by
Thomas J. DiLorenzo

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by Thomas DiLorenzo: Totalitarian
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Barack
Obama recently proved once again that he is indeed a Proud Marxist
(as Yuri Maltsev, former advisor to Mikhail Gorbachev, calls him)
when he argued that successful American entrepreneurs “didn’t
build” their businesses on their own. Government bureaucrats
were mostly responsible for their success, the Marxist in the White
House asserted, citing government-run schools, roads, etc. Like
all Marxists, Barack Obama is belligerently ignorant of economics
and is in denial of much of economic reality.

No successful
business person believes that he built his business completely on
his own, without help from anyone. Obama’s claim is a straw-man
argument. Every business person collaborates day in and day
out with suppliers, customers, employees, managers, accountants,
marketers, bankers, investors, and many others. As Adam Smith wrote
in his famous 1776 treatise, An
Inquiry into the Nature and Causes of the Wealth of Nations
(1937 Random House edition, p.422):

In civilized
society [man] stands at all times in need of the cooperation and
assistance of great multitudes, while his whole life is scarce
sufficient to gain the friendship of a few persons . . . . Man
has almost constant occasion for the help of his brethren, and
it is in vain for him to expect it from their benevolence only.
He will be more likely to prevail if he can interest their self-love
in his favour, and show them that it is for their own advantage
to do for him what he requires of them. Whoever offers to another
a bargain of any kind, proposes to do this. Give me that which
I want, and you shall have this which you want, is the meaning
of every such offer; and it is in this manner that we obtain from
one another the far greater part of those good offices which we
stand in need of. It is not from the benevolence of the butcher,
brewer, or the baker, that we expect our dinner, but from their
regard to their own interest . . . . Nobody but a beggar chuses
to depend chiefly upon the benevolence of his fellow citizens.

As for the
role of government, history proves that it has always been the mortal
enemy of free voluntary exchange and the generation of prosperity
through the free market. As Ludwig von Mises wrote in his 1956 book,
The
Anti-Capitalistic Mentality, “A nation is the more
prosperous today the less it has tried to put obstacles in the way
of the spirit of free enterprise and private initiative. The people
of the United States are more prosperous than the inhabitants of
all other countries [as of 1956] because their government embarked
later than the governments in other parts of the world upon the
policy of obstructing business.”

Government
spending at all levels accounts for some 40 percent of GDP, signifying
that the American economy is at least 40 percent socialist. The
socialist “public” school system is a disaster in every
city with only a relatively few affluent suburban enclaves of success.
As such, the American workforce has been dumbed down, year in and
year out, to the economic detriment of everyone. The socialist “public”
roads are responsible for more than 50,000 highway deaths each year,
which is hardly a good record. The welfare state has destroyed the
work incentive of millions and caused the break-up of untold numbers
of families. (The basic mechanism here is welfare and child support
payments that are generous enough to create millions of deadbeat
dads who abandon their children without the social stigma of having
left them in dire poverty).

Social Security
reduces incentives to save for one’s own retirement. Lowered savings
rates lead to less capital investment and, consequently, slower
economic growth. All other government spending programs enrich the
parasitic political class while impoverishing the producer class.
The long history of aggressive militarism by the U.S. government
has always ratcheted up governmental powers at the expense of liberty
and prosperity while enriching the military/industrial/congressional
complex. The system of unlimited democracy that Americans now slave
under can be defined as follows: Moochers and parasites hiring/electing
professional looters to steal from producers.

The Fed has
always generated boom-and-bust cycles in the economy, and then blamed
the problems it created on the free enterprise system. After the
Greenspan Fed created The Great Recession the current Fed “godfather,”
Ben Bernanke, went on television to arrogantly sneer at the notion
that markets and the free enterprise system should or could be the
way out of the depression, while arguing for the granting of vast
new regulatory powers for the Fed.

Every business
in America is now strangled by tens of thousands of pages of regulations
in The Federal Register, not to mention reams of state and
local government regulations. The pettiest, most selfish, and most
ignorant local political hack has the ability to use government
regulations to shut down billion dollar construction projects on
a whim. A recent example of this is how a single member of the West
Palm Beach, Florida city council caused a stoppage of the building
of a major outlet shopping center in that city by demanding that
the construction company that is building the shopping center hire
more “local firms.” It is a good bet that the city councilwoman
in question has a relative who is a construction contractor. Such
acts are nothing more than legalized extortion.

The more a
business person must deal with regulations and regulators, the less
time he has to devise ways to improve his products, cut his costs
and prices, and create new products. Government regulation crowds
out entrepreneurship, wealth creation, and job creation while imposing
immeasurable costs (in time and money) on private businesses.

There are a
few exceptions, but for most of the past 120 years government regulation
of business has been a tool used by large corporations to stifle
competition from their smaller competitors and to create barriers
to competition from potential competitors. The very first federal
regulatory agency, the Interstate Commerce Commission, founded in
1887, was used first by the railroad industry to cartelize the industry
as a government-controlled price-fixing cartel. It then did the
same thing for the trucking industry. The Civil Aeronautics Board
was similarly “captured” by the airline industry, which
enjoyed a government-enforced cartel price-fixing monopoly for half
a century before it was deregulated in the late 1970s. The entire
regime of “public utility regulation” has been one big
government-run cartel or monopoly scheme since the late nineteenth
century. This all goes under the rubric of the “capture theory
of regulation” in the discipline of economics. (See Butler
Shaffer, Restraint
of Trade; and Gabriel Kolko, The
Triumph of Conservatism).

Government
also deals a death blow to the institution of capitalism with its
massive bailouts of failing businesses as an additional form of
corporate welfare. Capitalism is a system whereby profits and losses
are private. Serving customers well leads to profits; failing to
do so leads to losses or bankruptcy. Socializing the losses while
keeping profits private encourages reckless risk taking and sloppy
business management and causes “private” businesses to
operate more like government bureaucracies.

In short, Barack
Obama’s ignorant “you didn’t build it” remark did two
things: First, it displayed remarkable economic ignorance; and second,
it asserted exactly the opposite of the truth with regard to the
role of government in the economy. In today’s world American businesses
that are successful in the marketplace have become so despite
government intervention, not because of it.

August
13, 2012

Thomas
J. DiLorenzo [send him mail]
is professor of economics at Loyola College in Maryland and the
author of The
Real Lincoln; Lincoln
Unmasked: What You’re Not Supposed To Know about Dishonest Abe
and How
Capitalism Saved America. His latest book is Hamilton’s
Curse: How Jefferson’s Archenemy Betrayed the American Revolution
– And What It Means for America Today. His next book is entitled
Organized Crime: The Unvarnished Truth About Government.

Copyright
© 2012 by LewRockwell.com. Permission to reprint in whole or in
part is gladly granted, provided full credit is given.

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