A while back, Elizabeth Warren gave a speech and talked about how entrepreneurs do get help from the community around them, and about the need to “pay it forward”. And recently, Barack Obama spoke about how businesses didn’t just do it on their own, but also with help.
Which brings me to the question: Do business people build things on their own? Or with help? I think the truth is a lot of both.
But since most of what we hear in the media is of business owners and their struggles, let’s examine the background against which their success is also built…
Consider that the average school district spends $10,000 per year per student on delivering public education. That’s teachers, classrooms, staff, facilities, textbooks, principals, administrators, janitors, coaches, materials, playgrounds, gyms, etc. So let’s say that’s $120,000 from 1st grade through 12th grade. Never mind college.
Then consider that the average middle class family in America spends well over $100,000 over 18 years – and considerably more in unpaid hours, blood, sweat, tears and hardship in parenting: bearing, birthing, caring, teaching, nurturing, educating, guiding, etc. If you’re a parent, you know exactly what I’m talking about.
All in all, over $220,000 to deliver a high school graduate to the work world. All so a business can hire that young individual at $8 per hour.
Now imagine if a business had to spend the time and money on their own to develop those workers from scratch. (And I’m not even talking about college-educated workers.) It would take YEARS, not to mention A LOT OF MONEY. Small business owners like shopkeepers who employ their kids to help mind the store know exactly what I’m talking about.
So… Do businesses REALLY build everything themselves? Or do they use the available building blocks that are provided extremely cheaply to them? Let’s look further at a few important factors.
Labor: As described above, the costly product of years of upbringing and education. People who develop themselves physically, emotionally, academically, etc. to be able to work for a business. Anywhere from 16 to 18 years at a minimum. For jobs that require advanced education, skills, and experience: 20 to 27+ years even.
That’s not usually someone that a business owner developed. That’s someone who was working on being prepared long before an entrepreneur even thought of starting a business! When we think about businesses being flooded with résumés during this down economy, where HR departments are experiencing an embarrassment of riches, this is the other side of the jobs coin: that there are numerous people ready to hit the ground running!
Infrastructure: Roads, bridges, water and sewage systems: paid for by generations of taxpayers. Already available so a business doesn’t have to send pack mules over muddy paths across town to deliver a product. So an entrepreneur cans reliably flush a toilet and get back to his desk.
Even public education not just as training for labor, is an “infrastructure” of sorts. I may have my misgivings about how educational dollars are wasted or how America’s educational system turns out too many unqualified graduates. But without consumers who have a basic level of education, the amount and quality of journalism and literary offerings would suffer even more. There would be fewer niches in the consumer goods and services ecosystem to support as many specialized or sophisticated offerings. There probably would be much fewer options available for many home electronics or appliances. Restaurant menus might have problems with words. Just imagine the drive-thru at your local McDonald’s with a much more limited selection.
Laws and Public Safety: Businesses can be sure that contracts they sign are honored. Most don’t have to hire a full-time security guard as they have to in a Third World country. They don’t have to bribe every policeman that comes in the door. There is someone to report to when criminal elements try extortion.
The products a business purchases for resale will tend to meet some level of standards (versus, say, pet food or infant milk formula from China, or lead or cadmium-laced toys), etc. As much as businesses hate regulations and grumble (sometimes legitimately), they are also protected by regulations and save a lot of time and money. For example, in knowing that a building they buy or rent is built to code – without having to hire their own engineers or inspectors. In knowing that there is a certifying institution that has at least vetted an engineer or inspector (or even a doctor) without having to risk as much in “testing” them out first.
Now, there are MANY honorable and good corporations and businesses out there. They pay their taxes. They understand that they are blessed with hard-working American workers, relatively decent law enforcement, a relatively incorruptible court system, and infrastructure that still works. They understand that part of their profits go towards maintaining that. I’m not bashing them at all.
However, more and more corporations and businesses try to out of paying taxes by exploiting loopholes, tax shelters, off-shore accounts. By buying politicians, writing legislation and purchasing the votes of legislators, etc. They are getting value from their fellow Americans’ contributions – in the form of labor, infrastructure, laws and public safety – for their profits, but without repaying or contributing to the maintenance of all of this by providing living wages or being socially responsible by paying taxes without weaseling out of them.
These business violators are the ultimate parasites taking advantage of a generous American society that has provided so many of the building blocks they use to profit. How about the hedge fund billionaire who makes a billion but pays only 15% in taxes on passive income while a doctor makes $150,000 has an effective marginal income tax rate in the high 30% range, because the laws have been changed to value passive investment income (like a dividend-paying stock purchased years ago) over the blood, sweat, and tears of labor donetoday. Even Google, for example, pays an effective 2.4% in taxes – but ties up the court system and Patent Office in massive lawsuits defending against or attacking other companies. Corning has paid no taxes in several years – even got a refund last year – yet is asking for more tax cuts.
These rogue businesses built their profits not on their own, but at the expense of other businesses and the American people. They didn’t build it all on their own. But they sure act like they did. And it’s sad that so many have been brainwashed into believing them.