TGIF: "You Didn't Build That"

Remember Barack Obama's profound 2012 campaign speech about success? Here's part of what he said:

There are a lot of wealthy, successful Americans who agree with me -- because they want to give something back. They know they didn’t -- look, 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, well, 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 hardworking 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 in 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.

The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together. There are some things, just like fighting fires, we don’t do on our own. I mean, imagine if everybody had their own fire service. That would be a hard way to organize fighting fires.

So we say to ourselves, ever since the founding of this country, you know what, there are some things we do better together.... We rise or fall together as one nation and as one people, and that’s the reason I’m running for President—because I still believe in that idea. You’re not on your own, we’re in this together.

Obama was no outlier. Plenty of people would be willing to give that speech today, maybe even Donald Trump.

Where to start? Obama said that he knows wealthy people who want to "give something back." Why? Presumably because of their wealth and success. That makes no sense. If these people made their wealth by producing attractive goods for consumers (which is how most wealthy people get wealthy), then what's to give back? We consumers did not give them money as a favor. We engaged in voluntary exchange. We gave up $X to get product Y because we prefer what we got to what we gave up. They benefitted and we benefitted. Double profit, double "thank you," as John Stossel says. That's how trade works when it's uncoerced. No debt; nothing to give back. End of.

Second, superstar entrepreneurs likely are smarter and more perceptive about the future state of the market than most other people. I doubt they go around bragging about it or minimizing the role of "good breaks." They surely know that things other than sheer intelligence figure into success. But let's not be unrealistically egalitarian about it. Some people are better suited to be entrepreneurs than others. Many of the outside factors that Obama named were also available to others. Why didn't those others succeed?

Next, what's this buncombe about all of us rising or falling together? When a business fails to satisfy us, it falls. Its owners, managers, and employees have to find other work. Its investors lose out. But the rest of us have not fallen. The failed businesses's material factors are now available to produce things we want. The discharged employees are now available to make other things we want. Where's the general failure? Obama spoke collectivist nonsense. Something does—or should—unite people, but it's not what Obama had in mind. They have a stake in a free society, that is, a society in which the government does not try to manage their lives and market relations.

The rest of the passage is Obama's elaboration of this thesis: "If you’ve been successful, you didn’t get there on your own." Was he so ignorant of the case for laissez faire that he thought this was news for defenders of the unmolested market economy? Was he having a laugh? Ludwig von Mises, one of the 20th century's premier champions of individual freedom considered calling his economic treatise "Social Cooperation." That is the second most common phrase in Human Action, right behind "division of labor," which Mises sometimes called the "social division of labor."

So Obama was tackling the scrawniest of strawmen. He was being a demagogue. No market advocate ever suggested that lucrative businesses were built in isolated shacks in rural Montana. Businesses were always described as embedded in the complex network we call the market economy.

I modestly suggest that Obama and every one of his ilk read I, Pencil. That's Leonard E. Read's 1958 essay explaining why no one person can make something as commonplace as a pencil. On the contrary, it takes incredibly complex worldwide cooperation, and it happens without a central authority. The price system, rooted in private property in the factors of production and in trade, directs the myriad self-interested activities that entrepreneurs, under no one's orders, combine to produce the pencil. No kidding. I. Pencil was written three years before Obama was born. Read, founder of the Foundation for Economic Education, had a different lesson in mind from Obama's ignorant message. The former president had a collectivist, interventionist message. Read's was an individualist, free-market message. Read for the win.

Obama named particular things, such as the internet, which got started or built under government auspices. But, as usual, he overlooks what is not seen. (Also see "I, Website.") Obama thinks that if the government does not do something, it does not get done. But if the government did not build roads, bridges, airports, ports, schools, and the internet, would those things never have come into being? That's beggars belief. We know it's not true. People privately built public infrastructure before the government did. It didn't happen "on its own." Profit-seeking individuals and their free associations made it happen.

Businesses that relied on the infrastructure paid for its services. "Take what you want, said God, and pay for it," the Spanish proverb says. That's the market; no need for coercion. Why the mystery? Obama ignored all of the amazing things that free and private enterprise has created over the centuries, not without any assistance, but without government assistance. If he knows better, he's a demagogue.

Here's how Ludwig von Mises addressed the issue in Human Action in 1949, long before Obama  was born (but the year I was born):

The interventionists and the socialists contend that all commodities are turned out by a social process of production. When this process comes to an end and its fruits ripen, a second social process, that of distribution of the yield, follows and allots a share to each. The characteristic feature of the capitalist order is that the shares allotted are unequal. Some people—the entrepreneurs, the capitalists, and the landowners—appropriate to themselves more than they should. Accordingly, the portions of other people are curtailed. Government should by rights expropriate the surplus of the privileged and distribute it among the underprivileged.

Now in the market economy this alleged dualism of two independent processes, that of production and that of distribution, does not exist. There is only one process going on. Goods are not first produced and then distributed. There is no such thing as an appropriation of portions out of a stock of ownerless goods. The products come into existence as somebody’s property. If one wants to distribute them, one must first confiscate them. It is certainly very easy for the governmental apparatus of compulsion and coercion to embark upon confiscation and expropriation. But this does not prove that a durable system of economic affairs can be built upon such confiscation and expropriation.

Before the interventionists dispense more advice, they might learn some economics.