Actually, Yes, You Did Build That

“You didn’t build that!”  Elizabeth Warren used that line first, addressing it (rhetorically) to business owner who thinks that he built a business.   Warren the gives a litany of various things like roads, police protection, schools that educated his employees, and so on. Since the businessman benefits from these things, the argument goes, he woes compensation back to society, i.e., more taxes.

How should we think of such an argument?  Let’s imagine a pure libertarian society. Here road maintenance, security, and education are private functions, provided by private businesses and non-profits. It is still the case that the business owner does not provide these services directly himself. He needs to pay someone else for them. For example, he would need to pay tolls on a private road to fund road construction and maintenance.

So, in this libertarian society, can we wag our finger at the businessman and scold, “You didn’t build that”? No, not really. Of course, the businessman depends on suppliers and clients, etc. We cannot argue against that obvious fact. The libertarian merely argues that such relationships ought to be consensual, not coerced.

So, back to the Warren argument. I think the same logic applies there. It is well known that, in our progressive tax regime, most of the taxes are paid by a small fraction of taxpayers. The top 3% of taxpayers pay over half of income taxes, while the bottom 50% pay only 5%.  So, in a very real way, the roads that the businessman used, the schools that educated his employees, the police presence that protects him, these are all things he, and other high-income persons, already paid for. And not only that, he paid for these not only for his own business, but for numerous others in society who paid nothing.

Warren are is trying to double-charge the wealthy, taxing them initially to build the roads, fund the police, etc., and then, noting that they benefited from the roads they paid for, goes back and claims they owe another debt, to society, for the roads the exact same roads they already paid for.

Again, the libertarian argument is not that the businessman does not benefit from roads, police, etc., but that the businessman, who in a very real way is already paying for the roads, would be better off buying such services in a competitive market than from a monopoly supplier. Libertarians would rather have these relationships be consensual than coerced.