The eWaves are afroth with unsupported speculation, hand wringing, condemnation and counter-condemnation over the atrocity in Colorado. Uncharacteristically, I won't add my bit (at least not just yet). Whatever we may learn in the days to come, I am confident that there is very little we will be willing and able to do about it.
For a bit of relief, I will return to what we can do something about. The President committed a major Kinsley gaffe last week. He made the mistake of telling us what he really thinks at a moment when he had all the attention focused on his opponent. Here is what the President said:
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.
Conservatives in general and the Romney campaign in particular pounced on nine words:
If you've got a business -- you didn't build that.
How you view that sentence depends on the meaning of "that". If it means "roads and bridges" as the Administration insists, then it is obviously true in most cases. Entrepreneurs don't generally build such things in the US; they only pay for them. If "that" means the business you built, as the other side thinks it does, then it is manifestly false and insulting. Having watched a portion of the speech, it certainly sounds like the President meant the latter. However, I am willing to give him the benefit of the doubt.
The passage in context is nonetheless very revealing. Liberals and conservatives both recognize the roll of individual effort in private enterprise and the role of government in laying the foundation for private enterprise. Conservatives like to emphasize the former whereas liberals like to emphasize the latter. A lot of the difference between the two lies precisely in what they like to talk about.
I find the first part of the comment above more problematic than the second.
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.
The President does seem to be saying that successful entrepreneurs don't deserve much credit for their successes. It isn't their hard work or genius that made them successful or even luck; it's government. I think that's insulting and unfair.
Still, Mr. Obama obviously has a point. Collective action through government provides a lot of the conditions that make private enterprise possible. That would be a very relevant point if one side in the debate were arguing for the abolition of government. Of course that is not the case. Mitt is no more an anarchist than Barack is a Bolshevik. The problem with the President's comment is that it is an attempt for force a false choice, in order to avoid confronting the real issues.
Precisely to the degree that you value government, you have to be concerned that government can work. To make it work, you have to make it fiscally solvent. At the local, state, and national levels, many governments are going belly up, financially. Three California cities have declared or are on the point of declaring bankruptcy. I believe Scranton is at the same point. The national government is on the same trajectory. That is the issue that the President should be addressing rather than ducking. The question is not whether to abolish government, but how to keep the ones we have from abolishing themselves.
A second problem with the President's comments is that he shows no awareness of the flip side of the argument. Yes, government provides conditions for private endeavors, but it also puts a lot of obstacles in the way. Government frequently makes it much more expensive to start a business or hire new employees. When that burden grows large, both jobs and tax revenues fall off. Ryan Streeter has this at the Indy Star:
Politicians typically believe that job creation happens when existing businesses, big and small, hire more people. That seems reasonable, but it's not quite right. The reality is that almost all new jobs five years from now will be created by companies that don't exist today. Job growth in America is driven almost entirely by new companies, or what we typically call "startups." According to Hudson Institute economist Tim Kane, new companies created 3.5 million jobs in 2005, while 10-year-old companies the same year created 355,000 jobs but lost 422,000.
The reason this fact is important to grasp is because startups themselves are declining. Based on the best estimates I've seen from Kane's work, we would have roughly 2 million more jobs each year in America if we were creating new firms at the same rate as in the 1980s. In other words, despite what we tell ourselves, entrepreneurship is declining in America, and job creation is suffering as a result.
Yes, Mr. President, there are a lot of smart and industrious people out there and only some of them will found the next Apple and Microsoft. Whether fair or not, some entrepreneurs get to be Steve Jobs or Bill Gates. In doing so, they provide almost all the jobs that other hardworking people will apply for. They also generate the wealth that government can spend on all the good things that it does.
Perhaps that is the problem the President should be thinking about: how to return to the business creation of the 1980's. He isn't paying attention to that, of course. He isn't paying attention to job creation at all. As one dreadful jobs report after another arrives, the President is focusing on other things. Over the last six months, he has held about 100 fundraisers. He hasn't met with his jobs council once. That is something we can do something about.