If You Have a Business, Who Built What?

         The fall election season will bring the familiar type of campaign ads accusing Democratic Party candidates of fiscal irresponsibility and wasteful government spending, even on infrastructure spending that will boost productivity and competitiveness. Expect to hear an old favorite: the story of how  President Obama stumbled into a rhetorical thicket when he said, “If you have a business, you didn’t build that. Someone else did that.”    

         Standing alone, these two sentences are outrageous. Accordingly,  by omitting the immediately preceding sentences, these words became part of Republican campaign ads,  declaring that they showed Obama’s socialist tendencies.  

The Importance of Interdependence   

         In his 2019 book, The Conservative Sensibility, George F. Will does his readers a great favor: he includes the entire paragraphs of Obama’s quotation, words that demonstrate that Obama was speaking about the role of government in providing public infrastructure essential to the business sector but which businesses do not provide for themselves.  Immediately preceding the famous quotation above, Obama said, Somebody invested in roads and bridges.” He was making a case for increased government investment in the nation’s deteriorated infrastructure, claiming such spending would improve business profits. His point was that firms do not have to build the entire infrastructure they use, that they can focus on what they do well and support government efforts to provide such public assets as bridges, roads, water, sewer, and police and fire protection.

         Obama further noted that firms need not build many of the other assets they need and can simply buy or rent them in the marketplace. He was appealing to bedrock economics which for 250 years has demonstrated how markets guide the inter-dependence of the citizens in a market economy. He further said, Somebody helped to create this unbelievable American system that has allowed you to thrive,”   emphasizing the importance of this interdependence in enhancing the firm’s pursuit of profit.

Instructional Episode in The Role of Government in a Market System.

         Two lessons can be drawn from the episode. First, without streets and roads,   reflexively anti-government "free market" advocates would have a hard time moving their goods and services to market and having their employees show up for work. These complements to business are built by government and paid for by taxes. 

         Second,  an important lesson for political speech writers: don’t use pronouns with an antecedent that lies in another far-off sentence! A lot of ad-writer opportunism would have been avoided if Obama had simply said, “If you have a business, you didn’t build the streets, roads, bridges, water and sewer systems that you rely on to run that business. Some level of government did each of those things,  and we all paid taxes to enable them to make that happen.” That’s it: no pronoun, no link to an antecedent that can be de-linked.  

         Rhetorical vulnerability aside, Obama’s meaning is essential: the private enterprise sectors of the economy depend strongly on the public sector. Reciprocally, the various levels of government rely on market activity to generate the value added to the economy from which the resources are drawn to finance the public goods.  Markets rely on government and vice versa. 

William L. Holahan is Emeritus Professor and former Chair of Economics at the University of Wisconsin-Milwaukee.


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