Tags

,

Let’s not nitpick on what exactly the President meant when he said “you didn’t build that.” Assume that he was referring to the infrastructures that every business has to be built upon. His, and Elizabeth Warren’s, point still makes little sense once we have thought it through.

The success, and perhaps the mere survival, of any business owes it to things that fall into three categories:

1. Those that can be purchased in the market – raw materials, man power, etc. They have been paid for. If the market is open and free, the business doesn’t owe anything to anyone once the transaction is concluded. If the market is not entirely a free one, and the price is artificially suppressed by some government policies for political reasons, then obviously the solution ought to be to break the suppression, instead of asking whoever happens to benefit from such suppression while still keeping it going.

For instance, one might argue that the huge success of Netflix’ business model owes it in no small portion to the infrastructure provided by the USPS. On the surface that combined with the fact that the USPS has been run so poorly as to require taxpayer bailouts, it would seem that Netflix indirectly owes the taxpayers. However, the real problem in the situation is not Netflix taking advantage of the taxpayers, but that the USPS did not price its services to compensate its cost, and as stakeholders, the taxpayers failed to protect their own interest by fixing the poor operational situation of the USPS.

2. Those that are provided by the government with taxes, and their usage can be charged for quantitatively. For instance, a tolled highway, or a government service with fees on per-consumption basis. Despite the apparent monolithic nature of the things in this category, they work out to the same conclusion as in the first category: the consumer of the infrastructure will have paid the price squarely.

It is also unfair to say that “someone else” built the roads on which the successful business transport the goods, since part of the upkeep of the roads come out of the taxes the business pays, proportional to its profit.

3. Finally, there are the things that could not have emerged out of any open market and must be provided by the government. Well, if the demand of something cannot grow organically out of a free market, that should be a big red flag that it might be some kind of snake oil invented by the government to begin with. One good example might be the SEC and CFTC. There is very little in what these agencies do that cannot be done by an accounting firm. On top of that, these agencies’ flat fee operating model basically penalizes good businesses whose books take less time to scrutinize and regulate, and reward the shady ones.