Tom Smith on “You Didn’t Build That!”


But here’s the question to ask — how many more successful businesses, inventions, products, services, toys, tools, insights, and just plain fun would there be, if government did not in the first place make it so ridiculously difficult to start a business and keep it going? I don’t see our young president taking credit on behalf of the state for all the failures it help cause, all the ideas that never got off the ground because the regulatory hurdles were so high, or all the established companies that never had to face competition because they had managed to get their rents written into law.

Not to mention the times when government directly destroys businesses. For example, my paternal grandfather opened business after business that failed (but always eventually paid his debts to his creditors, so he was always able to start again). He finally achieved some modest success in his forties. New York City, however, had other plans, and took his business via eminent domain, paying a nominal sum for his inventory and precisely nothing for his most valuable asset, goodwill. Lord knows how many thousands of small businesses were destroyed by (generally) misconceived urban redevelopment projects, with inadequate compensation to their owners. I don’t know the full details, but would anyone be surprised to learn that the developers who built on the condemned land had a lot more political power than the displaced small businessmen? That’s government, too.

My dad also owned a small business, a dental practice in Queens. In his business life, the New York City government existed almost entirely to hassle him, preventing him from kicking out deadbeat tenants living above the practice who used city-provided legal aid attorneys to avoid paying rent for months on end (but had plenty of money for drugs), sending inspectors who informed him that they were ordered to find at least one major (and costly) violation “so how ’bout I just write you up for inadequate ___ [a violation that didn't exist] and we can both call it a day,” ticketing him $100 plus if a stray plate from the pizzeria next door blew past his door on the way down the block, and so on and so forth.

Sure, the government can provide useful services, and undoubtedly my father benefited from public schooling and other services (which is not to say that at least some of those services might not have been better-provided privately). But it’s an atrocious logical error to argue that if government does some things with at least minimal competence and efficiency that this somehow justifies any other intervention into civil society by government, or that the fact that most of us appreciate some government means that we should inherently want more government (or for that matter, that we shouldn’t want less government).

UPDATE: To be fair to Obama, perhaps he has given less publicized speeches in which he also acknowledges the existence of the “[In]visible Foot” of government. If anyone has such examples, please share them in the comments.

FURTHER UPDATE: Actually, I got a bit distracted by the Obama point in the update, and to give credit where it’s due, Obama did also say: “We’ve already made a trillion dollars’ worth of cuts. We can make some more cuts in programs that don’t work, and make government work more efficiently…We can make another trillion or trillion-two, and what we then do is ask for the wealthy to pay a little bit more.” I’d rather he said that he’d eliminate programs that don’t work and acknowledge that many regulations are counter-productive, but, heck, if Obama can show me a total of three trillion dollars in real cuts, I’d be all in favor of raising tax rates in return (with the proviso that if the cuts disappear, so do the increased tax rates).

Anyway, as might be surmised from the fact that I don’t mention Obama in the original post, I was really primarily addressing the broader controversy over whether expansion of government should be supported because the government provides public goods. I know some libertarians like to deny that any goods are public goods, or if there are that the government ever provides them properly, but I don’t go nearly that far.

But I did want to point out that government also provides a great deal of what one might call “public bads,” and that these “public bads” often fall heavily on small businesspeople who lack the political power of the crony capitalists (witness the example of my grandfather), who because they often have fixed business assets and roots in their communities often make a tempting target of exploitation by governments (as with my father and the “we’ll find a violation even if you don’t have one or else” protection racket), and who, moreover, don’t have the economies of scale to treat complicated government regulations as a minor business expense. (Public bads tend to fall even more heavily on poor people, but that’s a subject for a different post.)