The American Dilemma and How We Can Fix It

First we had nature – she gave us cowslips;

Then we had President Obama’s election – he gave us pink slips;

And now the President has created his very own special brand of gaffes which I have named in his honor, Obamaslips.

“You didn’t build that,” has now become a household phrase in the vocabulary of everyone who believes the President’s greatest achievement after nearly four years in office has been to make former President Jimmy Carter look good.

But let’s take the man at his word (great leap of faith required here) and say that this comment was taken completely out of context.  I can almost buy into that since I’ve been listening to the President’s attack ads and I believe his staff has mastered this technique and knows what “out of context” is all about.

Okay, what the President was really saying was, “Small business people didn’t build the infrastructure which enables them to engage in their livelihoods.”  By the way, it also enables all the rest of us who expect to see water when we turn on the faucet or flush the toilet; expect that when we drive we are going to be able to cross bridges that are safe and roads that don’t have pot holes; and when we flip on the magic light switch, we expect to find our rooms and our lives lighting up.  We didn’t build those either.

Well, by building the infrastructure I mean we didn’t (or most of us didn’t) go out and pick up an axe or a shovel and start the process that once represented the greatest achievement seen on earth since the Romans.  No, we didn’t physically build it – but we paid for it to be built.  That is true of the person who works for someone as well as for the owner of a small business.

When I bought the house in Las Vegas in 2001 it came with a separate special present.  That was a bill for the infrastructure that had to be built as the city spread out further and further from the Strip.  The City advanced the money in order for this to be completed.  But the ultimate cost of funding it was borne by the individual homeowner or rental apartment building or the person who took the chance to construct a small shopping mall so that your favorite fast food restaurant was only a short drive away.

As I recall, this originally amounted to about $8,000 for my house, but I don’t know the exact number as I wasn’t the original owner.  By the time I inherited this bill it was down to a little over $6,000 – and while the City had floated a revenue bond and was paying interest of 4.5%, the homeowner was being charged 8% on the outstanding balance.  (It’s kind of like big bank borrowing/lending – but not as profitable).

Well I paid off the balance since it was hard to get a guaranteed return of 8%, but I always wondered, how much competitive bidding went into this infrastructure build out?  After all, if you’re going to pass the costs along to a third party who has no say in the matter, does it really concern you whether you’re getting the best workmanship at the best price since someone else is paying for it?  But that’s a conversation for another time.

Let’s get back to the fantastic highway system that President Eisenhower constructed, connecting us from east to west and north to south.  This was a project that was admittedly undertaken by the Federal government and not by small businessmen (or any of the rest of us).  It was one of the great American achievements of the 20th century.  But where did the money for this project come from – and how was it paid for?

Well, the part of the equation that President Obama doesn’t understand and I suspect never will is that the American taxpayer may not have been out digging ditches or operating heavy equipment to move boulders and mountains, but we, each of us paid for it with our tax dollars.  And more than anyone, small businesses contributed the most to this enterprise.

The decades of the 1950’s through the 1980’s saw an explosion in the number of small mom and pop, entrepreneurial business come into being.  They couldn’t have existed before the interstate highway system was developed.  But they could exist and thrive once that system was in place.

As they grew, they paid more and more taxes because they earned more and more income.  And their numbers grew and they hired more people to work in their roadside fruit and vegetable stand or at the little gas station that they had opened.  And the economy exploded into one of the greatest periods of prosperity in the history of our country.

That highway system paid great dividends – and people realized the benefit that they had received and were happy to pay taxes for something which had given them an opportunity for a new and better way of life.  Respect for those in Washington was probably at the highest level since George Washington was in office.

Today we find ourselves with a group of political Aristocrats who exhibit, with few exceptions, none of the greatness and little of the pride that was widespread and commonplace among our legislators and presidents of fifty years ago.  We find small-minded people, bickering over who is most deserving of the best and biggest piece of meat to be carved from the still barely breathing wounded animal.  So absorbed in their petty fighting, they do not see that the buzzards are circling overhead what soon will be merely a carcass.  And the buzzards will strip it to the bone.

I guess what President Obama said is in fact true – “We didn’t build that.”  But if we continue to elect men and women to public office with miniscule mindsets and self-serving petty agendas, “We will all pay for it.”  And the price will be dear.

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Comments on: "YOU DIDN’T BUILD THAT – (BUT YOU PAID FOR IT)" (6)

  1. Superb, my friend, simply superb.

  2. Great article. It is important to note that while President Eisenhower did push the Federal Highway System through Congress in the 1950s, it was the vision of one man in particular, but a small group of wealthy men in general, who conceived of an interstate highway spanning one coast to the other.

    Not only did they conceive the idea, they used their own funds to get the project in motion by raising and spending more than one million dollars in 1913. As the project moved along, local government and state governments saw the advantages their regions were gaining in new and more efficient trade and persuaded their citizens that such projects were worth additional taxation to improve and expand upon this road called the Lincoln Highway.

    It wasn’t until private entrepreneurs saw the value of an interstate highway route that government took an interest and ultimately took over the job for political benefit with new efficiencies being the selling point to the people who were asked to fund the projects and the private corporations who were hired to build it. Not a single member of government took to shovel and pick.

    A similar deal occurred under the Presidency of FDR who demonized those who sought to create electric power from a variety of sources to sell on the open market. These men invested their own fortunes and took extreme risks to build power plants and distribution points and lines.

    When FDR and his cronies saw how valuable such a market was and the value in taking it over, they began demonizing these great producers like Samuel Insull and ruining reputations to coerce them into giving up their dreams of developing and running great, giant utility corporations. These officials forced companies to give up or to join in partnerships with the federal government in the regulation of the sale of electricity, regardless of the cost to produce it, in order to appease the masses and provide them with artificially low priced utilities.

    This also gave FDR the opportunity to grow government jobs which had been lost due to the great depression by creating work project involving utilities such as the rural electrification project of 1935 run by his Rural Electrification Administration. FDR’s interior secretary, Harold L. Ickes, the father of the Harold M. Ickes of Clinton fame as the White House Deputy Chief of Staff, tried to enforce the Raker Act against the city of San Francisco, an act of Congress which specified that because the dam at Hetch Hetchy Valley in Yosemite National Park was on public land, no private profit could be derived from the development. The city continues selling the power to PG&E, which is then resold at a profit

    As to government creating the internet, it was created by a small group of scientist who needed a better way to communicate with each other. It wasn’t until entrepreneurs involved themselves and heavily invested their own fortunes and risked ruination for a dream that the internet developed into what exists now.

    Government has never been know for being visionary. It sets goals with no idea as to how to accomplish them and proceeds by hiring bright minds from the private sector to design and run its programs. The only contribution from government is money; taxpayer money; my money; your money and they do so without ever asking permission or public input.

    Government involvement in private market industries has had both positive and negative results; mostly negative because it doesn’t have the capacity to turn quickly, to make instant and nimble decisions and then act on them with speed and due diligence. It can’t react well to market forces because it can’t comprehend them from the ivory tower when most derive and operate in the trenches of entrepreneurship. Government and private industry can be complementary, but only in the sense of the play, Beauty and the Beast – a fairy tale.

    Thanks again for a well thought out and interesting article.

    • Thank you for fleshing out the history of our infrastructure. I’m sure that the material you presented will be elucidating to many readers – myself included.

      • You are most welcome. By the way, the book I linked to is a free download and if you or your readers are interested in the history of the great depression, it is a well sourced reference.

    • In general I agree with you. You do need more research on the REA, however. of course I have an advantage since my family was involved from the Executive Order that created REA on.

      First Insull and his friends were building ridiculously deep trusts 10 layers deep in many caes, and making their money on the financial transactions, not on supplying customers, sort of like the Wall Street banks today.

      The REA provided very few federal jobs, a few administrators, and some engineers. It was, and is, a loan program. Nearly all of the rural electrics are coops, owned by their customers, and especially in the start most of their employees were skilled professionals.

      The problem, other than the trust-building, was that no one could figure out if there was enough market but, if we wanted farmers on the land, and remember in 1935 much farming was still done with horses, they needed some modern amenities like light and running water. Turns out the market was there and the repayment rate on REA loans is somewhere north of 99.5% last time I looked. It’s one of those very rare government programs that worked, and worked well.

      TVA/BPA and others were instituted because private companies wanted to build much smaller projects (all they could afford) which would not have gotten the maximum generation available and would also have had no, or deletorious, effect on flood control which is a proper government function.

      As to the regulation, it started in the telephone industry, the main proponet was Theodore Vail, the Chairman of AT&T who designed the system of regulated rates and also provided that ALL customers would be served, the much balyhooed “Universal Service”. This is also a provision in REA loans, and the reason why private utilities, which were, and are, eligible wouldn’t take the loans and responsibility. Hence the coops.

      It’s an interesting story, and rare. Almost always, the less government intervention in the privat market, the better for everyone.

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