Big Head Press


L. Neil Smith's
THE LIBERTARIAN ENTERPRISE
Number 638, September 25, 2011

"Call it a game of chicken on a global scale."


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"Warren the Crusader" vs. the Evil, Greedy Factory Owner
by Thomas Andrew Olson
techmac@earthlink.net

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Special to L. Neil Smith's The Libertarian Enterprise

"There is nobody in this country who got rich on his own. Nobody. You built a factory out there—good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces [sic] that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory—and hire someone to protect against this—because of the work the rest of us did. Now look. You built a factory and it turned into something terrific or a great idea—God Bless! Keep a Big Hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along."
—Elizabeth Warren, Democratic candidate for Senator in Massachusetts

This statement has been circulating the social nets like wildfire over the last day or so, often with a snarky "take THAT, libertarians!" thrown in as a bonus. While it is wonderful raw meat for progressive populists, and gets their hearts pumping, there are just so many misconceptions, misstatements, and just plain disingenuousness in that tirade that it deserves a critical breakdown.

"There is nobody out there who got rich on his own. Nobody."

That's right. To get rich, you need:

a) a great idea,

b) the skill, focus, and entrepreneurial temperament to make it real,

c) access to adequate risk capital,

d) in the case of a "factory", a place to build or convert to suit,

e) to recruit skilled partners and staff to help make the vision a reality, and a personal ability to keep them motivated,

f) a marketing plan,

g) dedication, faith and patience,

h) the ability to effectively deal with bureaucrats, inspectors, and other tax feeding parasites, any one of whom could bar the door from ever opening, and most importantly,

i) lots and lots of customers.

Yes, to get rich, it requires hard work, partners, suppliers, capital, and customers willing to buy. Infrastructure and other "services", is something all of us in developed nations already pay for, and the existence of such doesn't help anyone enrich him/herself any more than it does to hold back the impoverished.

"You built a factory out there—good for you."

This anachronistic mythology is meaningless. It's a very silly thing to say, and even hurtful, considering factories have been closing at record rates in this country, with those jobs going offshore, never to return. The US manufacturing sector is struggling to survive, and demonizing factory owners as greedy, selfish social miscreants adds nothing to the debate over trying to help that sector of our economy stop the bleeding and rebuild itself.

"You moved your goods to market on the roads the rest of us paid for."

I love the strawman here—the artificial distinction between that mythical factory and "the rest of us", as though they were somehow different worlds, and not an integrated whole. Those roads were paid for with everyone's taxes... taxes paid by rich and poor alike... including that imaginary factory owner. "The rest of us" will use those same roads to go to malls and Wal-Marts to purchase those manufactured goods—providing, arguably, far more net wear and tear on those roads than the factory's shipping trucks will engender. Most of these taxes were paid directly at the gas pump, and were in no way voluntary. So who is this "we" she's talking about, as though we're all in it together gleefully throwing money in the pot for the common good? We're in a "club" in which we are forced to pay heavy dues, including that factory owner, but have virtually no say in how the club conducts its business, which is often capricious, arbitrary, and politically motivated.

But here in the twenty-first century, significant amounts of "goods" today are digital in form, and moved entirely over this thing we call "the internet". While some may also consider that a "road" for all intents and purposes, those "roads" are privately owned, and access to and use of them are paid for entirely by the users of such in the form of monthly "tolls". These are all self-sustaining, with no government interference required. The people who use these toll roads to earn a huge living are no doubt laughing incredulously at Ms. Warren's statement.

"You hired workers the rest of us paid to educate."

Considering the quality of what those schools are producing these days, that mythical factory-owner should be getting a huge tax break for all the additional resources he had to expend in "training" to make up for the deficiencies his employees brought to work when they were first hired. The US is #2 in the world in per-student spending, but #25 in outcomes, that is, core skills in reading, math, science, and geography. Those now exiting that mind-grinder can barely make change, let alone balance a checkbook. So perhaps Ms. Warren, in her Senate bid, should focus more on why it's so difficult for that factory owner to find and retain qualified help.

"You were safe in your factory because of police forces and fire forces [sic] that the rest of us paid for."

This is no different from the roads. Everyone—including the factory owner—paid lots of taxes already for all this "protection". I would challenge the Liz Warrens of the world to name me a case where local police or fire departments actually prevented specific, premeditated crimes against or damage to private commercial property. That's pretty low on their priority list.

In the case of the police, the tax-feeders generally only drop their doughnuts and swing into action after a criminal act has already been committed against persons or property. So in order to protect his investment, our mythical factory owner had to invest his own capital into electronic monitoring systems and a private security guard service for active 24/7 oversight. The police have nothing to do with this, but the factory owner doesn't get a tax break for having to provide for his own protection.

As far as the "fire forces" go, he's already paid for fire protection—twice. Once, as before, through the same taxes everyone else pays, and again in the costs of compliance to ensure his new/renovated building is up to local fire code and OSHA requirements. In this hypothetical industrial setting, that would likely include dynamic fire suppression systems that in addition require continuous monitoring and maintenance. The various kleptocracies masquerading as "protective" services provide none of this in exchange for those tax dollars.

"You didn't have to worry that marauding bands would come and seize everything at your factory—and hire someone to protect against this—because of the work the rest of us did."

This is demagoguery at its over-the-top best. But to be fair, our mythical factory-owner doesn't have to worry about this... unless, of course, he fails to pay his taxes, or runs afoul, in even the most minor way, of the unnavigable web of regulations at every intrusive level of governance—then the "marauding bands" do show up... sporting badges, riot gear and automatic weapons. How do you think "government" got started to begin with? Marauding bands went pro.

"You built a factory and it turned into something terrific or a great idea—God Bless! Keep a Big Hunk of it."

Well, isn't that gracious of you, Ms. Warren, from your ivory tower, to allow us successful peasants to keep a portion of what we worked so hard to earn! Someone built a factory (and indeed, God Bless! because no one is building them much anymore in this country... ), and offered dozens, perhaps hundreds, of families in that area an opportunity for economic advancement—and a higher tax base—than existed before he showed up with his terrific idea and his risk capital. He could have just as easily failed. And the Warrens of the world claiming a bigger chunk of his success for themselves increase that probability significantly. And if he does fail, and those local working families are thrown out of work again, where will the Warrens of the world be? Probably still out excoriating the evils of capitalism, and blaming the victim.

"But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along."

I'd like someone to show me a copy of the "underlying social contract", and show me the fine print where it says that if you are successful, you automatically "owe" society a big pay-forward, in addition to all the other taxes, out-of-pocket regulatory compliance, and various other payoffs just to stay in business in the USSA today. And show me the place where I signed that. By adding value and employing others, that mythical factory owner has already "paid forward". Those who work at that factory can afford better food, clothing, and medical services for their children, than they could before. They can also set a little aside, perhaps, for their children's education.

In the dim past, and before the income tax, the so-called "Robber Barons" endowed colleges and libraries, built parks, museums, and opera houses, thus bequeathing the gift of knowledge and culture to future generations. Many wealthy people do the same things today. If Warren Buffett was serious about giving back, instead of hypocritically insisting he pay more taxes, how about he build the best charity hospital in Omaha? And fund it in perpetuity? And perhaps, Ms. Warren, let him have a tax credit for doing so??

Simply giving more to "government" is not the same as giving to "society" and its future. But the Elizabeth Warrens of the world can't seem to grasp this. I think we all dodged a bullet when she was passed over to head the new Consumer Financial Protection Bureau—an agency that shouldn't even exist to begin with. Hopefully the citizens of Massachusetts will retain enough sense next year to see through her inflammatory, but shallow, rhetoric, and send her back to academia, where she can continue warping young minds.


Thomas Andrew Olson is a Founding Partner of Exodus Consulting Group, helping both startup and growing companies clarify their business vision and achieve their funding goals. He is based near New York City. Email him

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