Regarding Obama’s “you-didn’t-build-that” comment back in July, I explained why that attack on entrepreneurs and small business owners was misguided.
And I also shared some humorous cartoons on the topic.
But it is true that no entrepreneur produces a product without help from many others. But what the President apparently doesn’t understand is that almost all of the real help comes from voluntary and decentralized exchange in the private market.
This CEI video is a good introduction to this spontaneous process.
And if you want to look at the topic from a different perspective, this video helps to explain how we often get much more than we pay for in a competitive market economy.
There’s also a moral argument presented in this video from the American Enterprise Institute.
Needless to say, Walter Williams is always worth reading to understand the difference between markets and statism. And here’s some good real-world evidence about the benefits of better policy.
International Liberty 
[…] The Real Version of “You Didn’t Build That” […]
[…] The Real Version of “You Didn’t Build That” […]
[…] The Real Version of “You Didn’t Build That” […]
[…] The Real Version of “You Didn’t Build That” […]
Pretty smart, for a Bulldog.
Actually, this video is how economics should be taught! Thank you for sharing it. I’m posting this on my Facebook…I wonder what kind of comments it will get.
Great video. I particularly like the way it is made with that reassuring Cumbaya voice, we’re-all-in-this-together narration that is so typical of liberal mandatory compassion videos, while giving the opoosite message.
But to pick on a cousin theme,
What if you DID really aspire to build pencils for the world. What if you were one of the fewer greedy enough, that what you made, after your efforts are tax-trimmed by fifty percent, was still enough for you to leave your family every morning to let your children be raised by baby-sitters?
Would you still be able to do it? Would you still succeed?
With a workforce demotivated by welfare guarantees — given unconditionally, whether one works hard or not, or with all his brain cells or a few — and managers and executives burdened by the same half-for-the-people tax rates, YES, you would STILL be able to produce a pencil. But it would not be as good or as cheap as some other pencil produced somewhere else in the world where people operate under steeper, less blunted effort-reward curves. You would thus FAIL, just like one of the many French Steve Job’s failed to produce an Apple and after a while even stopped trying and that is why you’ve never heard of him. People worldwide, especially poorer people, would not by your pencils, and why should they pay more for them? They are already poor.
After a few pencil and other failures, you, your employees, and the people around you at large, would register the negative experiences. People would start not even attempting. “It’s not worth it, a lot of hard work and most of them fail anyway, not competitive, take the less ambitious road, live on the welfare programs, top it of with a little bit of unexceptional work, focus on the non-pecuniary aspects of your family life and be happy” (*). That would become the prevailing advice, and indeed, the entirely rational and justified wisdom in such an environment. A few heroes, a few mother Teresas, would keep working, and, alas, even enthusiastically so. But surrounded by a populace mired in low effort-reward curves they would not be able to accomplish much.
Meanwhile some of the still competent ambitious people would also change focus. With (an initially ) large pot of communitarian money collected in the public trough, quite a few competent people would find it more fruitful to switch focus and devote effort into getting their hands in the public trough rather than launching a more or less futile attempt to compete in global markets. Those will be the future founders of the new Solyndras, wind farms and GMs etc. of the future, at least as long as the public trough of a comparatively declining economy can support this further decrease of economic efficiency by switching to more expensive energy that makes the final product even less competitive worldwide during the declining years of the once outlier prosperous empire.
But the public trough will empty, because there will no longer be any real force filling it. Once companies staffed with employees operating under flatter effort-reward curves fail to compete in the global marketplace (**), once all the money that could be printed has been printed, once the promises of joining the forces of low-motivated employees into unimaginative homogenized public projects fail to produce something commensurate to the effort, once… once.. the trough will run out of funds. The public troughs of countries where the public lets exceptional people keep most of their money will become larger (per capita) than the troughs of highly redistributive countries where a larger proportion of effort is put into the public trough.
So, no the future will not dawn with Hannity climbing the gallows as yesterdays cartoon ridiculed. It will just be a slow (but precipitous on a historical timescale) wretched decline.
Alas, the only thing the average voter sees is “I have standard of living in the top 10% worldwide but I want to climb back up in the top 8%, I want more”. Well, guess what? So do five billion people in the still to develop world and they don’t even have one car. And, unlike you, a significant number of them are letting the most competent members of their societies keep the fruit of their labor. So once you have lost your top spot in overall aggregate motivation and business competitiveness, then you, your current 10% top standard of living, aspiring top 8% standard of living, and the 98% of your comrades will all be toast, declining into the dustbin of history, as the once outlier prosperous country is being absorbed into worldwide averagedom.
(*) That mentality is not quite as pervasive in America. But go to Europe and you will see how pervasive it is. Under the same incentives, after some brief cultural inertia, Americans will eventually react the exact same way. There is nothing special in American human DNA, most of which comes through historically recent immigration from the rest laggard world anyway.
(**) few people realize the motivational serendipity of a point three billion citizen America having outcompeted a seven billion world, especially when America has consistently been the most backwards laggard in implementing social programs (coincidence? – we’ll find out as America has well embarked in copying the rest of the world).