Many people are discussing the Obama speech in Roanoke, Virginia where he made some comments (channeling Elizabeth Warren) intended to justify taxing the rich more. Here’s the excerpt:
There are a lot of wealthy, successful Americans who agree with me — because they want to give something back. They know they didn’t — look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there.
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.
The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together. There are some things, just like fighting fires, we don’t do on our own. I mean, imagine if everybody had their own fire service. That would be a hard way to organize fighting fires.
So we say to ourselves, ever since the founding of this country, you know what, there are some things we do better together. That’s how we funded the GI Bill. That’s how we created the middle class. That’s how we built the Golden Gate Bridge or the Hoover Dam. That’s how we invented the Internet. That’s how we sent a man to the moon. We rise or fall together as one nation and as one people, and that’s the reason I’m running for President — because I still believe in that idea. You’re not on your own, we’re in this together.
This kind of argument might play well in a dorm-room bull-session of a left-wing college, or in a highly partisan Democrat crowd, but I don’t think it will resonate well with the median American voter (it didn’t take long for this site to appear). First of all, it’s flawed on its face. Here’s a classic refutation of the basic argument. Here’s an excerpt:
Did you know that your dog owns your house, or rather some portion of it? If this is not immediately obvious to you, you will find it helpful to consider some aspects of the ethics and economics of redistribution.
Your dog is alert, plucky and a fearsome guardian of your property. For all we know, without his services, you would have been burgled over and over again. Your belongings would be depleted and the utility you derived from your home would be much reduced. The difference between the actual value of your home and its unguarded value is the contribution of your dog, and so is the difference between the respective utilities or satisfactions you derive from it. We do not know the exact figure, but the main thing is that there is one.
All contributions of others to the building of your house have been paid for at each link in the chain of production. All current contributions to its maintenance and security are likewise being paid for. Value has been and is being given for value received, even though the “value” is not always money and goods, but may sometimes be affection, loyalty or the discharge of duty. In the exchange relation, a giver is also a recipient, and of course vice versa.
For in a voluntary exchange, once each side has delivered and received the agreed contribution, the parties are quits. Seeking to credit and debit them for putative outstanding claims is double counting.
But, worse than the bad logic, I think, is the bad philosophy that I believe misunderstands American values, and the American sense of individual responsibility and desert.
Most Americans admire entrepreneurs and think they deserve the fruits of their efforts. They recognize that most of the rich create wealth primarily because of their own vision, creativity, talent and effort. Entrepreneurs take risks that most of us are unwilling to take, and when they succeed it’s because they have figured out how to marshal ideas and resources in a way to efficiently deliver goods and services to people that the people consider more valuable than the prices that they pay. The entrepreneurs have added value to society. They don’t owe anything “back” to others.
Obama is demagoging against the rich, because he thinks that most Americans (or enough to help him win the election) resent people who are successful in the economy. But, and I might be wrong about this, I don’t think very many share that crab mentality. Most of us admire honest success.
Of course people don’t do everything on their own! But the people who have provided help to them have already been compensated along the way. The business owners have paid (or have been eligible) for state (and other) services and so the state does not have a blank check on earned wealth. If you want to make an argument that the wealthy should pay even more than they already do (in 2008, the top 5% earned 31.7% of the nation’s adjusted gross income, but paid approximately 58.7% of federal individual income taxes), then make one.
But, it’s a mistake to imply that the fact that some of the resources that success depends upon have been provided by the state means that the state really has the first claim on all wealth; and we should be happy with whatever scraps the state allows us to keep.
That’s the kind of thing that strikes me as un-American, and I expect that effective replaying of this speech in campaign ads will strike most American voters that way, too.
UPDATE: This post seems to corroborate my intuition about what Americans think (and that Americans think this way more than most other people).