ABOUT TOM WOODS

Thomas E. Woods, Jr., is the New York Times bestselling author of 12 books, including The Politically Incorrect Guide to American History and Meltdown (on the financial crisis). A senior fellow of the Ludwig von Mises Institute, Woods has appeared on MSNBC, CNBC, FOX News, FOX Business, C-SPAN, Bloomberg Television, and hundreds of radio programs... (Read More)



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You Owe Your Success to the State, Citizen

1st May 2012      by: Tom Woods     

Over on my Facebook page, someone pointed out a review of a new book called The Self-Made Myth: The Truth About How Government Helps Individuals and Businesses Succeed. Not having read the book, I don’t know whether it or the review itself is more grating, but I bet it’s close.

The review, at least, is an exercise in question-begging, gratuitous assumption, and the broken-window fallacy. The reviewer evidently absorbed the entire seventh-grade lesson on the benign nature of government and its passionate crusaders for justice. Not even a tinge of curiosity about alternative points of view, or concern that the way government portrays itself to the public may not in fact be the whole story.

The review proceeds under the premise that were it not for government providing A, B, or C, then A, B, and C would not be provided. If there were no government-funded road connecting Sears to that apartment complex, we’d presumably all be standing around like doofuses, scratching our heads and wondering how on earth to get those dishwashers to our dwellings.

It further assumes there is no moral argument involved when people with guns and badges expropriate peaceful individuals. Consequences are all that matter.

It assumes that successful individuals owe that success to government “services” that they had no choice but to pay for, and in many cases no real choice but to use.

It assumes government has not hindered business in any way, or at least in any way the reviewer bothers to disclose to us. So the taxation, the inflation, the business cycles, the subsidies for inefficient production at the expense of the efficient, the Alice-in-Wonderland antitrust litigation, the regulation — another 70,000 to 80,000 pages worth per year (all of which is necessary to keep us from instant death, you understand) — none of this ever hindered anyone. None of this is worth mentioning, since, hey, some guy found some useful information in a brochure published by the Small Business Administration.

It buys into the boringly conventional “public goods” argument, as if a zillion scholars hadn’t been chipping away at it for years. (Here are just two, but there are many more.)

It is oblivious to how wages and living standards rise, and calls for the very things that retard that process: increased income and capital-gains taxes, minimum wages, more spending on “education” (how much spending on education could ever be enough, I wonder?), etc.

On education, by the way, I repeat what I wrote on my new site:

From the early 1970s to 2003 alone, [education] spending per capita doubled…. Meanwhile, Japan, spending one-third as much per capita, and with much larger class sizes, vastly outperforms the U.S.

There is no connection between higher education spending and higher SAT scores. In fact, some of the highest scores are earned in states that spend the least on education. Washington, D.C., which spends the most, is dead last. (Statistics here.)

(Incidentally, state subsidies cannot account for the extraordinary literacy rates, including among the poor, in nineteenth-century England. See the work of E.G. West.)

The review has absolutely no inkling of how regulation — which, we are quaintly told, is just there to keep us all from dying — is used to inhibit competition, and is lobbied for by business firms themselves. Tim Carney does some good work on this in his book The Big Ripoff.

The Small Business Administration, touted in the piece, has an atrocious record. Naturally it will have some successes — giving certain people special privileges at the expense of others is bound to bear some fruit for those so privileged, but there is obviously no non-arbitrary way by which we can declare that the SBA-led outcome is economically superior to the outcome that would have occurred without it.

We need “trust”  in the marketplace, says the reviewer. Of course, the real problem has been too much trust — thanks to the SEC, investors have failed to do their due diligence. Why, if the SEC can’t find anything wrong with Bernie Madoff, he must be a fine fellow! What private certification firm could survive a scandal like that, much less wind up with a bigger budget?

It seems to be taken for granted that the very infrastructure of society owes itself to the state. Our reviewer would be puzzled, no doubt, at the development of merchant law in the Middle Ages, which occurred without state involvement and extended to a variety of peoples scattered across a vast expanse.

This is exhausting, so feel free in the comments to hit on anything I didn’t cover.

Unlearn the Propaganda!

  • Steve H.

    I’ve always found it comical when statists talk about roads.  “Who would build the roads?,” they exclaim, as if that were the end of it. I usually reply by asking them where all of the road building equipment came from.  Is there a Department of Road-Building Equipment in Washington?

    And where did they materials to build these roads come from?  Are we to believe that cement, gravel, slurry, re-bar and the like are produced by D.C. bureaucrats?  Please.

    The whole argument is really quite silly.  Get the government out of the way and roads will get built faster, cheaper, and of higher quality than the crappy roads we must endure and overpay for today.

  • Kevin

    Tom, I am puzzled even at the education ratings of the states. Here in Texas, we are rated at 37th, or at least that is what the local NPR station said yesterday morning, yet, our economy is booming. In my local area, we can’t fill all the jobs we have and I struggle to fill my positions that vacate for higher pay. So based on outcomes- wouldn’t Texas be among the highest because our results produce a viable economy?

  • Anonymous

    I am quickly coming to believe that it is no longer intellectual or academic, but little better than propaganda. To what end I can’t imagine, because I would assume no one wants a totalitarian society, from the left or the right, even though they may support those policies without understanding. The only possible culprit I see is ad hominem reasoning and the Dunning-Kruger effect, because I’m not much for conspiracy theories.

  • Anonymous

    Yes the regulations help the big corporations and hurts the family businesses.  The SEC is unconstitutional. 

  • http://www.facebook.com/profile.php?id=696056815 Matt Postell

    The government did give us the intellect for 12 years in order to think about ways to improve the society. And they also gave us a means to and from these places of learning. And don’t forget citizen, we also would not have the internet we are using to discuss this topic if it was not for these people of high moral status. I really don’t see what you are complaining about Dr. Woods. I mean, where would you be in life without these gang of thieves. Did you not know the books you wrote would not have done as well without the stimulus package. It created demand for everything! You should be thanking the public servants who have made you who you are today.

  • Frank M

    Plus, the government only fixes the potholes during the election year.  ;) 

  • http://www.facebook.com/profile.php?id=1457760294 Robert Fellner

    Who would build the roads? Well let’s look at the history of the U.S. Who built the roads here? Oh, all private companies did. And this is an argument they use for government?!

    “By 1860 at least 7,000 corporations had formed to operate bridges,
    canals, ferries, railroads and roads. Total private capital investment
    in those transportation facilities and services amounted to over 3
    billion dollars. (Which is equivalent to approximately $10 Trillion in
    today’s dollars!)”

  • http://www.facebook.com/profile.php?id=1457760294 Robert Fellner

     Oh ya, private firms also created the first railroads, airports, and air traffic control systems in the US.

  • http://www.facebook.com/profile.php?id=507332958 Philip Lynch

    Another point you can make for the whole “roads” argument is that in a free market, people are compensated for the work they do. So if someone builds a road, you pay them for it, either to build it or to drive on it.

    Plus, the government demands a monopoly. You could use the same argument about shoes if the government had a monopoly on making shoes. “Sure you have loads of money, but how much would you have if you didn’t have government-made shoes? You would be barefoot and very unproductive. Thank goodness for government shoes. Now pay your taxes like a good citizen because the state has provided you with so much.”

  • http://www.facebook.com/people/Frank-Gimsdale/100001154537833 Frank Gimsdale

    The argument in Slate, like Warren’s argument, is based on looking at only one side of a ledger and then coming to a conclusion. What about the value or consideration that accrues to those that risk their own capital to invest in, start and/or grow a company? If one considers the recent stimulus spending, the government must believe that a middle class job created for two years is worth between $300,000 and $1.2mil or $750,000 on average to society. Applying this to my own small company that has created at least 100 such jobs during its history, I am owed roughly $75million from the government or society. Anytime the government would like, it can wire the funds to my account. LOL

  • Anonymous

    I enjoy when people tell me that “You owe your success to the government.” When hearing such things, I often think of my parents and childhood and respond with the following. Roads they say! Yes, I used roads. Although growing up, the roads where my family lived were often stone and tar roads and not smooth highways of shiny black asphalt. But roads none the less. Roads that were actually laid out many, many years ago (mid 1800’s) before any government agency was planning them out. Clean water and sewers! My parents get their water from a well. All of the purification was bought and paid for by them. My parents also have a septic tank that they have to pay to have cleaned and emptied every so often. And because of local government regulations, they actually have to spend a couple thousand dollars to upgrade because their current system (that they had when the house was built in the 70s) no longer meets the criteria and rules for an approved septic system. Thanks government! Electricity! Yes, we used electricity. But that is hardly an invention of government. My parents live by state owned power lines that are about 80 ft high that distribute high voltage to areas within that state. I find it interesting that the “all knowing” state came by their house and did an analysis of what trees on their property could possibly be blown over to hit the 80 ft high power lines, thus possibily disrupting power for numerous other areas. The state officials ended up cutting down a hand full of trees, none of which were 80 ft tall. They even cut down some trees that were 20 ft tall and over 50 ft away. Maybe these genius state officials should go back to geometry class and learn the Pythagorean theorem! Thanks again government! Heat! My parents heated their home by oil and more recently use a wood stove. Education! My parents did not go to college and ended up being quite successful. I went to both private and public grade/high school and a private college. About 6 years of my education were in a public school. I had both good and bad teachers in both private and public systems.Police! My parents only called the police once during my entire 18 years living with them and it was to report a stolen santa clause that someone took from our yard. They did end up finding it to their credit. Food Safety! My parents had a garden and my neighbors very often provide vegetables from their garden. There is alos quite a large deer population in the area that is available to be hunted during certain times of the year. We also had close friends with a dairy farm nearby that provided corn, milk and beef, none of which was inspected by the FDA. I can keep going on and on. So in conclusion, my parents live in a state where they have to pay a federal income tax, state income tax, county tax and property tax. For these 40+ years of taxes, they get a couple trees cut down, have to spend a couple thousand dollars to get a new waste system, got me 6 years of public school and had a 4 ft santa clause returned to them. What would we ever do without our wise overlords!

  • Jovan Galtic

    Without all the government waste we wouldn’t need roads today. We would drive energy efficient flying cars.

  • http://plenarchist.wordpress.com/ plenarchist

    Ask if the road in front of their house was privately built… If someone lives in a subdivision, the road probably was and might still be privately maintained. All roads within a commercial development like office parks or retail centers are usually privately built and maintained.

    The issue isn’t whether businesses *can* build roads (of course they can) but rather if roads can be built without stealing people’s land. Eminent domain is the reason the state can build roads more cheaply… and combined with zoning laws create lots of sprawl and way more driving than would otherwise have been the case.

    If we had had market-based transportation in the US, urban development today would actually be a lot more like what the anti-sprawl people claim they want… Without eminent domain or zoning laws, there’d likely be much more high-density mixed-use development, more transit of some kind, and fewer roads. Another lesson learned from the school of unintended consequences…

  • J Cortez

    The “you don’t live in a vacuum, so therefore you owe everything to society (or the state)” argument/fallacy is something that needs to be shot down whenever it’s seen. It’s something redistributionists repeat ad nauseam, whether it’s a theoretic arguments over taxation, wealth inequality, and social justice or policy arguments over various so-called public goods.

    Personally, I find the very notion of the argument disturbing. It logically doesn’t follow to me that because somebody got rich by selling people stuff, that same rich person now owes everybody else. All parties got what they wanted already through voluntary means, there is no logical reason ruin a scenario where everybody cooperated peacefully.

    It’s a strange aversion to the concept of monetary profit, I guess. But really, provided the people getting the profit didn’t commit violence, fraud, or theft, there is no problem. So, what’s the issue? Is it stupidity? Envy? Primitive tribalism? I wish I could explain it.

    As foolish and illogical as it is, I think the “vacuum” argument is going to be repeated constantly during this election cycle.

  • Serio4220

    The notion that we would not have an interstate highway system without the government is indeed silly. But during the time that they were being buillt, we have to ask ourselves, “was this the proper efficient time to build a state highway system?” As we all know, markets are efficient at allocating resources. So perhaps during the time that the government built the highway system, it’s possible that those resources were actually demanded elsewhere in the economy for more urgent uses. Perhaps there would have been a private highway system 5 years later (or something like that) and we might have had an economy better suited for it.

    Profits signal efficient use of resources in an economy. So if entrepreneurs wouldn’t have profited from building their own highway systems at that time, it’s possible that the highway system temporarily was a loss to society.

  • http://twitter.com/annilita Anne F

    One day, as a kid, I went to put some money in my bank only to find that half of what I’d saved so far was gone. As a poor kid, I’d been saving my paper route money to buy myself some “cool” clothes, as my parents could only afford to get us clothes once a year, and it was always sturdy and utilitarian. I was so mad! Where did all that money go! The missing amount would set me back months!
    A few hours later, in walked my older brother, buzzed, with a small bag of candy for me that he’d bought at the package store where he used the rest of my money to buy beer for himself and his friend. He’d “appropriated” my funds to buy what he wanted, and tried to placate me by arguing that he’d used my money to buy the candy, because he knew I liked candy.
    I did like candy. I’m not going to lie about that. Who doesn’t like candy? But I needed and wanted clothes. I was purposely not buying candy with my earnings, because it was less important to me than some shirts. Not only that, but the amount of candy he provided me with was far less than the amount of candy I could have bought with the full amount of my money, because he had used a large potion of it on his own pet project that benefited himself and his friends.
    Things were bought with the money. The economy was helped. But it would have been helped to the same extent had I been able to spend the money in the Junior’s section of JCPenny’s instead of having it stolen and spent at Hilltop Liquors. Also, I would have had the shirts I wanted, and a destructive practice I didn’t support wouldn’t have been funded.
    In my example, adults shake their heads and talk about my brother as a problem child who needs guidance and rehab, and I’m clearly the victim in the situation. But when it’s taxation for government projects, anyone who objects to having their money taken to pay for things they don’t support to the detriment of their ability to buy the things they do need or support, then you are a selfish, ungrateful citizen who hates the poor.

  • http://twitter.com/annilita Anne F

    Also, I’d just like to say that I *do* owe our current success to the US government. If the US government hadn’t created such a hostile environment for business, we never would have moved to the Philippines to start our company, where, for the mean salary of one American worker, we are able to fully support our family of 4 in a large home with two maids and a driver; pay cash for our medical expenses, as well as those of our maids, driver, and their families; go to museums, movies, and amusement parks on a weekly basis; eat out several times a week; have our kids in 4 different types of private lessons (piano, Chinese, etc); homeschool without the use of a public library; and, to top it all off, help support several families at our church, as well as assist others when emergencies arise and they don’t have access to funds.
    So, thanks, America, for helping me be a successful entrepreneur and philanthropist!

  • http://twitter.com/annilita Anne F

     Statistics like this are often based on either standardized testing, which has been shown to be an inaccurate indicator of academic success, or arbitrary measures like class size, amount of spending per child, etc, which, again, are not indicators of academic success. This is why education needs to be defederalized, and full control returned to the state (or, better yet, local) level.

  • Guest

    Funny question, here:

    If all property is owned, can people legally box you into your own property?

  • http://plenarchist.wordpress.com/ plenarchist

    If you owned land and a road builder wanted to put a road through, you wouldn’t sell the portion without ensuring access rights. I’d expect land would typically be licensed to the road owner/operator; not sold outright.

    If you wanted access to a new road, you’d want to make a deal either with the road owner or a neighboring land owner who is to have access. But if you didn’t have access before then presumably you wouldn’t be entitled access to the new road.

    Assuming that a new arterial is being built and you have land that isn’t directly next to the road, you could negotiate with someone who does for a shared drive say. Maybe several neighbors choose to build their own local street to the new arterial. Each land owner on the route could donate a strip of land and enter a shared agreement.

    There’s probably a million ways for people to voluntarily work out mutually beneficial solutions for access to the new road… need is the mother of invention after all. And the road owner wants customers, so the owner would likely help with the local road projects. This is another negative consequence of gov intrusion… that people don’t have to work out arrangements with each other. We’d be better off. Good way to get to know your neighbors if no other reason.

    But with proper law, IMO no one should be prevented access to a transportation thoroughfare although their use would of course be restricted by the owner (certain vehicle types, speeds, etc).

    And with all private roads, no patrolling by police, speed traps, or other state-sponsored shake-downs. Traffic violations would not be criminal offenses but rather civil in nature between the vehicle operator and the road owner/operator.

  • Guest

    That was really thoughtful and helpful. Thanks.

    Making arrangements beforehand, to have access rights, solves a lot of the issues for me.

    And of course, having to be nice to others out of economic concerns, covers a whole lot of issues not just for roads.

    You locked this up pretty good, I think. Again, thank you.

  • tomshag

    I don’t see Biden, Boenher or any other politician out there swinging picks and shovels.

  • http://pulse.yahoo.com/_XXUI2U5IPS7IABBMSM4I27BYDA chris

    Wouldn’t it have been nice if you’d have been able to do that in the US?

    But noooooo, Hope and Change.  We’ve got to destroy the free market to save it.  Depends on what “is” is.  No new taxes.  Government IS the problem.

  • http://pulse.yahoo.com/_XXUI2U5IPS7IABBMSM4I27BYDA chris

    Free markets deliver the mail faster, too.

  • http://pulse.yahoo.com/_XXUI2U5IPS7IABBMSM4I27BYDA chris

    My grandfather worked building the original Interstate system.  He told me that the contractors built in the most indirect routes possible, because they got paid by the foot, not from point to point.

    A free market would never allow for such waste.

  • http://pulse.yahoo.com/_XXUI2U5IPS7IABBMSM4I27BYDA chris

    I think that both the left AND the right fully support a totalitarian system.  They just never seem to acknowledge that the other side is going to get control of power one day and use it against them.

    A long-sighted, honest, free-market political leader would dismantle the levers of power, handing the authority back to the individual while limiting his opponent’s ability to retaliate.

  • http://pulse.yahoo.com/_XXUI2U5IPS7IABBMSM4I27BYDA chris

    Keep in mind also that measurments of “education” based on standardized tests get skewed by Texas’ sizeable immigrant population.  For the vast majority there is a language barrier which pushes Texas test scores down.

    Oddly enough, the immigrant population is the most receptive to education.  They’re here for the opportunity to self-improve, and education is as important to them as jobs.  Maybe moreso.

    God love ‘em.

  • http://pulse.yahoo.com/_XXUI2U5IPS7IABBMSM4I27BYDA chris

    Flying cars… like airplanes?

  • Johm Mullis

    You have failed to mention the enableing act for a states acceptance into the union of states.In Alabama as an example in order for acceptance in the enabling act of march 1819 the following had to be accorded by the territory of Alabama they are as follows; that section 16 of every township be given to the schools so that they will never be a burdon on the tax payers,the territory must give up all lands in addition to the above mentioned to the federal government with the additional exceptions for resale by the federal government for said survey of Alabama territory by the surveyor general  and records of survey turned over to the USBLM for disposition and sales to private citizens under the several artices and sections of the US Constitution.Exceptions being all of the roads lands where the government buildings occupy,the Coosa river and Cahaba rivers which are navagable waterways,salt streams,the rest is to be sold to private citizens.

     The question that everyone should ask if this is true and land grants authorized by congress under the provisions of the several articles and sections of the constitution of the US and the land patent which can only be issued by the signature of the president and has been upheld by the US superme court whos conclussion is that whoever holds title to the land as well as the land grant and patent has never lost a case in our court in the 213 years of cases tried before this court that the Federal,state,county ,or city governments have no lawful claims and further that no private party has any claims.This gives souverty to private citizens under the 10th amendment where the state and people have no distincton.The supreme court referances the Lousianna purches as well as the Haldalgo/Guadalope treaty among several others.

     In conclusion  this is not taught in the public educational system for we are to be good communist and turn ourselves over to the government along with all of our worldly possions.

  • Jovan Galtic

     http://www.youtube.com/watch?v=iE2Ij7Rfw1Q

    :)

  • Braelynch

    Breed registries and sport clubs do fine without government regulation.

  • vox

    Without government, we probably wouldn’t need as many roads as we have today.  I have more than faith that the middle class could probably afford private jets by now, if the federal government were kept to the size and limitations prescribed in the Constitution.  

  • http://www.praxacademy.com Rothbardian

    Its funny when you mention it:  the statists (mostly environmentalists) want people to stop driving and conserve resources, but their very insistence on public access of roads leads to wasteful transportation practices and inefficient design.  

    Its the same story I guess: these government worshipping people always want to stop X, but X would never have occurred if it were not for some previous government intervention.  Nice post.

  • http://www.praxacademy.com Rothbardian

    There might be flying cars if it were not for the government’s promotion of roads and regulation of flight.

  • chandra duggirala

    Anne, Excellent example except one minor caveat. The economy was not helped to the same extent as it was if you had gone and bought your clothes. Economy being helped is not some random transfer of wealth from consumers to the producers. It is the purposeful, efficient and voluntary transfer of money and resources between people who own them (consumers and producers), inline with their actual wants and desires. If you had your clothes and JC penny had your money, it is a net economic benefit to both of you. In your brother’s case, it unethically and immorally benefits the candy maker and the beer maker at the expense of your satisfaction. That is a worse economy than if you had your way. This is the same reason why USSR gap meant nothing. Their economy was huge, producing things nobody but the politicians wanted. Everyone had a job digging ditches and filling them up (proverbially of course), and everyone was broke!!!

  • chandra duggirala

    I meant to say GDP and not gap.

  • Dstorey

    The USSR gap doesn’t matter, either… You couldn’t even get blue jeans there ;)

  • Anonymous

    Here’s a flashback with Milton Friedman with Donahue.

    It gets to the heart of the problem with progressive claims of laissez faire monopoly and the mitigating role of government. This stuff is still really relevant, despite our disagreements with Friedman.

    http://www.youtube.com/watch?v=DvNzi7tmkx0&feature=related



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