Can You Really Build Your Own Business?

President of the United States Barack Obama suffered a verbal misstep in 2012, when speaking to a group in Roanoke, Virginia.  The clip can be found here: http://www.youtube.com/watch?v=YKjPI6no5ng.

Specifically, the words that he used, that were focused on as insulting to entrepreneurs, were: “If you’ve got a business, you didn’t build that. Somebody else made that happen.”  Opponents jumped on the opportunity to point out the slap in the face to hardworking businesspeople across the country.  Surely, small business owners who accept the tremendous risk and uncertainty in starting a new business, the significant chance of failure, the long (unending) hours, and the delayed hope of profits, want to feel that their efforts are appreciated, and that they are financially compensated for their efforts.  They also want to know that their president appreciates their contribution to the economy.  Indeed, small business is an important driving force of any economy. Those businesses at a micro level which are quick to respond to market forces, searching for niche markets, and ever responsive to consumers, all while creating jobs, are certainly enterprises to be celebrated. 

Unfortunately, this is another example of a perfectly sound message lost in a perfectly erroneous soundbite. 

To say an entrepreneur didn’t build their own business is like telling any one of us that we didn’t clothe ourselves this morning.  Did we?  Yes and no.  We put on the clothes that were available to us, but we didn’t make them. Or perhaps a few people did actually sew their own clothes, but they didn’t make the fabric. Or the sewing machine. Or the thread. 

The message that should be articulated again and again is the correct idea that an enterprise is a team effort.  The infrastructure of business must be in place for business to grow, much like the infrastructure of a plant must be in place for a plant to grow.  The seed itself is of course vital and of utmost importance, but it will accomplish nothing without soil, moisture, and sunlight. If we really want to allow small business to flourish, we must take care that the infrastructure of business is in place, which includes rule of law, contract enforcement, property rights, physical infrastructure, information technology, etc.  Many of these public goods are indeed provided by government, and it is fair that those seeds which grow to become the forest canopy also give back most significantly to the surrounding infrastructure for future growth. 
There’s my liberal statement on the issue. 

Now for the conservative one: one other infrastructural element that is ostensibly missing from the list in the previous paragraph is that of incentives. I’m an economist. I believe that incentives are key drivers to what happens in this world.  Reduce the incentive to do something, and it will be done less.  This certainly applies to the appropriation of profits (as well as the expensive seeking of tax shelters).  But that’s another story for another time. 

The summary statement I would like to make, is that no, none of us can really build our own business. This is posited alongside of my personal admission that I cannot completely feed myself, clothe myself, or shelter myself.  My ability to do these things is precluded by a highly efficient system which allows us to use phones, computers, cars, where we could never produce these things ourselves.  We use this technology as we use our legal infrastructure, seldom giving thanks for its existence, and with little appreciation for all that goes in to its maintenance and development.  I have met with several young students in recent weeks who are hoping to build their own business very soon.  Whether they see it as the true partnership that it is, remains to be seen.  Whether you see the events of your daily routine in this same light is of course, up to you.  But doing so might provide each of us with a renewed appreciation for our communities, making us feel a little more dependent, but also making us feel a little more grateful as well.