Risk is crux of any free enterprise system

One of the things I admire most about business people—particularly small business people—is that they have the courage to take risks. Free market capitalism isn’t for the faint of heart. Those folks who take an idea, wrap it in scarce resources, nurture it with hard work, and make it successful will always be special to me.

Risk is the very crux of any free enterprise system that isn’t adulterated by government-sponsored crony capitalism. The vast majority of small businesses don’t get a subsidy, a preference, or a government-backed loan. They sink or swim on their ability to create a product or service that others are willing to buy and to manage a business successfully in a growing maelstrom of government regulations and mandates.

Successful small business owners who grew their businesses take great pride in the fact that they started with next to nothing and made something out of it. Those individuals undoubtedly felt misunderstood and belittled by remarks President Obama made recently at a campaign stop in Virginia.

“If you’ve got a business, you didn’t build that. Somebody else made that happen,” the president told the crowd at a fire station. The kindest interpretation of President Obama’s remarks is that he was noting that each of us benefits from education, fire and police protection, and public infrastructure—and that is generally true. But to take that generalization and turn it into “somebody else made that happen” indicates a gross misunderstanding of the ingenuity, industry, and willingness to take risks that are the critical ingredients in creating a successful small business.

In the president’s view, government is the force that moves the wheels of the economy and in doing so it must ensure that businesses are appropriate tools of social justice and an instrument for reallocation of wealth. I can understand how he came to believe that and how passionate he is about his belief. I only wish that he would temper his view of the economy with a greater understanding of how economics actually works. The government redirects wealth, it doesn’t create it. It takes resources from the private sector to fund public initiatives. If the private sector stops developing the resources, the public sector experiences exactly what is happening today.

Small businesses understand the real marketplace. They live in it. They respect consumers’ needs and desires. They don’t have the authoritarian power (nor do they want it) to force choices on consumers that they don’t want. Small businesses understand and respect the symbiotic relationship they have with their customers: both benefit from each other in a voluntary relationship. Unfortunately, President Obama and many in government don’t comprehend that concept. In their view, government determines the “common good” and trumps the freedom of economic choices in the quest for social justice.

I wish the president understood small business owners better. I wish he could see how they serve as the backbone of communities; how they engage in community service; how they sustain charities and coach children’s sports teams. He might learn that running successful businesses and hiring folks in their communities is part of the “quality of life” that every community strives for and too many of them don’t have. He would then understand how misinformed his “you didn’t build that” comment is on so many levels.


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