Friday, August 31, 2012

Tagging along

I'm going to jump on the bandwagon and comment on the "you didn't build that" comment. I usually give people the benefit of the doubt and look at statements like these in the best possible light. I think that the president did mean that private businesses didn't build the infrastructure that they use, and of course he's right. Even in the broader sense that every successful person needed the work of other people to become successful is correct. But that doesn't mean that successful people have no right to their wealth, or should not complain when the government takes more money from them.

The fundamental insight of economics is that no transaction will take place unless everyone involved thinks that they will be better off afterwards. So, successful people, whether they are buying or selling goods and services, are making someone better off with each transaction. You can't build a mansion with out lumberjacks, but you can't be a lumberjack if no one wants lumber. Any claim that a lumberjack may have on a millionaires mansion, that millionaire has just as much claim on the lumberjacks ax and flannel.

The biggest problem I have with the president's statement is the misunderstanding of what is necessary and what is sufficient. Yes, roads are necessary for businesses, but not sufficient. What is sufficient to build a business? You need all the goods and services produced by others, for sure, but the thing that makes a business a reality is the choices, drive, determination, and all that good stuff of the people who "build" the business. All those goods and services will be there whether the business is "built" or not, but the business will only be built if the someone chooses to. That choice is what is most important and is what gives businessmen the right to their profits, not anyone else.

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