Somebody Else Made That Happen

Every now and then the President inadvertently provides a blinding insight into his thinking. As with Joe the Plumber four years ago, this week he provided another one:  “If you’ve been successful, you didn’t get there on your own. If you’ve got a business — you didn’t build that. Somebody else made that happen.”

Here is the "logic" of the President:

Successful people are successful because others (primarily government) provided them the means that enabled their success. Ergo: The fruits of their success rightfully belong to others, not them.

By his reasoning the produce of the farmer rightfully belongs to the owner of the land, the maker of the implements he used, the county that built a road to the farm and the distributor that shipped his produce to market.

One small part that he misses (and it's not clear whether this is intentional or just out of ignorance). The land and tools and the road were PAID by the farmer on mutually agreeable terms. The terms did NOT include the other parties confiscating more of his revenues if he had a bumper crop. He paid his taxes to the county for the road. He paid a rent to the owners of the land and the tools. Now he potentially could have negotiated terms which gave them large payments in the event of a successful crop and little or no payment in the event of a failed crop. He didn't. And the reason he didn't is because highly able and motivated farmers can make more by assuming more of the risk. The people who would see such terms favorably are those with low abilities, motivations and expectations.

This, in a nutshell, is the President's vision. He wants to transform the terms under which the people of the United States have always labored. Instead of encouraging people to take risks in search of high rewards, he wants to compensate people for failure by confiscating more of the rewards from success. The President would probably characterize this as "fairness". That's debatable. What's not debatable is the economic fact that such a change in terms results in fewer people taking the risks that drive the success. Since economic growth is directly related to the number of people risking their talents and capital, this can only be path to lower economic growth.