Sunday, August 19, 2012

You Didn't Build That, but I Did Write This

  Currently political news is still covering a speech made by President Obama last month where he addressed small business owners saying "You didn't build that", in regards to their businesses. A lot has been made about what he said and what he meant. Friday night Bill Maher covered the topic with his guests, who included billionaire Mark Cuban. Mr. Maher did get it right in saying that President Obama was referring to roads and bridges directly in his statement. However, if you assess his words and actions as a whole, you know that he was indirectly addressing the concept of who created the success.

  We are all familiar with the "spread the wealth around", "tax the rich to help the economy", "prosperity has never trickled down... prosperity has always come from the bottom up"  comments from our President. It's that last comment and the "you didn't build that" which I want to walk through and diagram in an indirect manner. I could analyze ad nauseum the subtext of the approximate 9 minutes of video here, most specifically the psychological underpinnings of President's Obama's comment, and how it possibly shows a subconscious awareness that he has done very little on his own. Or, I could analyze how the internet limped along at sub 56k speeds for decades until opening it up to commercialization in 1989 which pushed it into 45/mbit/s within 2 years, which makes it a horrible example of government efficiency. However, I will stick to the philosophical differences being debated.

   Follow me down the rabbit hole... Literally, a rabbit hole. Would you tell the rabbit he didn't build that? Would you tell the queen bee she did not build her hive? Would you tell the beavers that is not their dam? Of course not. Did they receive help along the way? Of course. Suppose the rabbit is an independent owner and operator, the honey bees a corporation, and the beavers a partnership. Rabbit burrows lead to other rabbit burrows that create the literal rabbit hole. What one does in his own work helps the group survive. The queen bee has thousands of workers, but she is the architect and brains behind the operation that brings forth the honey. The hive doesn't happen without her. It is worth noting that this bee corporation is also an absolute necessity for pollination that supports all life on this planet. The beavers labor tediously and tirelessly, all day long, to achieve their goal of building a dam, as it is crucial to protect themselves and create a food source. Once again, many other animals benefit from the wetlands that are created by the beavers' hard work. The rabbits receive help from each other, and nature creating the spots for them to burrow. The bees receive help in the form of protection by using trees, and help in the form of resources from the nectar of flowers they use to make honey. Beavers get help from each other in the design and construction, and they receive help from trees. Some of the trees they harvest themselves, but much of their dams are built from loose lying timber that is doing nothing else. These three natural and daily occurring examples highlight the important stroke of this topic: there is always some form of assistance. However, that does not mean that the vision and work of an individual or group did not build the end result.

   We are all helped along the way in some form or fashion. Saying you were helped and then alleging that it was due to the government and it's construction of roads is flawed logic of the highest order. This line of reasoning and debate shows a gross misunderstanding of resource allocation and utilization. Just like our animal friends are in an ecosystem, so too are we. The government would never have been able to build roads and bridges, and hire firefighters, and defend the country, and do anything else that it ever does without the tax revenue of the people who built those businesses and who risked what they did to utilize their resource allocation to create the successful outcome they did. The entrepreneur came before the government, and before the taxes, and before the roads. Without their tax money the government would never have been created and it would not exist today.

   A lot of people have had great teachers along the way. I had many, but none of them have ever cosigned a loan for me. It's easy to look at someone's success and say they can share a little more if you have no understanding of risk and reward. Many, many, many more small businesses have fallen to the risk side and gained no reward than the ones that have been successful. However, people that have never assumed any real risk, and by function no responsibility, fail to see the reality of the situation. The rabbit must choose wisely or be eaten, the bee must work and protect at all times to preserve the hive, and the beaver must succeed or starve to death.

   These three micro examples expand to the macro and are part of our human DNA and evolution. We as a species are alive and thriving because our ancestors risked losing physical traits for different ones, and because we risked travel and experimentation to better feed and protect us and our offspring. Those who didn't, perished. That same law of nature applies in business. Sam Walton took risk, after risk, after risk. He encountered many different obstacles that others in his field had, but he persisted. The outcome was an amazing reward. Did he have help? Of course. His wife was supportive, his employees were, and his investors were, but could anyone else have done that? Only a few, and maybe none to his extent. Roads and bridges? It likely would have made no difference to him. If it was 1860 in Northwest Arkansas, where he founded Wal-Mart, he would have made a trail or found one, and been selling rabbit stew, honey mead and beaver hats - all resourced from the unsuccessful of the species.

   This leaves us with two schools of thought: those who accept and operate in natural order, and those who seek to circumvent it and claim it's success as their own. In politics that translates to either you believe that the free market allows the opportunity for businesses to succeed or fail, or that the government and it's proxy community helps businesses succeed. The latter here presents a unique problem, if the government helps businesses succeed, does that mean that it helps them fail? This topic is never addressed, and the omission of it from the conversation logically leads to the sum that businesses succeed in spite of the government. Further it follows that if the government cannot help businesses in the micro, that it is also ineffectual in the macro, or in popular terms "the economy." Due to the lack of risk/reward, the government by it's design cannot make a profit, therefore it cannot stimulate the economy. It's only positive action is inaction, and to leave resources (read tax money) in the private sector where it can benefit from risk and reward.  

   Are you wondering where your fellow Americans fall into these two categories? Let me give you some HELP. According to a Gallup Poll in September of 2011, even the most optimistic of American adults believe that the federal government wastes 44 cents of every dollar it spends.

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