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Barack Obama recently proved once again that he is indeed a Proud
Marxist (as Yuri Maltsev, former advisor to Mikhail
Gorbachev, calls him) when he argued that successful American entrepreneurs
"didn’t build" their businesses on their own. Government
bureaucrats were mostly responsible for their success, the Marxist in the
White House asserted, citing government-run schools, roads, etc. Like all
Marxists, Barack Obama is belligerently ignorant of economics and is in
denial of much of economic reality.
No successful business person believes that he built his business
completely on his own, without help from anyone. Obama’s claim is a straw-man
argument. Every business person collaborates day in and day out with
suppliers, customers, employees, managers, accountants, marketers, bankers,
investors, and many others. As Adam Smith wrote in his famous 1776 treatise, An Inquiry into the Nature and
Causes of the Wealth of Nations (1937
Random House edition, p.422):
In civilized society [man] stands at all times in need of the
cooperation and assistance of great multitudes, while his whole life is
scarce sufficient to gain the friendship of a few persons . . . . Man has
almost constant occasion for the help of his brethren, and it is in vain for
him to expect it from their benevolence only. He will be more likely to
prevail if he can interest their self-love in his favour,
and show them that it is for their own advantage to do for him what he
requires of them. Whoever offers to another a bargain of any kind, proposes
to do this. Give me that which I want, and you shall have this which you
want, is the meaning of every such offer; and it is in this manner that we
obtain from one another the far greater part of those good offices which we
stand in need of. It is not from the benevolence of the butcher, brewer, or
the baker, that we expect our dinner, but from their regard to their own
interest . . . . Nobody but a beggar chooses to depend chiefly upon the
benevolence of his fellow citizens.
As for the role of government, history proves that it has always been
the mortal enemy of free voluntary exchange and the generation of prosperity
through the free market. As Ludwig von Mises wrote
in his 1956 book, The Anti-Capitalistic Mentality,
"A nation is the more prosperous today the less it has tried to put
obstacles in the way of the spirit of free enterprise and private initiative.
The people of the United States are more prosperous than the inhabitants of
all other countries [as of 1956] because their government embarked later than
the governments in other parts of the world upon the policy of obstructing
business."
Government spending at all levels accounts for some 40 percent of GDP,
signifying that the American economy is at least 40 percent socialist. The
socialist "public" school system is a disaster in every city with
only a relatively few affluent suburban enclaves of success. As such, the
American workforce has been dumbed down, year in and year out, to the
economic detriment of everyone. The socialist "public" roads are
responsible for more than 50,000 highway deaths each year, which is hardly a
good record. The welfare state has destroyed the work incentive of millions
and caused the break-up of untold numbers of families. (The basic mechanism
here is welfare and child support payments that are generous enough to create
millions of deadbeat dads who abandon their children without the social
stigma of having left them in dire poverty).
Social Security reduces incentives to save for one’s own
retirement. Lowered savings rates lead to less capital investment and,
consequently, slower economic growth. All other government spending programs
enrich the parasitic political class while impoverishing the producer class.
The long history of aggressive militarism by the U.S. government has always
ratcheted up governmental powers at the expense of liberty and prosperity
while enriching the military/industrial/congressional complex. The system of unlimited
democracy that Americans now slave under can be defined as follows: Moochers
and parasites hiring/electing professional looters to steal from producers.
The Fed has always generated boom-and-bust cycles in the economy, and
then blamed the problems it created on the free enterprise system. After the
Greenspan Fed created The Great Recession the current Fed
"godfather," Ben Bernanke, went on television to arrogantly sneer
at the notion that markets and the free enterprise system should or could be the
way out of the depression, while arguing for the granting of vast new
regulatory powers for the Fed.
Every business in America is now strangled by tens of thousands of
pages of regulations in The Federal Register, not to mention reams of
state and local government regulations. The pettiest, most
selfish, and most ignorant local political hack has the ability to use
government regulations to shut down billion dollar construction projects on a
whim. A recent example of this is how a single member of the West Palm Beach,
Florida city council caused a stoppage of the building of a major outlet
shopping center in that city by demanding that the construction company that
is building the shopping center hire more "local firms." It is a
good bet that the city councilwoman in question has a relative who is a
construction contractor. Such
acts are nothing more than legalized extortion.
The more a business person must deal with regulations and regulators,
the less time he has to devise ways to improve his products, cut his costs
and prices, and create new products. Government regulation crowds out
entrepreneurship, wealth creation, and job creation while imposing
immeasurable costs (in time and money) on private businesses.
There are a few exceptions, but for most of the past 120 years
government regulation of business has been a tool used by large corporations
to stifle competition from their smaller competitors and to create barriers
to competition from potential competitors. The very first federal regulatory
agency, the Interstate Commerce Commission, founded in 1887, was used first
by the railroad industry to cartelize the industry as a government-controlled
price-fixing cartel. It then did the same thing for the trucking industry.
The Civil Aeronautics Board was similarly "captured" by the airline
industry, which enjoyed a government-enforced cartel price-fixing monopoly
for half a century before it was deregulated in the late 1970s. The entire
regime of "public utility regulation" has been one big government-run
cartel or monopoly scheme since the late nineteenth century. This all goes
under the rubric of the "capture theory of regulation" in the
discipline of economics. (See Butler Shaffer, Restraint of Trade;
and Gabriel Kolko, The Triumph of Conservatism).
Government also deals a death blow to the institution of capitalism
with its massive bailouts of failing businesses as an additional form of
corporate welfare. Capitalism is a system whereby profits and losses are
private. Serving customers well leads to profits; failing to do so leads to
losses or bankruptcy. Socializing the losses while keeping profits private
encourages reckless risk taking and sloppy business management and causes
"private" businesses to operate more like government bureaucracies.
In short, Barack Obama’s ignorant "you didn’t build
it" remark did two things: First, it displayed remarkable economic
ignorance; and second, it asserted exactly the opposite of the truth with
regard to the role of government in the economy. In today’s world
American businesses that are successful in the marketplace have become so despite
government intervention, not because of it.
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