Open letter to President Obama (Part 222)

 

President Obama c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear Mr. President,

I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is going on out here.

Is the government the one that is coming up with great ideas for new businesses? Where does the credit go for all the new ideas that create new businesses?

Dylan DelliSanti

August 6, 2012 at 2:00 pm

President Obama’s “You didn’t build that” comment has drawn much attention. The reactions from both the President’s defenders and his critics illustrate a profound misunderstanding about how the market actually allows us to cooperate.

As Milton Friedman, echoing Foundation for Economic Freedom founder Leonard Reed, pointed out: “not a single person in the world can make [a] pencil.” This may sound strange at first, but the reality is that it takes many people, each with different skills, coordinating with each other from around the world to produce a single pencil. The graphite may have come from Italy, the wood from Oregon, and the rubber in the eraser from Malaysia.

Yet no government direction was needed to bring these people together.

It is the entrepreneur who brings these people and resources together, guided by a market system in which prices determine the most efficient use of resources. Government planners can never match the ability of the market process to facilitate an environment for cooperation and coordination—no matter how intelligent the bureaucrats or how benign the governing elite.

This is not simply theory; the Index of Economic Freedom proves that countries with higher levels of economic freedom are also the most prosperous.

Today, the world economy is much more complex than when Milton Friedman lectured about the production of pencils. Paper and pencil have been usurped by the computer, iPad, and smartphone. Yet as this video from the Institute for Faith, Work and Economics demonstrates, the market process is more important than ever.

A recent study found that for every $299 iPod sold in the U.S., our reported trade deficit with China increases by about $150; however, the value added via the assembly lines in China is only $10, and much of the value added of that so-called deficit is captured in the U.S. by designers, financiers, and owners of intellectual property. A variety of different producers and service providers from many countries contribute to the complex process that puts an iPod on the shelf in an American store. And all that effort is coordinated by Apple, not the U.S. government.

The government has a role in society, but it is only through the market process that individuals can cooperate effectively on a grand scale.

Dylan DelliSanti is currently a member of the Young Leaders Program at The Heritage Foundation.

__________

On July 3, 1981, I was in Prague, Czechoslovakia in the middle of a 20 country student tour. Our group of 48 American students had the opportunity to speak to a Communist government official for over an hour. We asked him several questions. My questions were quite direct and I will share some of them at a later time.
 
However, I did want to share one question that I asked. I told the official about an entrepreneur from Memphis named Fred Smith. Back in the early 1970′s we heard about how Smith had this crazy idea about delivering overnight packages from LA to San Francisco via Memphis. Sounded like it would not work, but Smith was able to invest all his money and eventually it paid off. His idea was successful.
 
I asked the simple question: Could something like this happen here in Communist Czechoslovakia? He responded, “No. That is because no private citizen is allowed to own that much capital. The government must do things like that.”
 
There was no chance for entrepreneurs to exist in communist countries. I was simply pointing out that economic freedom allows an environment for entrepreneurs. Why would someone put the time and energy in putting together a grand plan like Fed Ex when the benefit and reward would just go to a communist government?
___________

Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.

Sincerely,

Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com

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