  From the perspective of politics, I believe it is perfectly legitimate to focus on this one line because it captures in a quick and simple way Obama’s government-first approach to the economy.

But there is so much more here.  For now, let me just focus on what I believe are some of the most important aspects of Obama’s argument.

1. Obama’s point about the business creator not building his business is that he was benefited by other people – not just any people, but government people.  This, of course, is amazingly statist, since it leaves out all the good that people do in the nongovernmental, civil society.  But let’s just put that to the side.

2. Obama claims that the creator of the business was helped by others.  Well, of course, he was.  Who could possibly deny it?  We live in a society – in a social network – because we are benefited by others in that society.  Obama’s making this the basis of his argument shows that he is attacking a straw man.  When someone says they built something – or accomplished something – they don’t mean that no one helped them in their entire life or even with respect to the accomplishment.

3. From my perspective as a consequentialist, the key point is not whether the government (or someone else) helped a business creator, but whether the additional taxes on the business creator that Obama seeks to justify would promote the economy and people generally.  The problem with Obama’s approach is that the taxes and government he favors would be harmful and not beneficial.

Even if the help that business creators received from the government people did allow it to tax and regulate them freely, that does not mean the government should take harmful actions.  As Tom Smith says, the higher taxes on business creators (not to mention the excessive regulations he favors) will result in less wealth (and of course less liberty) for the nation.  How do we “thank” these government actors?  Certainly not by giving them more taxes.

4. There is another problem with Obama’s argument.  He says that people gain from the government’s provisions of bridges and teachers.  True enough, at least sometimes.  But notice that most people pay taxes for these services and so have already paid for the benefits conferred.  Why is that enough to end any debt that they have to the government?  Well, perhaps Obama would argue that people benefit more from the government services than they pay in taxes – that is, as the economists say, they derive consumer surplus from the benefits provided.

For beneficial government actions, that is probably true.  But think about it.  People also benefit from businesses.  They buy goods from them and get jobs working for these businesses.  They benefit more from the goods than they pay for them and they benefit more from the jobs than the labor they supply.  That is, they derive consumer and producer surplus from them.  So if Obama believes that business owners owe more to the government than their taxes, doesn’t that mean the society (and the government) owe more to the business owners for the benefits they provide?  Do we pay these business owners back with additional taxes?  Once again, Obama’s argument rests on statism and an unjustified preference for government.

Reader Discussion

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on July 27, 2012 at 21:51:02 pm

Prof.Rappaport...I have commented on Mr. Obama,s words on several blogs. Allow me to sum up. Government is a criminal enterprise. The Constitution limits the roll and function of that criminal enterprise, at least on the Federal level to certain limited functions. Today those functions are unlimited. 90 % of what government "services' and functions that are now on the books are probably unconstitutional or illegal. On top of that,there are millions of Americans who don't need nor want those functions and services in their lives but are forced to pay for them. With that said,the question to ask is; Why should I pay my "fair share" of taxes for services of government that are not only unlawful and illegal but are counter to my and millions of other Americans best interests? In essence, why should I pay my "fair share' when I never get my "fair share?" The Left constantly states that "taxes are what we pay for a civilized society." And that it is noble and heroic to sacrifice the hard earned fruits of one's labor for the sake of "society'" and society's poor. Well I say that being forced to work for for nothing is slavery and therefore I ask this question; Whats so heroic and noble about slavery?

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libertarian jerry
on July 28, 2012 at 09:47:16 am

Great article! It is interesting that both Obama and Elizabeth "Native American" Warren mention teachers as a huge benefit to business. This might be one reason the left stands so opposed to home schooling: if you take children away from public schools, not only do they not get to influence them, they also cannot say that these children "owe" the government for their usefulness.

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Joseph Dindinger

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.