Remarks by President Obama at a Campaign event in Roanoke, Virginia, are appearing everywhere: “If you’ve got a business — you didn’t build that. Somebody else made that happen.” The president explains his beliefs:
“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.”
There is a true premise to this argument, even though the conclusion (government deserves the credit) is false and evil.
Leonard Read pointed out over half a century ago in a 1958 essay titled I, Pencil that there isn’t a single person on the face of the earth who knows how to make a pencil from scratch. Building a pencil requires mining the elements, lumberjacking, creating the paint, building the trucks and trains, and repairing the pencil-making machines. No one person can do it all.
Watch this two-minute video by Milton Friedman on the I, Pencil principle:
The process of manufacturing anything depends on a global network of commerce and trade involving the knowledge and decisions of millions — no, billions — of human beings, operating under a division of labor, and overseen by the “invisible hand” of Divine Providence. Knowledge changes a billion times a day, with the changing prices of everything on earth, signaling the relative scarcity or abundance of natural resources and human labor. Every business that makes a decision based on this ever-changing knowledge changes everything for those who depend on the productivity of that business.
There is a difference between the “individualist” and the “survivalist.” Obama doesn’t understand the distinction.
True and Godly “individualists” cooperate with others, but they don’t use the State to impose their will on others by force. They are not “isolationists.” Individualist business owners are so grateful for the help they receive from an infinite chain of suppliers that they voluntarily pay them all out of their own pocket. They are happy to admit the truth of Obama’s claim: “If you were successful, somebody along the line gave you some help….”
The question is, who organized the help?
Obama wants to give credit to the government. But the government had nothing positive to do with the manufacture of pencils, refrigerators, computers, and iPhones. Billions of people worked harmoniously, helping other businesses by doing business with other businesses, bringing the products to consumers around the world.
Who decided who would do what? Who decided how much help would be provided? Who made these decisions? Based on what knowledge?
Obama doesn’t understand the answers to these questions, because he’s a socialist. Too many Americans are also socialists.
If we lived in the Soviet Union under totalitarian communism, and the Government Ministry of Shoes provided shoes to all the Soviet serfs, Obama — and way too many Americans — would be appalled at the very idea that the manufacture and distribution of shoes should be left to the “anarchy” of a “free market.”
The essence and the glory of the free market is that individual firms and businesses, competing on the market, provide an ever-changing orchestration of efficient and progressive goods and services: continually improving products and markets, advancing technology, cutting costs, and meeting changing consumer demands as swiftly and as efficiently as possible.
The libertarian economist can try to offer a few guidelines on how markets might develop where they are now prevented or restricted from developing; but he can do little more than point the way toward freedom, to call for government to get out of the way of the productive and ever-inventive energies of the public as expressed in voluntary market activity.
No one can predict the number of firms, the size of each firm, the pricing policies, etc., of any future market in any service or commodity. We just know — by economic theory and by historical insight — that such a free market will do the job infinitely better than the compulsory monopoly of bureaucratic government.