President’s Remark on Building a Business is Backwards

With President Obama visiting California yesterday, let’s take a look at his recent controversial remark related to business:

“If you’ve got a business — you didn’t build that. Somebody else made that happen.”

The irony is that the things that he says help a business grow and mature – the infrastructure, education –are paid for in large part by the taxes generated by the small businesses that he said were built by someone else.

While businesses use the resources the president mentioned such as schools and roads — the same resources used by everyone else including employed workers, the unemployed and government workers — businesses are not built by some amorphous collective.

Entrepreneurs are the risk takers that build and mold businesses. In the president’s world-view it seems that the businesses only exist because they were built on the back of government action. I would argue it is the other way around. Government is able to function because of the strength of small business people taking a chance, growing their businesses and producing tax revenue for government to operate.

In an insightful column on the issue by Charles Krauthammer in the Washington Post Krauthammer writes, “Obama’s infrastructure argument is easily refuted by what is essentially a controlled social experiment. Roads and schools are the constant. What’s variable is the energy, enterprise, risk-taking, hard work and genius of the individual. It is therefore precisely those individual characteristics, not the communal utilities, that account for the different outcomes.”

Business people have few safety nets to catch them if they fail. In fact, while the president speaks of business people not building businesses without help, implying the government is there with support, he ignores the obstacles government raises with regulations and taxes that often hinder businesses’ ability to grow or to hire new employees.

The debate that was opened by the president’s remarks is the age-old chicken and egg question. What came first, government funded services that helped a business to advance or the initiative and hard work of the entrepreneur.

There is no doubt in my mind that without business entrepreneurs there would be no business. If you’ve got a business you did build it!