Thursday, July 16, 2015

Who Built the Roads in Galt's Gulch?

During the 2012 Presidential campaign, President Obama delivered a speech that enraged conservatives.  Obama pointed out—as he had done on several previous occasions—that those who strike it rich in America owe some portion of their success to society and to the contribution of the government.  In what would later be dubbed Obama’s “You Didn’t Build That” speech, Obama argued that:
“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 immediate reaction from the Romney Campaign was, naturally, to claim Obama said something that he didn’t—namely, that entrepreneurs don’t create their own businesses.  The Republican National Convention even went so far as to craft its stated theme (“We Built That”) around this fabrication.

The good news is that my blogging counterpart David Weinberger appears to reject this clearly false line of reasoning, in a new post where he questions why Elizabeth Warren—whose speech inspired Obama’s remarks—would make such an obvious point in the first place.  “All of us—including the factory builder—pay for roads, schools, and police and fire departments, and therefore “pay it forward,”” David writes.

David accuses Warren and Obama for attacking a straw man, but that’s because David is answering a different question.  “The relevant question,” David says, “is why some people innovate and create. Is it because there are public roads and police departments? No.”  But Warren and Obama weren’t answering why people innovate and create.  They were answering how the physical and social infrastructure allows businesses to flourish.  Still, if such statements are so obvious, why did Warren and Obama make them? 

One of the core philosophical issues dividing the Right and Left today is wealth and income inequality.  The Right considers the distribution of wealth and income to be inviolable, or at least mostly fair.  The Left, including Warren and Obama, rejects this premise, arguing that the market economy hardly distributes wealth justly, that America is not a meritocracy.  This is the reason why Obama, in the lead up to his “you didn’t build that” line, ridiculed wealthy individuals who think their success is entirely the product of their own intelligence and hard work:

“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.”
This philosophical divide between the two parties manifests in how the two sides approach policymaking and how they think about the problems America faces.  You can see it in how the Right frames issues—dividing society into “makers and takers” and calling wealthy individuals “job creators”—and how that mindset is reflected in the policies it favors.  As Texas Governor Rick Perry put it during the 2011 primary: “America is not going to move forward until we remove restrictions of over-taxation, over-regulation and over-litigation on the job creators and free them so the jobs can be created.”  In other words: boost the earnings of the wealthy, in the form of tax cuts, at the expense of the middle-class and the poor, in the form of spending cuts to the social safety net.  To be sure, this is precisely what Paul Ryan’s 2012 budget proposal—which Warren and Obama were surely speaking to, at least indirectly—did.

By contrast, the Left views society as a collaborative structure, where the value in the economy is created together.  Of course, that’s not to say that the economy shouldn’t reward merit—as Warren so eloquently put it, “You built a factory and it turned into something terrific or a great idea - God bless! Keep a hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”  But this is why Obama constantly calls for things like a bigger social safety net, infrastructure improvements, education reform and, yes, a little more from society’s winners to fund such investments (i.e., all the things the Ryan Budget proposed to cut).  When these suggestions are met with cries of “class warfare”, well, you get Obama throwing around phrases like “you didn’t build that.”     

Obviously, my belief is that Obama and Warren have got this right.  In the words of The Newsroom’s Sloan Sabbith, “Our difference in opinion isn’t political; it’s religious.  I’m an economist and in my church it’s your customers who are the job creators.”

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