Two fine points

A few weeks ago, I wrote about a fine point made by Thomas Sowell regarding Obama’s “You didn’t build that” comment and, in general, the idea the we always owe something to “society” or “government” because government provides a plethora of infrastructure.

Sowell wrote:

Did the taxpayers, including business taxpayers, not pay for that road when it was built? Why should they have to pay for it twice?

Don Boudreaux adds to Sowell’s fine point in his column this week in the Pittsburgh Tribune-Review (bold mine).

Sure, Wal-Mart uses government-built highways to speed its inventories to its stores. But the fact that Wal-Mart would be unable to operate without the highway system doesn’t make those highways a uniquely special input to which Wal-Mart owes all, or even much, of its success.

Wal-Mart would be equally unable to operate without farmers to grow food to feed its truck drivers — or without textile producers to supply clothes for those drivers — or without oil companies to fuel its fleet of trucks.

Would Obama therefore conclude that Wal-Mart owes some special, open-ended obligation to oil companies? Would he insist that, if oil companies now squander their revenues, Wal-Mart and other retailers are morally compelled to chip in to help oil companies get back into the black?

Does Wal-Mart owe a special, open-ended obligation to oil companies?

If an oil company exec gave a speech suggesting that the oil his company provides is so valuable that they should be able to come along after someone has bought and used oil to make a profit and charge them again, that exec would be laughed off stage. Most people have a sense that oil has a price and once price has been paid, there’s no further obligation to the oil company.

So, why wasn’t Obama laughed off stage? Why have I only heard two economists point out that the folks using the services provided by government have already paid for the use of those services?

Boudreaux goes on to make another fine point, often overlooked or treated with much skepticism by folks who don’t give this a lot of thought:

Among the kinds of infrastructure that have, in fact, been supplied successfully by private businesses are city streets, highways, sewage systems, formal education, policing, money and commercial law. Government provision of such infrastructure, therefore, cannot be read as evidence that government’s role on this front is necessary.

If government failed to build highways to connect, say, Atlanta to Pittsburgh, private firms almost certainly would. (It’s easy to collect tolls from drivers who use highways.) And likewise for nearly any other pair of cities in America. So in what way is any actual, government-built highway necessary for any private entrepreneur’s economic success? None — if (as is likely) private enterprise would have done what government instead did by crowding out private efforts.

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7 thoughts on “Two fine points

  1. Obama has the cause and effect backwards. Wal-Mart doesn’t come into existence because a road happens to be there. There are PLENTY of places where roads are plentiful but businesses and residences are few. Roads are built where people happen to want to go (which is usually to a Wal-Mart or other such successful business). There are virtually *no* places where businesses and residences are plentiful but there aren’t any roads to connect them.

  2. Two more fine points:

    Obama makes it sound like “the people” are unilaterally doing WalMart (and other businesses) a favor, by providing infrastructure so that WalMart can unilaterally benefit from that infrastructure, but he fails to address the fact that the only reason WalMart succeeds is because WalMart is providing something that “the people” obviously want more than the money “the people” traded to pay for that infrastructure. WalMart and other businesses receive no more benefits FROM “the people” than they provide TO “the people”.

    In claiming that “the people” are really entitled to the means of production because it’s really them who built it, Obama’s rhetoric in urging the “proletariat” to rise up and support his administration in taking from the “bourgeoisie” is strangely similar to – no, it’s precisely the same as – that of the late 19th and early 20th century socialists, e.g. Marx, Lenin, etc.

  3. Pingback: The iPad Tax | Our Dinner Table

  4. a buddy posted this thomas paine quote when we were dithering about the original speech:
    .
    “Personal property is the effect of society; and it is as impossible for an individual to acquire personal property without the aid of society, as it is for him to make land originally.

    Separate an individual from society, and give him an island or a continent to possess, and he cannot acquire personal property. He cannot be rich. So inseparably are the means connected with the end, in all cases, that where the former do not exist the latter cannot be obtained. All accumulation, therefore, of personal property, beyond what a man’s own hands produce, is derived to him by living in society; and he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came.”

    -Thomas Paine, Agrarian Justice Part Three

    unless there really are _no_ wolves at the door. im not an alarmist, but it may be naive to think that without a common defense, our ‘territory’ would be inviolate. im not sure.

    • Hi dave,

      Did you let him know that in our society they already paid what they owed and a pretty fair amount, too, and that the only reason anybody is talking about them paying more is because our elected officials have been horrifically irresponsible?

      Or that ‘gov’t’ isn’t the fairest representative of ‘society’?

      ‘”…is derived to him by living in society.”
      The key question that Paine doesn’t address here is how is it derived?

      If it is derived by producing value for others in society then it’s a dangerous oversimplification because it leads us to ignore the value they created for us. In other words, before they ever paid a dime in taxes they’ve already ‘given back’.

      Few folks are talking about shrinking gov’t to 0. That’s a red herring that keeps from talking about the gross irresponsibility of the politicians society elected.

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