We're seeing the back and forth between the Dems and the GOP about "who built it," whether the economy is a function of both public and private action (as artfully expressed by Elizabeth Warren and clumsily imitated by the President) or purely private Galtian will-to-create entrepreneurship. The only interesting thing about the argument is that there even is an argument. The facts are so overwhelming in support of the Elizabeth Warren version that it's astonishing that anyone would deny that government plays a huge and largely uncontroversial role (police, fire, roads, courts, currency) in making the economy function.
So why are so many Americans so wedded to the private enterprise story? Why is this the heart of the GOP vision of what American is and should be? Why the insistence on clinging to the lone frontiersman version of America that has never really held true except on the margins?
I don't have a great answer to this paradox, but I think it is central for understanding our current political culture. Here are my initial thoughts toward explaining it; none strike me as a very satisfying answer.
- True belief and aspiration. Clearly some people deeply believe the solely private enterprise story. Why flummoxes me. Upbringing explains some of this. Maybe there is something to the private enterprise story that we want to believe: if we are successful, we want to believe that it is because of our personal merit, while if we fail, we want to believe that it is someone else's fault (and who better to blame than the government). We want to believe that we are all capable of being the loan frontiersman (who doesn't love Bear Grylls) and would be successful if everyone else just got out of the way.
- Ignorance. This is the "get your goddamn government hands off my Medicare," phenomenon. A lot of people (including some who are very well educated) simply don't recognize the extent of government's role in the economy (maybe because they've never bothered to look for it), and particularly that of the federal government, which doesn't have a lot of direct contact with citizens. The sole federal employee most people encounter is the postman or maybe someone in the armed forces. The lack of direct personal contact may make federal taxes seem out of proportion with benefits provided.
- Cynicism. Some people who embrace the private enterprise story know better, but they also see it as a lever toward deregulation that furthers their own personal interests. Relatedly, there are the policy world hangers-on, who are employed in government, think tanks, and the media. The conservative bench is often shallower in the policy space, so embracing the private enterprise story can be a smart career move.
I'm curious to hear readers' thoughts on this.
Comments
40 responses to “Who Built It?”
Gov. Christie’s keynote speech at the Republican Convention last night included a recitation his father’s history. Chrisitie mentioned that his father went to Rutgers on the GI bill. I’ve not seen this little fact mentioned in the context of the “we built it” theme, perhaps because it’s not directly related to privant entrepreneurship.
But, it was striking to me to see a leading Republican, speaking to the “we built it” RNC, and mentioning without much fanfare and with little notice, that the Fed’l Gov’t had a direct and important hand in enabling his father to get a college education.
I realize that I’m not addressing your question. I don’t have an answer to it. The “we built it” theme feeds directly into what the party faithful already believe or know: Obama is a socialist who is working on a government takeover of anything he can. To the faithful, it doesn’t matter what Obama actually said, what matters to the faithful is that his statement ratifies what they already know. It’s like they’re saying, “See, I knew it!”
Speaking as a libertarian, please know that it is equally frustrating to us when we hear someone lay out the debate in the terms you have above. For everyone but the hardcore anarchists, the debate is not about whether government has a place in society, but rather what roles the government should be charged with taking on.
The major fallacy above comes with your association of “government plays a huge and uncontroversial role” and “police, fire, roads, courts, currency”. The things you listed are uncontroversial parts of government… NOT the huge parts. The huge parts involve social security, health care, and a defense budget that’s astronomically bigger than our potential rivals, and gets used to project global power rather than truly act in our own defense.
To pay for the entirely of our legal system and a scaled-down national defense would be a fraction of what we give to the government now. Throw in national infrastructure like roads, currency, and the like, and it’s still a drop in the bucket.
Take a look at the narrative from the opposite perspective. Every time someone comes out to talk about reducing the size and scope (and therefore cost) of the government, they get demonized in the very manner you implied above. “You want to cut back on our cops, our teachers, our firemen, our soldiers, who already don’t get paid enough for the critical things they do??? Villain!” It should be okay to suggest that maybe the government is spending too much and doing too much without it being assumed that the most vital and uncontroversial of said expenditures are the ones that would get cut first.
Mr. Loman,
I notice that you identify yourself as a libertarian, not a conservative or a Republican. It think that is a good thing, because conservatives and Republicans are definitely not libertarians. They believe in government interference in things they don’t like and no interference in things they do like. They are simply Democrats in that regard.
I think that it used to be that Republicans were libertarians, but that was before Nixon’s southern strategy and the Moral Majority’s takeover of the party in the 1980s.
What we are left with is about a 95% corrupt government and no-one representing libertarians.
Personally, I struggle with this. On the one hand, I believe that society should strive to make life better for everyone. On the other hand, I don’t think that the private sector can do this and when government does this, it invites cronyism.
In sum, I am faced with a choice of an extremely unfair society as opposed to graft and corruption. Do I want to live in a place governed like Somalia or the USSR? The US is somewhere in between and does well. We are all trying to find out where, in between, it should all fall out.
I have trouble understanding where a principled line is drawn between police, fire, roads, courts, currency, and things like social security, health care and defense. Is there a libertarian principle for distinguishing types of government action? I don’t see all of these as fitting into a public goods category, for example.
I’d be very happy to see the debate focus on whether we want to have social security or health care or how much we should spend on defense. That’s a reasonable framing of the debate (and I’m very happy to take all comers on the point of whether government is better suited than individuals for assuming retirement income and health care expense risks), but the government vs. private enterprise framing is silly and unproductive.
In any case, the GOP isn’t arguing for libertarianism. Romney wants to increase defense spending, for example.
Maybe I will get my hand slapped for commenting, not the first time a teacher rapped my knuckles with a ruler.
Before one increase spending for military would not one need to have something worth defending?
As for private industry wanting the governments hand out of their business, consider an employee of this private company accidentally starting a fire, will it be the public service firemen that place their life on the line? Many forget until needed, many of the services offered by the government.
Where one refuses to pay for these services by avoiding or reducing taxes, one’s risk loss.
I would add Scots-Irish individualism to Adam’s list: a kind of exaggerated anti-communitarianism, which owes something to Calvinism. The problem isn’t so much with gubmint, as it is with any collective effort, which government personifies. Nothing stands between me, my Bible, and my salvation.
The irony, of course, is that Mitt Romney is an observant adherent of one of the most communitarian of religions, and Paul Ryan is associated with the most corporate of religions.
It’s not surprising that on a Warren-founded blog a Warren acolyte extols Warren’s view. But intellectually it’s been refuted a number of times, but I suspect those come from commentators you don’t follow. I’ll summarize briefly.
1) Quantification is lacking. The cost of police, fire, courts, defense, currency is a small portion of government expense. Although yes there are a handful who would argue for privatization of all those, few who reject the Warren pov are opposed to paying for a ratable share of those.
2) Mismatch of examples to agenda. Fire, police, defense are all public goods. But Warren and other progressives advocate, and the lion’s share
of government outlays consists of, transfer payments – the public goods examples proffered do not include or justify massive transfer payments, so largely miss the point intellectually. The argument is totally inapposite to what people mainly object to in goverenment spending.
3) Who benefits and who pays. Every citizen benefits from police, fire, defense. The principal activities of police are not property protection of the rich (why do the rich have bodyguards and alarms if they had such great police coverage?) but traffic, drug, alcohol, first responder, and domestic violence, all activities that are utterly uncorrelated, and to some extent, negatively correlated with wealth. Yet wealthy people pay more in dollars at least and maybe in rates, for such coverage.
4) Overstating the benefit of many government services. For example, fire protection in my town is volunteer provided. (Why do people volunteer and not free ride? Apparently it’s where you go for affairs in town. But I digress). As well, what is the real source of most fire safety? It’s not the fire department. They are the last resort. It’s the homeowners own actions.
Continuing:
5) Payment once is enough. A a road or bridge etc may have been built and the workers paid for theier work years ago. Its continued existence does not mean that for the rest of eternity every generation has to pay again for that. And it also doesn’t mean that someone who didn’t build the bridge or road gets paid for the work our forebears did.
6) Misalllocating all the benefits to one side of an exchange. Sure, a successful business benefits from a road to transport its products. But so does the consumer at the other end of the transaction. The business owner’s profit is a small portion of the value in the exchange. NAd what about the 42% of the population that is not even in the workforce but gets all the benefit of defense, police, fire, roads, airports etc.
7) Ignoring all that government gains from private enterprise. Sure, computers are more productive with the internet. But who built the computers government uses? Who built the cars, the planes, etc. Obama is transported in? Who grew, processed and shipped the food that government workers eat? Etc.
8) Confusing the absolute and the relative and failing to attribute proper weights to public goods. When it comes to public goods, because they are public, they are available to everyone. So if they caused success, everyone would be successful. Since people have different levels of success using the same public goods, those public goods must not be causing very much of the success. Rather, what produces different levels of success is the different skills and effort that individuals bring to their interaction with public goods. Many people drive on a road and don’t start a business, only the entrepreneurs among them start the business and put in the effort to make it a success. When Michael Phelps wins 8 or however many gold medals he won, those medals are not attributable to the guy who filled the swimming pool. Yes, you can’t swim without the water, but the pool was filled for all the competitors, not just Phelps. Phelps won because of individual distinction, not because some guy put water in a pool. Sure, you can argue “but for” causation, but the number of “but for” causes is equal to pretty much every event in your life. But all the causes can only add up to 100% of a result. So how much of a rare success is due to widely available public goods and how much by individual distinction?
Finishing:
Political confusion. Even if you believe the points Warren makes about public goods, they don’t lead to the particular tax and spend system we have, let alone the one progressives want. Maybe they justify a flat amount of tax on all people on the ground that everyone benefits equally from having their lives proteced and from being able to drive – that is how auto licenses work, for instance. Maybe they justify a flat rate on the theory that taxes should be proportionate to benefits. Alternatively, you can match benefits and costs with a user fee system, not have a tax system at all. Just charge people based on how much they use a certain service, like roads or subways. But absolutely nothing in her theory supports a progressive tax system that is at the heart of the progressive agenda. And that is a big part of why there is so much scorn of the merits of her way of thinking, although another reason is that it’s utterly condescending for someone from the not for profit world to be so holier than thou towards the for profit sector without which neither big government nor the not for profit sector could exist in their current form..
Allan:
There is a subset of Republicans who are libertarian. A lot of the genesis of the Tea Party was libertarian in nature, before it got co-opted by social extremists and subverted into something of a more reactionary faction. There’s a subset of Democrats who are libertarian too; our political system is set up to protect its two-party nature, unlike systems in other countries with a more proportional allotment of representatives that allow multiple parties and diverse viewpoints to actually hold votes. Ultimately libertarians who choose not to vote Libertarian (for candidates who they know cannot win) have to make a pragmatic choice about whether fiscal libertarian principles or social libertarian principles are more important to them. Unfortunately in many ways this calculus leans towards the Republicans, as attempts to enforce socially unjust laws can often be struck down by the courts, but the courts are further distant from the enactment of fiscal policy.
I wish I had a solution to offer here short of a systemic overhaul that neither party has any self-interest in supporting, but I don’t.
Adam:
There is a principled line, though as with any political philosophy, you’ll find some disagreement among libertarians on where that line lies. I’ll speak for my own views.
The core responsibilities of any government revolve around the protection of the rights of its citizens. This naturally extends to the legislature, the courts, law enforcement and the military, to defend against internal threats (crime) and external threats (war). Almost no one will disagree on this.
Most libertarians are also okay with the notion of the government managing resources that are inherently common, to some extent. This function extends to infrastructure, for one. There’s only so much physical space, and it seems impractical to entrust something like our roads and railways and waterways and airspace to an unregulated collection of private entities. Same goes for printing currency, and to some extent protecting the environment.
Somewhat more controversial but generally accepted is the government’s role in protecting its citizens from non-criminal harm. So having a fire department, or FEMA, or regulations to make sure our food isn’t contaminated with bacteria… all of these things intrinsically feel like acceptable government functions.
Where libertarians tend to object is the notion that the government should take responsibility for protecting us from the consequences of our own bad decisions. Part of living is making mistakes and having to live with them… when you insulate a person from the consequences of bad choices, you wind up instilling a sense of privilege and entitlement that most libertarians find galling.
The GOP may not be strictly arguing for libertarianism, but increasing defense spending is not strictly antithetical to libertarianism. Defense, at least, is an accepted role of government in the libertarian’s mind; most believe we have too much spending there, but that’s more of a sub-debate. A libertarian might scrap all of Social Security or federal health care, but would never scrap the entire defense department.
To draw back to the original premise: framing the debate in terms of private enterprise versus public oversight taps into the real, primal desire of most rational beings to live their lives as they choose. That’s music to the ears of most limited government advocates; you can argue about how well Republicans would actually advance their causes (GWB certainly didn’t in his eight years), but that’s the base that they’re courting. And it represents their best chance for success, and they know it.
Your characterization of the issue and of the political discourse is wrong, btw. Warren does not argue that “the economy” is a function of private and public, and the opposition is not arguing that “the economy” is “solely” a function of pure entrepreneurship. What Warren argued was that business success was attributable to public investment. And the opposition argument is that business success is due to the entrepreneur’s individual skill and effort in an environment that invites all to compete to make the most of their skill and effort and the public goods available to all of us. For the reasons outlined above, public investment provides public goods for everyone not just the business owner. When I was a kid I rode a city bus to school. It wasn’t just a bus for me, lots of others rode it. I grew up and succeeded more than most of my fellow bus riders. I don’t think the bus played much of a role in our outcomes.
By the way, it was a religious school, not a public one. One more example of the progressive narrative not being valid.
Also your lack of understanding of the other side of the debate reminds me of the research Jonathan Haidt writes about in which, if I remember correctly, conservatives show a greater understanding of liberals’ positions than liberals do of conservatives’. Two of the three “possible explanations” you give – ignorance and cynicism – are incredibly condescending, a trait I find all too common in the academy. The one that isn’t — true belief and aspiration – is a caricature – references like “lone frontiersman”, come on.
There’s a lot here in mt’s comments, and I’m not going to try to address it all. I think the main problem is that mt fundamentally misunderstands the Warren point and is arguing against a position of his own construction. Whether one characterizes it as about “the economy” or “business success” seems like a difference without a distinction, but the point was NOT about public investment. Elizabeth was making a simpler point that economic production is the result of private and public contributions. She wasn’t arguing in favor of any particular type of government program. She was making a positive, not a normative point, that we live in a world with complex government and private interactions, and that the “free market=good, government=socialism” argument is as silly as “2 legs good, 4 legs bad.” My point was to ask why anyone would persist in believing the pretty obviously oversimplified private enterprise can do it all story. Most of mt’s comments are arguing with points that neither Warren nor I made and which don’t need to be addressed.
A lot of mt’s comments were about public goods, but mt seems to be using an idiosyncratic definition of public goods, which are commonly understood as being non-rival and non-excludable: my use doesn’t prevent another’s use and I can’t be preventing from using the good. None of the government services mentioned fit the public good definition. Fire, police, and defense are all rivalrous goods. If the fire dept. is putting out my fire, it isn’t putting out yours. The more police protection I get, the less that’s available for someone else. And I can be excluded from them as well. There aren’t a lot of things that meet the definition of public goods. Instead, I think what mt is referring to is government provision of goods and services that could be privately provided (police, fire, adjudication, garbage, electric generation, etc.). When those goods/services are and when they should be provided by government or private parties is a really interesting question, and one that I’ve been writing about since 2009 (so don’t assume I’m a parrot). But that’s a totally separate issue than whether government does in fact contribution to the provision of most goods and services.
I’m going to take the liberty of restating mt’s comment into something more useful, namely a statement that the “private enterprise” or “free markets” mantra isn’t to be taken literally, but is short-hand for a belief that private services are generally better than government. I don’t know if it is falsifiable, but that’s a reasonable position. (Having grown up in the city of Chicago, I do not have a romanticized view of government’s provision of any type of service, but I can tell you that when things were privatized or deregulated, the service became more expensive and worse.) So maybe the problem is that I’m taking the “free enterprise” mantra too literally. And that may be the case with more thoughtful commentators, but I suspect many on the private enterprise bandwagon aren’t so thoughtful. Put another way, while the ignorance and cynicism explanations are condescending, they may also be true. (Of course, it is also amazing how people convince themselves that self-serving positions are also true beliefs.)
I appreciate Robert Loman’s thoughtful response. I think it helps focus where the real disagreements are.
I don’t think there’s much dispute that people should have to live with the consequences of their own bad decisions. But there are some important caveats to that. First, that there are no negative externalities from those decisions, and second, that people have sufficient information and wherewithal to make the decisions, and third, that there are certain minimum living standards that must apply to everyone. I’m sure there are some people who would disagree with those principles, but not many. Instead, a lot of the debate is about the application of these caveats: are there sufficient externalities for intervention? How much information and wherewithal do people people need? Just what those minimum standards should be?
That’s fine, but notice how very far away we are from Elizabeth Warren’s observation that “there is nobody in this country who got rich on his own.”
mt – “5) Payment once is enough. A a road or bridge etc may have been built and the workers paid for theier work years ago. Its continued existence does not mean that for the rest of eternity every generation has to pay again for that. And it also doesn’t mean that someone who didn’t build the bridge or road gets paid for the work our forebears did.”
Stuff wears out. A bridge built 50-75 years ago will eventually need to be rebuilt. Plumbing installed 100 years ago will need to be replaced at some point in time. I lack the patience or verbosity to respond to all your other arguments but this one is so obvious I could not resist.
The idea that “there is no free lunch” is a fallacy that seems to just keep chugging along.
When you are born, there are libraries full of books, cars have been invented, science has made sense of your world, roads exist, satellites have been rocketed into orbit to provide GPS services, there are medicines, schools, and there is already a system of double entry bookkeeping.
Some of that was provided by government through the public’s tax dollars, some by individual effort by people in the past. But virtually all of the accumulated knowledge, infrastructure, systems, institutions, and wealth owe something to government and sacrifices made for the nation and the public good.
For example, those sacrifices are why we don’t speak German or Japanese in this country – to remember probably the largest deficit spending, as a percentage of GDP, ever in this country’s history. Among the giants whose shoulders we stand on, were the “greatest generation”. No business personal alive today “won that”.
The idea that business people are “self made” – personally bursting the bonds of a Hobbesian “nasty, brutish and short” life in a state of nature, to forge a career as a synthetic derivatives trader – is laughably ignorant. Or, it would be laughable if there weren’t serious arguments being made that entrepreneurial success is a creation ex nihilo.
The entire “pro-business” argument reminds me of this:
https://www.youtube.com/watch?v=ExWfh6sGyso
It’s one thing to disagree with some aspects of government. It’s another thing entirely to claim that it has done nothing positive.
The Private Citizen created the Government. Government did not create the Private Citizen. The Private Citizen has the power to destroy the Government and create a new Government. Of course, the Government cannot destroy the Private Citizen and create a new Private Citizen.
So, explain to me again how those that think the Government had anything to do with anything other than corruption……
mortgagefraudexaminer
I am amazed at the comments as such but suffer from a lack of education but the imporatnce of knowing from where one comes: The Past. It is a belief that we are all created free and equal with the rights of our own beliefs.I keep seeing, hearing and reading of those who speak of the right solutions to everything. Thomas Jefferson one wrote: “I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.” I could care less if one is republican,democrat, independent or any other name. What is imporatnt and seems to be missed in rhetoric is America is still a government of the people, by the people, and for the people.One last observation for Mr. Solot. There is nothing wrong with a veteran who became educated via the GI Bill. Veterans in the past, present and future allow you to have freedom of speech to say or do as you please. In fact many died for that same freedom.
So AMC provides a viewpoint that I think is typical of the current Democratic mindset, but when considered closely, leads to some truly disturbing conclusions.
It’s true that everyone in society stands on the shoulders of those who came before. Our technological advancements, our safety, our heritage, all built by our predecessors and in many areas owing to the efforts of governments. But to imply that such efforts naturally lead to a permanent, undischargeable indebtedness to the very notion of governmental involvement in any particular area of our lives is both wrong and tragic.
People should owe based on their own decisions, not be born into debts based on the decisions of their forefathers. I cannot walk up to you and hand you a book on fishing and say, “Now you know how to fish because of me, so I want 10% of your profits from any fish you catch and sell.” Private citizens should be responsible for paying for the continued upkeep of services they use, even those used passively (e.g. police protection is still there whether you’ve experienced crime or not). They should not be believed to “owe something to the government” forever because of past accomplishments… those achievements were earned and paid for by their contemporaries.
The argument becomes even worse when someone tells a business owner, “Many of your customers could not afford your services if it weren’t for the Social Security/Medicare/welfare funds they receive from the government, so you are benefited materially by those things and should therefore be expected to pay for them.” That would be like me stealing $5 from your wallet and then saying it’s okay because I turned around and used it to buy a $5 sandwich you were selling.
Disagree if you choose, but know that the entire attitude being espoused here, that a person’s own achievements are somehow lessened because of some public collective foundation on which they are built, is not just opposed but REPULSIVE to those who believe in individual freedom and personal responsibility. AMC’s arguments not only say that a business owner’s hard work to create his or her business are invalid, but they say that it’s not even POSSIBLE for any individual to produce an accomplishment without already “owing” some or all of the fruits of that accomplishment back to society.
Adam, to turn the question in the initial post back to you: if you support the notion that a business is not built in a vacuum, but instead has an implicit debt to the society in which it operates… how do you quantify that debt? Google purchases servers and creates and supports services on them, accessed by users over the internet. With no internet there would be no Google, no profits. So if you posit that the internet is an ultimate creation of the US government, spawned out of ARPANet and so forth… does Google owe every cent of its profits back to Washington? If not, why not? Where’s the line?
Ultimately, any argument that insists that all citizens owe a permanent debt to our government, and that debt entitles the government to claim any amount of compensation it wants to use for any purpose that it wants, runs counter to the spirit of individualism and accomplishment that our nation cherishes, and sends us far afield from the system of free-market capitalism that has been crucial in becoming the land of innovation and prosperity that we are today.
@Robert Loman
Your fishing analogy sounds like exactly how the method patent system works. If a business or private individual came up with the novel strategy that you’ve learned rather than the government, you’d be forced to license the patent, wait until the patent expires, or find a different non-patented fishing method. I assume you acknowledge the importance and legitimacy of ownership of ideas that originate from businesses and individuals, so I don’t understand why you insist it shouldn’t apply to the government sphere. If taxes are considered a bundled payment for prior knowledge, in exchange open source use of the government’s research and services it seems like a fair deal.
Robert Loman –
So, you agree that they “didn’t build it”, but you want to talk about not wanting to pay taxes instead.
Got it.
Let’s try a different approach.
Apple is a very successful corporation. What contributed to its success? What are the “but for” causes?
Anyone dispute that Steve Jobs was a but for cause? If Steve Jobs had never been born, Apple would not be what it is today. In fact, I think we can safely say that while Jobs was a but for cause, he was significantly more important than Steve Wozniak. As technologically brilliant as Wozniak was, without Jobs, Wozniak would have been just another successful engineer — he had no vision, drive or willpower to turn Apple into what it became. Without Wozniak, Jobs undoubtedly would have found a Wozniak replacement and Apple would still have developed substantially the form we know it today.
Now, we can think of lots of but for causes that are not proximate causes. Undoubtedtely some Apple engineer had a brilliant idea one late night that was assisted by eating a slice of pizza, but while the pizza deliveryman might be an actual cause, he would not be proximate cause.
So the question becomes, in the relative hierarchy of but for causes that contributed to Apple’s success, where do we rank the government, which built the roads, setup the intellectual property legal system, and does the numerous things that take up 40% of GDP. No dispute that the government is a but for cause, in the sense that if Jobs would have been born in Somalia, Apple would not have been created. But where do we rank “government” in the hierarchy?
I see Jobs at the top of the hierarchy — he is THE proximate cause, and that is why Warren is so irksome. In her world, goods and services just happen. She does not see, or at least minimizes, the contribution of the entrepeneur who makes things happen.
Government has the power to take from A and give to B, but that does not create wealth. Government has the power to create institutions that permit entrepeneurs to create wealth, and that is a contribution (although it is a separate question whether the institutions would independently develop without the government stepping in), but it cannot compare to the vision and drive of the entrepeneur in the hierarchy of value attribution.
@David Shemano
The problem with your perspective is that you’re only looking at the government’s contributory role in the success of Apple. But do you think Steve would have had the wherewithal to create Apple had he not received a public education?
I think the basic divergence in the economically liberal/conservative ideologies is the issue of how much one’s success comes from their individual skill and effort versus the product of a community infrastructure and luck.
I found the comments to be most interesting. If you discount the extreme positions on both sides of the arguement (the outer 15%) , both sides will aknowledge that government plays a large role in our lives, for example the Ryan budget wants to limit the budget to 20% of GNP, that is still a big number.
I believe that the real questions are the following:
1. Who should be the driving force in the economy , the government or private enterprise?
2. Shoud government (federal, state, local) have more or less involvement in certain facets of our lives, like health care?
3. Are government workers overpaid?
bzhou, you assume of course that private education would have not fulfilled the role of public education. Just because government may offer some services does not mean private enterprise cannot or would not have done it better or more efficiently.
If community infrastructure had that big of a impact on individual success, then we wouldn’t be having this discussion as more people would be successful.
It take s special person to build a business. You need to balls (BIG ONES) to take the risk of starting a company. Most entrepreneurs will talk of the long hours, the lack of income initially, the stress, the stories of sacrifice (paying employees while you f*ck up your own personal credit), etc. Then at some point, with a little luck the business is successful. Many are just scraping by. Others may hit it big. But one thing is certain, it takes vision and commitment to do it. This is why most people are worker bees and entrepreneurs. They don’t have what it takes.
This is why the you didn’t build that comment pissed so many entrepreneurs off. It showed a complete lack of understanding of what it takes to be successful and what makes America the envy of the world.
It is easy to sit back collecting a paycheck when you never had to risk anything and speak from a position of envy.
What kills me is that even some successful entrepreneurs who are liberals can’t see how their own success was largely a result of their own individual initiative. I don’t know if it stockholm syndrome or what…
@bzhou: We’re not talking about a specific patentable method or optimization of a skill. We’re talking about the entirety of the country’s infrastructure and expenditures. Short of leaving the country to live somewhere else, it’s impossible as a citizen not to make use of them, and they would exist regardless of the use of any particular individual. Further, it’s not like the US government came up with the knowledge of building roads or printing money.
To the extent which the government uses public money in the form of grants to fund private research, the people should be entitled to some share of the fruits of that research, not just in the existence of some new invention but in the revenues generated by them. I don’t want to go too far afield and dive into the woes of our science and tech expenditures and our often ridiculous patent and intellectual property systems, but suffice it to say that we probably both agree there’s lots of room for improvement there.
Taxes should not be considered a bundled payment on prior knowledge. How does one begin to quantify the amount that should be owed on fundamental, centuries-old ideas… and why should it be owed to the government? Taxes should be considered a payment for the important continuing functions of our government.
@AMC: Show me where I say that people shouldn’t pay taxes. We shouldn’t pay AS MUCH tax as we do now, not even close to it, and we should probably consider better methods of taxation than an income tax. But the government has legitimate functions that cost money that has to be provided by the resources of the people in the form of taxation. That’s valid.
@David Shemano: That’s an excellent and well-formed summary of the argument here. I would go further and say that the government is providing roughly the same infrastructure and support to EVERY citizen. The difference between Steve Jobs and a failed or failing business owner has everything to do with Steve Jobs’ individual talents and motivation and nothing to do with the government (setting aside claims of favorable treatment and other things that certainly happen but aren’t a function of an ideal government).
@bzhou again: The “no one would be anywhere without public education” argument is equally spurious. Widespread education is a boon to our country, but there’s no natural order that says it has to be run by the government, or even that the government is doing a good job of running it. Saying Steve Jobs is Steve Jobs because of a public education is assuming that if our system didn’t exist, a self-motivated individual like Jobs wouldn’t have found any other way to educate himself, or that his family would not have been able to educate him on their own.
I wanted to respond to your post Adam, but it seems you already have a whole host of responses. Even the Austrian school admit that government is essential to provide a level playing field. It’s up to individuals what they do with that. Obama’s inartful comments (or were they just true to his beliefs) implied that individual success is just random happenstance. In essence, we have no control over our success. This discredits the incredible hard work, risk, and sleepless nights of every small business owner in America.
This discussion is getting silly. Absolutely no one is claiming that individual effort and skill doesn’t matter for business success. That’s not what Elizabeth Warren said, and while the President’s words could be taken to mean that, I doubt that was what he was trying to convey. Obviously hard work and talent matter.
Instead, Warren’s and the President’s comments were aimed at rebutting the basic GOP trope that government is the problem, that it is what is holding back business, the economy, and personal potential. Their comments were highlighting that government provides a lot of things that help business, and that no one no matter how talented, not even the new patron saint of entrepreneurs Steve Jobs, could have achieved what they did without the support of government (e.g., we have legal enforcements of patents, roads for shipping Apple’s products, payment systems for buying them, etc.). That’s not to deny that Steve Job’s was the proximate cause of his success, but to state what should be a pretty simple truth–he needed services that the government provides, just like Michael Phelps needed the pool. Government’s role isn’t to make Apple computers or win gold medals, but to provide the environment in which personal potential can be fulfilled. And that requires government spending and regulation.
Could some of the services be provided privately? Yes. But would they look the same? No. It’s hard to believe that private capital would finance the equivalent of our current public education system, as flawed as it is, would finance the enormous amount of bio-medical research funded by the government, would provide for equivalent public transportation systems, etc. There would be something in the place of government, but it would look really different, and I shudder to think of the distributional implications. (See my Coasean Republic post here: http://www.creditslips.org/creditslips/2012/06/the-coasean-republic.html).
Are there some bad regulations? Well, yes, of course, but there are also some bad absences of regulation. Warren and Obama were simply pushing back against the demonization of government. To read their comments as a denigration of the entrepreneurial spirit is to be looking for an animus that doesn’t exist.
It’s like playing baseball. You lose as a team or win as a team but you always have an “at bat”. That’s where you can demonstrate your skills as an individual. Did you pay for your uniform…the stadium you play in… the TV station you shown on…the country your playing in..The roads you traveled on to get there? NO…They and by extension we invested in those things..I wonder though where some of these business would be without concessions from local and federal taxing authorities….hmmmm. Utilities, labor, zoning…on and on.. There is no “I” in team… unless your Ayn Rand… maybe there is in German but I’m no linguist..
@russ
Education is a classic example of a good with positive externalities, meaning that not enough of it would be provided in a private market. That’s a thesis that’s pretty much universally recognized among economists. Given that Steve Job’s adopted parents couldn’t afford to pay for a year of private college tuition, I find it hard to believe that he would have received a high quality education in a system where the quality of instruction you receive is perfectly correlated with the expense of tuition.
“If community infrastructure had that big of a impact on individual success, then we wouldn’t be having this discussion as more people would be successful.”
This would be more persuasive if you provided an iota of evidence to back it up.
@ Bzhou: “I think the basic divergence in the economically liberal/conservative ideologies is the issue of how much one’s success comes from their individual skill and effort versus the product of a community infrastructure and luck.” Your words, not mine.
Those of us on the right believe the the bulk of one’s success is individually obtained/earned. No one is arguing that successful people did not have help along the way whether it is through mentorship, great teacher, parents, etc. An of course, there is always a sprinkling of luck. Although, luck is best defined as when opportunity and preparation meet.
It appears from your quote, you are arguing that successful people primarily owe the bulk of their success to someone else. Given that everyone has access to public education, roads, and all kind of other government services that we supposedly didn’t build, you would expect to see more successful people would you not? If the government provided infrastructure were so important to individual success, why aren’t more people successful since we all have access to teh same infrastructure?
As someone earlier posted, simply owning a swimming pool does not make one Michael Phelps, nor does the availability of public golf course create a Tiger Woods. The Warren argument is basically saying that UPS/FedEx owe their business success to the US Government because of publicly financed roads.
@Adam: Michael Phelps needs the pool. Michael Phelps pays to use that pool. Michael Phelps doesn’t have a financial debt to the person who invented the pool.
A lot of the Republican rhetoric is obnoxious. They speak in outrageous overstatements and generalizations to “fire up their base” and try to convince independents of their narrative with volume rather than substance. The “demonization of government” falls into this category.
But that doesn’t change the fact that even if we can both agree that a combination of personal motivation and public infrastructure are both necessary to generate success, we probably have a vastly different view of the extent of said infrastructure that’s required. It’s easy to justify roads and bridges and policemen. Harder to justify the government being in charge of people’s retirement savings or health care expenses… to the massive extent which it’s involved right now.
Michael Phelps doesn’t pay more to use the pool because he’s the most successful swimmer, either. If the only way our system works is to take progressively more and more from those that have generated the most, and we’re STILL running a massive deficit, it could be a sign that we’re spending more than we should.
Here is what I get from your post: Entrepreneurs think they are better that non-entrepreneurs – and therefore shouldn’t have to pay taxes.
You know what? That is what pisses off a large part of the rest of the country.
http://news.yahoo.com/most-americans-rich-dont-pay-enough-taxes-160833705.html
“I created a medical billing company. I am a job creator (All hail! Kiss my ring!), my individualism trumps any social compact. The rest of you are citizens of a lesser god. Any one who disagrees – it’s envy I tell you! Pure envy!”
People in the military think you are a coward of a lesser god.
Teachers think they are under appreciated.
Doctors think they walk on water for the healing work they do.
Ministers know their work is even more important, saving souls, not just treating the clay.
Come to think of it – we all think we are special, and should be treated special!
Entrepreneurs already have laws that protect them – like, for example, they can file bankruptcy on their business debts without regard to their income (the Means Test doesn’t apply to those with primarily business debts).
The question is – how much do the rest of us non-entrepreneurial scum have to give before you are happy?
The United States is already undertaxed relative to other countries based on the percentage of GDP that goes to taxes.
http://www.usatoday.com/money/perfi/taxes/2009-11-25-oecd25_ST_N.htm
What is the protocol to be for the religious leaders, doctors and nurses, teachers, the merely self-employed, the members of the armed services, the guy who builds the roads, and the other worker bees that you see only as business expenses that need to be minimized?
How many times do we kiss your ring? Is four times enough?
As we bow abjectly, what is the appropriate distance between our foreheads and the floor? Should we scrape out noses to be sure?
Please tell us how to serve you.
1. I’m all in with Adam’s 12:20 post.
2. I think we tried all-private education once. It left the vast bulk of the population illiterate. The public education system gave the US (Read: US businesses.) a huge competitive advantage over other countries due to a largely literate workforce.
3. It is true even the Austrians accept that government is needed to assure a level playing field. Much of their model is based on access to information and access to markets, and if those are blocked by participants, the models fail.
4. I would rather have my health care and retirement savings controlled by a government in DC than by an insurance company or bank in Grand Cayman.
@ Adam:
“Government’s role isn’t to make Apple computers or win gold medals, but to provide the environment in which personal potential can be fulfilled. And that requires government spending and regulation.”
This is the fundamental disagreement. Some believe providing an environment in which personal potential can be fulfilled means government getting out of the way while others believe regulation and government spending is the way.
@Robert Loman: I don’t know if Michael Phelps pays to use the pool. It might be a municipal pool like those in my towns. Who knows how many even better swimmers aren’t swimming because of the lack of private investment in pools in their communities? (And how many drownings occur because of lack of swimming education…)
@Russ. Well put. Providing the environment for fulfillment of personal potential sometimes means getting out of the way and sometimes means getting involved. I’m fine with disagreement about when, but not with an absolute position that government always needs to get out of the way.
@russ
If you had one thousand genetically cloned, identical Steve Jobs and sprinkled them across different families in different communities in the US, I bet only the one that actually existed would have been able to create Apple into anything close to its current form. That is not to say that he wouldn’t have been otherwise successful in different contexts. Maybe in most of them he would have been successful, but you have to recognize the amount of serendipity that separated him from being a millionaire and a multi-billionaire.
@Robert Loman
I don’t understand your insistence on the need to develop a formula based tax that reflects government contributions to individual success. I agree that it’s difficult to quantify numerically, in the same vein as utility or happiness, which we know exist but can only measure relatively.
Query:
What are the odds that Steve Jobs could have created Apple in, say, Nigeria 35 years ago? I would say it was pretty low. And why not? Because Nigeria 35 years ago did not have the infrastructure.
I would say this is like the “leading a horse to water” thing. Somehow the water had to get there. Similarly, Steve Jobs had to have the proper surroundings to succeed.
I cannot imagine a world without Apple or Microsoft. But I am pretty sure our country would have continued to advance, even if Steve Jobs or Bill Gates had not stepped up to the plate.
MT says “Quantification is lacking. The cost of police, fire, courts, defense . . . is small”.
That’s not true for defense. The defense budget is roughly $700 billion to $1.2 trillion, depending on what you count as defense (veterans benefits are sometimes moved into a different category), or 25% of the federal government’s budget.
It is by far the single biggest spending category for the federal government. Defense spending used to be an even higher percent of federal spending in the WWII ear through the Vietnam war, so a very large percent of debt service is actually legacy costs from previous defense spending.
MT also writes:
“A a road or bridge etc may have been built and the workers paid for theier work years ago. Its continued existence does not mean that for the rest of eternity every generation has to pay again for that.”
Roads and bridges (and public transit and airports and sea ports) need to be maintained, and preferably upgraded to improve safety and efficiency.
According to the American Society of Civil Engineers, the U.S. is $3 trillion behind on basic infrastructure maintenance, and much of our infrastructure base is in danger of collapsing from neglect.
This is not news to anyone who has travelled to Europe or Asia. The U.S. looks like a third world country when it comes to infrastructure?
Why? Because libertarians and conservatives think that paying for infrastructure once, in 1940s and 1950s, should last forever.