John C. Goodman

Some of President Obama's defenders have claimed that the critics are reading too much into his speech. That all that's going on here is the classic conflict between individualism and social needs. But there are degrees of disagreement. Obama's articulation of the issue is an extreme collectivist point of view. It is remarkable precisely because it is so very far outside the mainstream of contemporary thought.

That's why so many people are outraged and why there is a sudden surge of gallows humor. On Facebook and in other social media, people are sharing examples of inventors and entrepreneurs "who didn't build it."

Steve Jobs didn't create the iPad. Other people did. Bill Gates didn't create Microsoft. Others did it. I guess Michael Phelps didn't really win eight Olympic gold medals either. Think of all the help he must have had along the way.

Still, there is a serious point to be made. For more than 200 years economists have been studying the distribution of income. Granted that what each of us does affects other people, what determines how much income any one of us receives? The economists answer is straightforward. In a capitalist system, each one of us tends to receive an amount equal to our marginal contribution to nation's output of goods and services. That is, each of us tends to receive an income equal to our contribution to generating national income.

In plain English: people tend to get the value of what they produce.

There is logic to how the economic system functions. Incomes are not distributed randomly. For the most part, they are not the result of misfortune or luck. They are very much affected by the attributes the president derides: smart thinking and hard work.

In a previous post, I described how low-income families have been systematically deprived of the benefits of capitalism because of unwise regulation.

If President Obama really wanted to help those at the bottom of the income ladder he would be calling for massive deregulation, for liberating the entrepreneurial spirit and allowing the dynamics of the marketplace to meet the needs of the poor, the way they meet the needs of everyone else.

Instead of deriding and belittling people who build businesses, the president should understand how helpful they could actually be.


John C. Goodman

John C. Goodman is Senior Fellow at The Independent Institute and author of the widely acclaimed book, Priceless: Curing the Healthcare Crisis. The Wall Street Journal and National Journal, among other media, have called him the "Father of Health Savings Accounts."