In 2012 President Obama outraged many people when he tried to argue for the value of government by saying, “If you’ve got a business, you didn’t build that. Somebody else made that happen.” His statement was wrong because, of course, you did build that.
But that doesn’t mean that you had no help. For many of us, that help goes back perhaps hundreds of years.
In my last post I wrote about some of the family histories my readers have sent me. I was struck by how “middle-class” their families were, even 100 or 150 years ago. I concluded that if you are a successful professional today, chances are good that you have a family history with a lot of solid middle-class people behind you, people who worked hard, sometimes back-breaking hard, who gave up leisure, and who sought education for themselves or their children.
That doesn’t mean your family history didn’t have some cads and misfits (mine did) but the general direction was toward discipline.
In other words, we have a cloud of witnesses who have predated us. Perhaps we received material goods from those ancestors, but far more important were the habits of mind—the mental strength that allows us to give up short-term rewards in the hope of longer-term gains.
As my readers know, I am studying the Industrial Revolution for my master’s thesis at NC State. Specifically, I’m looking at labor conditions in the early factories. I’m trying to figure out what changed workers. They came into the factory familiar with the pattern of agricultural seasons, with relaxation and downtime after harvest and before planting. They came with a tradition of taking time off for every wake, for every holy day, and even for a new and frequent holy day, “Saint Monday.”
It would have been impossible to run efficient factories if workers continued in those patterns. They changed, becoming the disciplined workforce whose cooperation with the machinery—even if it was unwilling—vastly multiplied productivity and brought a wealth of riches into the world, for them and for us.
I recently proposed one explanation for the change in habits of the workforce —the “gadget” theory. That argues that the growing consumer society spurred interest in buying goods, which, in turn, spurred workers to work more. (My post was rather controversial.)
Here’s another theory, introduced by Gregory Clark in the same year as the “gadget theory.”[1] In a complex economic argument, Clark concluded that workers who worked under the disciplined conditions of the factory were paid as much as 60 percent more per week than “undisciplined” workers (those free to set their own hours). The greater income came primarily because they worked more hours.
The crux of Clark’s findings was that workers wanted and needed discipline to keep them working reliably long enough to earn the money they wanted. Clark compared workers to dieters who must give up a continuing series of rewards in order to achieve a much larger reward (weight loss) down the road. They chose coercion to achieve that reward. Another economist made the same argument more than 20 years later.[2] And certainly it fits our experience today.
We don’t need the harsh discipline of factory work because we have that discipline already. Our world is far more pleasant, but we still get up early in the morning when we don’t want to. We work late at night even if we don’t want to. We create schedules and we meet schedules. We suffer defeat but keep trying. We force ourselves to do what our mind tells us we must.
We do it because we are following a long procession of people who have done just that.
If I am right about this, one lesson we can learn is that not everyone has that train of people backing them up over time. Some people, perhaps quite rationally over the short term, question the value of following routine habits. For them, schedules are too hard to meet, the work is troublesome, the results too uncertain, and the risks too great. They give up. And they miss the benefits of what we sometimes dismiss as middle-class behavior.
We should be sympathetic to them. A successful mindset is the harvest of many generations of similar mindsets.
[1] Gregory Clark, “Factory Discipline.” Journal of Economic History 4, no. 1 (March 1994), 128-163.
[2] Victor Hiller, “Self-control and the Rise and Fall of Factory Discipline,” Journal of Development Economics 133 (July 2018): 187-200.
“Delayed gratification”: no entrepreneur from criminal drug dealers to creators of space craft have had great self-discipline, and we now have psychological experiments that show early learning is important; also that delaying gratification can be learned later in life. And finally, we may find that in the variety of our species some people are poorly equipped neurologically for delaying gratification. (Many people know the marshmallow or cookie experiment run with children–wait and get a second treat, or eat it now and no second treat. The follow up shows those who waited are more often successful later in life. A quick summary, of course.)
Perhaps help needs to focus where the problem is. What form that help might take, I leave to others.
I think part of the outrage over the Obama comment was that when people owe their success to others—either in the form of inherited aid, such as you mention, or in the form of more contemporaneous assistance—most of that help doesn’t come from government. Indeed, the positive assistance businesses receive from government (e.g., roads, police protection, national defense) is often more than paid for by the costs imposed by government. Some of those costs are in the form of taxes and regulations. Others—and I know this from my own pre-academic business experience—take the form of obstruction or sheer harassment.
An additional reason for outrage at Obama’s statement is that you don’t need government to force businesses to share the wealth. In the normal operation of the economy successful businesses share their wealth with the larger society because they give the larger society more choices and better ways of doing things. (If they didn’t, they wouldn’t be successful.) For all of Jeff Bezos’s wealth, for example, it is only a tiny fraction of the wealth his ideas and hard work have generated for others. So Obama’s suggestion that successful business people owe even more to government didn’t sit well with business people, to engage in understatement.
Obama’s comment probably was sincere, but it reveals a shocking ignorance of how our economy operates and how business works. It’s worth noting that Elizabeth Warren made a similar statement.
I have no idea what Steven Eagle is complaining about.
What Obama meant was very clear. Along life’s journey other people helped you get where you are. So if you are successful, if you earn a decent income, you don’t deserve everything you have. The other people who helped you get there deserve part of it.
But aren’t these “other people” too numerous and diffused to be identified? Of course. So we come to the great (and completely indefensible) leap of logic: since you don’t deserve what you have and since we can’t be sure who deserves it, government is justified in taking it away from you and giving it to undefined “others” that its selects.
Economics teaches that in a market economy people get their marginal product – which is their contribution to total output. The prediction is not borne out perfectly, but on the whole most people get the value of what they produce.
Indeed, as you noted, many people were outraged by President Obama’s sentence “If you’ve got a business, you didn’t build that.” That’s mostly because it was quoted out of context in numerous Republican campaign ads and conservative op-eds. However, the Wash. Post story you linked to contains the entire quote: “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.”
Factcheck makes it clear that other parts of Obama’s remarks reinforced that message. https://www.factcheck.org/2012/07/you-didnt-build-that-uncut-and-unedited/
As a careful historian, you might want to put Obama’s remark in context and note that, inartfulness aside, he agreed with you.
For Mr. Eagle, the “Fact Check” analysis is deeply dishonest. It quotes the full statement from Obama and then pretends it means something other than what he said. Obama made it clear entrepreneurs do not build and thus have no just claim to what they imagine they’ve built.
His message was that government, or labor, creates everything. Elizabeth Warren then picked this up. It is Marxist nonsense and highly destructive.
One remarkable thing is that the left simultaneously promotes this nonsense, and at the same time denies the importance of the transmission of human capital within families, which is the one sense in which “your success depended on others” really makes sense. Note the left’s denial that the decline of the black family has anything to do with bad outcomes for blacks.
I cover Development Economics in my History of Economic Thought course. In discussing the background of Sir Arthur Lewis I note that after his father died, his mother raised him and his four brothers – Lewis referred to her as “the hardest working person he ever met” and an inspiration. At the end of the lecture, I suggest that if one really wants to know how development and growth occur, Lewis’ comment reveals the microeconomics of growth: it is the legacy of human capital that parents transmit to children. There’s more to learn about how economies develop from Lewis speaking about his mother than from all the blackboard models developed by theorists.