“You Didn’t Build That” — Yes, We Did!

by Burt on July 18, 2012

“If you’ve got a business–you didn’t build that. Somebody else made that happen.” Thus spoke President Obama last week about American entrepreneurs. They are, the president suggested, beholden to teachers, road-builders, bridge-builders, and other government workers. Therefore, the wealthiest 1%, which now pays 40% of all income taxes, should pay more.

What a breathtaking line of thought. What’s true about it is that successful people do owe something to others, but usually those others are parents, pastors, coaches, and other business partners–those in the private sector. True, teachers are helpful, but they do not work for the federal government–and until recently had no job contact with the federal government.

In fact, the federal government, more often than not, has harmed and not helped our nation’s best entrepreneurs. Not just through regulations, taxes, tariffs, and inflating the currency. But by targeted hindrances. John Jacob Astor, the first American to be worth $10 million, bought and sold furs, but the government created a competing company to buy and sell furs. That government-run company was ultimately sold out at a loss, but it hindered Astor’s business by trying to dictate what Astor could sell to the Indians for furs, and then by trying to impose special license fees for Astor’s business.

Cornelius Vanderbilt, the first American to be worth $100 million, made his start in shipping, but the federal government gave annual subsidies to another company, the Collins Mail Steamship Company, and even built the ships for Mr. Collins. In spite of that help, Vanderbilt built better ships, charged customers less, and survived that hindrance from the federal government.

James J. Hill built the Great Northern Railroad with no federal subsidies. And his high quality transcontinental railroad never went broke. But the federal government chose to subsidize the building of the Union Pacific, the Central Pacific, and the Northern Pacific Railroads, all of which used their federal aid to compete with Hill. The Union Pacific went broke several times and cost the taxpayers more than $30 million. Then after Hill established his supremacy in the railroad business, the federal government broke up his company with the Sherman Anti-Trust Act, after Hill had bought the failed Northern Pacific Railroad. And then the federal government used the Hepburn Act to force Hill to change the rates he charged–which were already incredibly low.

The good news in all this is that we Americans have built enough freedom into our system that thus far our entrepreneurs have been able to overcome the many obstacles thrown in their way by the federal government. Our entrepreneurs look at many government programs and just groan, saying to our politicians, “You didn’t pass that.” But they did, and we owe our entrepreneurs a great debt for overcoming those hindrances and creating so many improvements that allow us to enjoy our lives more fully.

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