Ignorance, Vested Interest and Age-Old Rhetoric

There has been a firestorm over Pres. Obama’s remarks on success and reward, which culminated in this beauty:

If you’ve got a business, you didn’t build that. Somebody else made that happen.

Full video here, but an extract:

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

In truth, given the obvious class-card that Obama has been playing for the past two years, this is just another step in the same direction, albeit egregious.

And like every effective rhetorical attack, it starts from a grain of truth (everybody gets some help in life), implies a straw man opponent (I didn’t rely on any part of society), makes illogical leaps (because you got help your efforts are irrelevant), and panders to the ego and resentments of its target audience (eat the rich, they make me feel less-than).

And then lets the inference go unsaid, which makes its dodginess less obvious. If the rhetoric holds, then obviously the wealthy, the businesses, the employers have to pay more tax, right? Leave it unsaid and the ideology of your audience makes your inference for you.

Look, I could spend hours on this. It represents a rehash of the key debates of the 20th century. What concerns me is that if people don’t see through this stuff, then the entire blood-filled experiment of the last 120 years will be wasted.

Individualism and Ignorance Mk 1

No free market liberal or classical conservative believes any economy can function without physical, legal or cultural infrastructure. No sensible free market liberal believes in atomistic individualism as a fact – though it can be a useful guide to keep an eye on excessive government.

We are social animals; our development is is social and other-focused; we are enculturated; we live through social institutions; our economies and economic decision-making reflect all these social influences. We also have the capacity to make choices that transcend our enculturation, that over time form our characters and our life paths. So far, so bog standard.

Check out Adam Smith: his first and most successful book was on the development of moral sense in individuals embedded in a society. His better known book talked about the cooperative-competitive genius of markets and how they channel competitive spirits in a cooperative framework (the market) to produce great social outcomes.

When less-than-thoughtful entrepreneurs claim they do it on their own, some of them believe it. That they are wrong doesn’t mean arguments supporting entrepreneurship are wrong. Successful entrepreneurs do quite special things that others can’t do. That they don’t understand how doesn’t change that fact. Sometimes risk-positive arseholes with driving personalities do good things for society. That is precisely the benefit of the market.

In this Obama-undergraduate view is the absurd belief that pointing out that we are members of a community somehow invalidates centuries of evidence of the benefits of private-sector entrepreneurship – from corner shops to telco giants.

This view is either ignorant of economic history and centre-right economic argument, or willfully misrepresents them. I vote both.

Necessary and sufficient, proximate and distal

Like all rhetoric, Obama’s full statement is chockers with fallacies. But the two which jump out are necessary and sufficient conditions for a state of events, and proximate and distal causes.

His implication is that the existence of publicly-provided goods is the cause of individual success. Indeed, that is the sufficient cause of success, because he explicitly discounts the actions of the successful individuals involved.

Notice the use of “somebody”; a vague abstraction sitting over in the corner, not an individual, not in your social circle, just some generalised benefactor. In some ways, this is the key actor in any entitlement mindset: someone other than me so amorphous that I don’t have to take their interests seriously, who will spring to defend my welfare as a matter of right.

But clearly Obama mistakes necessary for sufficient conditions; that necessary legal and physical infrastructure is all that is required (sufficient) for financial success. And for his argument, he has to. If he started talking about all that is required (sufficient conditions), he might have to talk about initiative, risk-taking, ambition and balls to make hard decisions. Can’t have that.

Hence he simply assumes away those other necessary conditions because they don’t suit his argument.

Equally he makes an arbitrary choice about how far back in the chain of causation he wants to go, and the relative importance of close causes (proximate) and distant causes (distal, or ultimate).

It is absurd to pick on a few distal causes (teachers, roads) and treat them as more important than similarly distant causes just because they are publicly funded. Why not talk about quality of parents, the values of your subculture, your school attendance record, things we know affect life success? Because they are individual, not social choices. Again, can’t have that.

Worse, when you cherrypick a few necessary conditions, you can pick what you like, and go back as far as you like. Why not say we owe our success to the Big Bang? It’s a necessary condition for our existence. Less ridiculously, why not pick the acceptance of the Common Law tradition? Or The Constitution? All necessary for US business success.

More importantly, it is absurd to treat distal causes as more important that much more relevant proximate causes: entrepreneurial personality, fair access to capital markets, capacity for networking and hard work, and on occasion, ability to gain rents from governments for delivering uneconomic energy projects.

What this approach does is swamp policy discussion with irrelevant logical truths, and distract from relevant areas of policy action.

Oh, and allow dodgy implications of class enemies who owe everyone much more than they are paying.

Ignoring the converse: why do people fail then?

In some ways this is a variation on necessary and sufficient. If your success is due to socially-provided goods – ones available to everyone – then why isn’t everyone economically successful?

Surely if someone’s success is due to “somebody” else, and not due to any skill, effort, capacity to postpone consumption or raw talent, then we should all be successful.

Sorry, but relative failure is a counterexample to Obama’s basic idea. It occurs for the simple reason that he has ignored so many other necessary conditions. Indeed, failure highlights that there must be something else other than socially provided goods.

Of course, I predict the response: everyone would be successful if it weren’t for discrimination. As an aside, this is the perfect example of a non-falsifiable thesis, so I expect to see it used a great deal.

Social contribution and paying thrice: Ignorance Mk 2

“Giving back” from companies and successful individuals has been the rage for a couple of decades. Simply put, the argument involves some sort of social repayment, ostensibly because companies have made profit or individuals have gained wealth.

What no-one addresses is the assumption underlying it: that profit and wealth are gained through exploitation rather than through providing something someone else values.

The prejudice is that private business “rips out” of society. Indeed, in a recent discussion with a leftist I pointed out to utter disbelief that private bakeries had done more for humanity than every journalist and activist in human history. It wasn’t until I explained the benefit to ordinary people of being able to buy bread that the light began to dawn.

There is widespread ignorance of how providing goods and services is a core social contribution. That’s because the compassionate Left is so brainwashed into seeing private business and profit as evil, and the public service as unbiased and noble, that they deny the real flow of benefits to consumers.

They see the sale of goods as an inherent rip-off and deny the fact that businesses that rip-off consistently don’t stay long in business. Without the social contribution of benefit to consumers, there is no business.

So, to the point. Not only does private business provide goods or services people value and wouldn’t have otherwise, not only does it generate livelihoods and opportunities for achievement for its employees, but it is the ultimate source of the taxes that pay for those social goods that Obama so values.

It’s not as though highways and public institutions sprang unbidden from the loins of Cultural Studies academics; ultimately they came from the appropriation of a part of the social contribution made by private business and private workers.

So the implication that private business and workers owe more for the use of social assets is an implication that they must contribute thrice: by providing what people need, by paying taxes that create social goods, and then paying for their use of them.  In short, Mr Obama, just where do you think the prosperity and the money comes from?

The real effort in business: Ignorance Mk 3

Honestly, I don’t believe I have to write this. Only someone who has never had to sell and deliver a job while managing employees could spout O’s crap.

But this is common, especially among those who spend a life in the public sector, or in a funded NGO, or salaried in a relatively secure job.

Too often you encounter the core prejudice that once someone employs a single worker, they’re an amoral fatcat who is fair game as a source of redistributive welfare. Too bad if they run a small business they might be earning less than their employees, with no sick leave or holidays, making payroll out of the mortgage, training themselves to improve their skills, keeping up with competitors, selling product, hiring and training staff of varied quality, struggling to get a loan, fighting local government on business-killing spree…

The strength of character and level of effort required to build a business is rare. People think it’s easy. It isn’t. I’m in private business but I’m not great at it. I get by. But I see what it needs to do more than that, and I’m in awe.

It is a great joy to see salaried friends of Lefty persuasion open a business and slowly become more vehement libertarians than I’d ever be, as they come to face just how hard it is.

Sometimes people are lucky; they just pick the right thing at the right time and it all goes well. I know a couple. Other times they work their backsides off and only just survive. And other times, people work and are smart and get help and thrive. I know a few of those too.

But one thing is true in every case. It requires effort, commitment, risk-taking, a personality and balls that most people don’t have.

 An eye over the planetThe Eternal Fight

For a while it seemed as though the world had changed: in 1989 it seemed the struggle had ended and we had learnt from the 20th century.

But in Australia we have the Greens; in the US Obama. And the fight continues, much as it always has, between the levellers and the producers; the insiders and the outsiders; the realists and the idealists; the Socratics and Sophists; the posers and the doers.

Private business isn’t always on the right side. Indeed, the social fault lines are changing and big business/big finance seems to have more in common with big government and the political class than with tradies and small business and growing entrepreneurs. But that’s another story.

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