Paul A. Samuelson on "You Didn't Build That"

post by Paul Kelleher

Economist Paul A. Samuelson (Economics, p. 484):

Many ingenious ways have been suggested for measuring this consumer's surplus, but they are of no particular significance. The important thing is to see how lucky the citizens of modern efficient communities really are. The privilege of being able to buy a vast array of goods at low prices cannot be overestimated.

This is a humbling thought. If ever a person becomes arrogantly proud of his economic productivity and his level of real earnings, let him pause and reflect. If he were transported with all his skills and energies intact to a primitive desert island, how much would his money earnings buy? Indeed, without capital machinery, without rich resources, without other labor, and above all without the technical knowledge which each generation inherits from society's past, how much could he produce? It is only too clear that all of us are reaping the benefits of an economic world we never made.

This basic fact is well stated in the following quotation:

The organizer of industry who thinks that he has "made" himself and his business has found a whole social system ready to his hand in skilled workers, machinery, a market, peace and order---a vast apparatus and a pervasive atmosphere, the joint creation of millions of men and scores of generations. Take away the whole social factor and we have not Robinson Crusoe, with this salvage from the wreck and his acquired knowledge, but the naked savage living on roots, berries, and vermin.[1]

[1] L. T. Hobhouse, "The Elements of Social Justice," pp. 162-163, Henry Holt and Company, Incorporated, New York, 1922.

Comments

[Mark LaRochelle]

Despite the fact that he was a Fabian socialist, I think Hobhouse had it right: "a whole social system." This social system -- families, churches, religious and private schools, firms, the "market" itself -- are the result of consensual interaction of "millions of men" and women, the spontaneous order of customs generated through trial and error, the experience of "scores of generations."

The President's error was in equating this "whole society" with the government. As Tom Paine wrote, "Society in every state is a blessing, but Government, even in its best state, is but a necessary evil; in its worst state an intolerable one." While society, being consensual, must perforce be beneficial, government, being coercive, must at some point become a net detriment to society.

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