For practical purposes, who cares who built it?

At a rally for Mitt Romney in Florida last month, Elisa Miyares holds a sign poking fun at Obama's "you didn't build that" comment.
At a rally for Mitt Romney in Florida last month, Elisa Miyares holds a sign poking fun at Obama's "you didn't build that" comment. (THOMAS FITZGERALD)
Posted: September 11, 2012

By Edward Glaeser

'We built it." That was the Republicans' rebuke during their convention to President Obama's "you didn't build that."

These phrases don't imply anything about concrete policy. Yet the debate reflects a deep ideological divide that goes back 150 years. And the battle over the relative roles of social collaboration and individual initiative is not limited to the United States.

The president's defenders claim Republicans took his words out of context. But the transcript shows that Obama's comments, taken as a whole, are a coherent statement of a communitarian worldview that emphasizes the power of social influences and the positive role of government.

On substance, both sides are right. Individual entrepreneurs build their own businesses with sweat, perseverance, and ingenuity. But every successful entrepreneur also owes much to others, for no great invention since the dawn of time has been a solo achievement.

James Watt built the separate-condenser steam engine, but he was helped by colleagues such as Joseph Black of the University of Glasgow; an ingenious partner, Matthew Boulton; and a supplier of cast iron, John "Iron-Mad" Wilkinson. Sergey Brin didn't invent Google single-handedly. He had a partner, Larry Page; investors, such as Andreas von Bechtolsheim; and excellent teachers, such as Terry Winograd.

But the collaborative nature of invention and entrepreneurship implies little about policy. It certainly doesn't suggest that marginal tax rates should be higher. Many people who helped Brin are quite wealthy. Should Brin repay his debt to them by voting to increase their taxes?

Obama is right that American entrepreneurs benefit from the rule of law, decent infrastructure, and research funded by the government. But this observation also has limited policy bite. Entrepreneurs' use of existing roads doesn't imply that we should build more roads, or that entrepreneurs can't pay for highways and bridges with tolls and gas taxes.

The Republican "We built it" mantra is similarly free of logical implications. The phrase recognizes the importance of entrepreneurial energy, but that doesn't mean the public sector should shrink or that marginal tax rates can't be a bit higher.

Both parties are counting on voters to rely on ideology more than facts. The Republicans are trying not only to defeat Obama, but to ensure the survival of their worldview.

American individualism

In a global opinion poll, only 36 percent of Americans agreed with the statement that "success in life is pretty much determined by forces outside our control," compared with 72 percent of Germans. Across countries, the belief that success reflects luck, rather than hard work, is robustly correlated with more income redistribution and a larger welfare state.

Eight years ago, I and my colleague Alberto Alesina wrote a book about why the United States has a vastly smaller welfare state than Europe's. Using history and statistics, we argued that the difference could be traced to two primary causes: political institutions and ethnic fragmentation.

More ethnically homogeneous places, such as Scandinavia, have more generous safety nets. And America is remarkably heterogeneous.

Across the United States, before the 1996 welfare reform, states with more black residents provided less generous welfare payments. Dartmouth economist Erzo Luttmer found that those who live near poor people of the same race support more redistribution, while those who live near poor people of a different race support less redistribution.

Yet American diversity can explain only part of the limited welfare state. The nation's institutions help explain the rest.

The United States has a majoritarian government, embodied in its powerful chief executive. Systems with proportional representation typically have more redistribution. Proportional representation tends to help parties that specialize in advancing the interests of the poor, such as Europe's Social Democrats.

The U.S. system also has checks and balances that have limited attempts to expand the welfare state, such as the Supreme Court and the Senate. Franklin Roosevelt battled a Republican Supreme Court and a conservative congressional coalition. Obama had only two years of undivided government. European governments typically face far fewer constraints.

America's more conservative political institutions are no accident. Its founders feared mob rule and wanted to check the whims of the people.

A century ago, Europe was more conservative than the United States, in its institutions and in its policies. Kings and courts ruled Germany, Austria-Hungary, and Italy, and the franchise was often limited.

Over the 20th century, however, after world wars, old governments fell and were replaced with new constitutions, often written by social democrats. These constitutions had left- leaning provisions, such as proportional representation.

As European politics lurched leftward, so did European ideology. Schools during the age of conservative monarchs taught that hard work brought prosperity. When social democrats took power, they conquered classrooms, dominated political discourse, and taught that society and luck, not individual effort, determined success.

Meanwhile, America retained its 19th-century institutions and older ideology.

Ideology over policy

After decades of indoctrination, 60 percent of Europeans, but only 29 percent of Americans, believe the poor are trapped in poverty. Fifty-four percent of Europeans, but only 30 percent of Americans, think luck determines income. Sixty percent of Americans, but only 26 percent of Europeans, believe the poor are lazy.

There is no correlation between the actual hours worked by the poor and the belief that thy are lazy. The American poor work far harder than their European counterparts.

The European worldview complements a large welfare state, just as the American worldview supports smaller government. When voters believe the poor are trapped, they are more likely to think redistribution is just; when voters believe the poor are lazy, welfare seems to be rewarding bad behavior.

Obama's "you didn't build that" line was hardly a full-fledged statement of the European worldview. He didn't imply that the poor are trapped or that luck determines income. But his statements did move away from a full-throated belief that effort alone engenders success.

Contrary to Republican claims that he only follows polls, Obama was trying to change American opinion. That led to the GOP response: America remains the land of opportunity.

I wish the president would make a case for specific spending proposals, rather than empty claims that businesses benefit from public services. I would prefer that Republicans explain how they will cut taxes and balance the budget, instead of extolling the virtues of the American entrepreneur.

But as long as we base our votes on ideology rather than facts, politicians will continue giving us ideology. As Cassius says in Shakespeare's Julius Caesar, "The fault, dear Brutus, is not in our stars, but in ourselves, that we are underlings."


Edward Glaeser is an economics professor at Harvard and a Bloomberg View columnist.

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