Why "You Didn't Build That" Stings the Successful

Jonathan Chait stirred up trouble today. Chait suggested a racial undercurrent in the reaction to President Obama's now-notorious "you didn't build that" comment.

Racial undercurrents eddy through everything, but I've got a more parsimonious theory about why the president's words in Roanoke, Virginia, on July 13 have jolted so many people—including many who are not usually prone to be ignited by the usual pretend outrages.

Warren:

There is nobody in this country who got rich on his own. Nobody.

You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.

Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

Warren is offering a single message: your success was made possible by the contributions of others, now you must contribute in turn. Nobody would seriously dispute her claim. We're just left to haggle over price: Should the successful pay forward 36% of their success or 39% or 28% or what.

Contrast President Obama:

There are a lot of wealthy, successful Americans who agree with me—because they want to give something back. They know they didn’t—look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something—there are a whole bunch of hardworking people out there.

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

Obama combines two ideas: the familiar and broadly acceptable idea in Elzabeth Warren's speech—and a second, much more destabilizing idea.

I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something—there are a whole bunch of hardworking people out there.

Obama's second idea is that success is to a great extent random, a matter of luck. You think you succeeded because you were smart or hard-working? Listen—a lot of smart and hard-working people don't succeed.

This second idea is not original to the president, obviously. In fact, Friedrich Hayek often made a similar point, suggesting that a big part of capitalism's PR problems originated in the fact that markets did not distribute their rewards according to ordinary ideas of moral deservingness. Yet it's also true that we badly want to believe that success is earned and is deserved. A universe that distributes its rewards randomly is a frightening place—and even worse is the suspicion that success is often seized precisely by the undeserving. In the words of the old doggerel:

The rain it falls alike, On the just and unjust fella.But mostly on the just becauseThe unjust has the just's umbrella.

In this particular election cycle, the argument that the successful are almost by definition deserving and that the unsuccessful are correspondingly undeserving has exploded into noisy public controversy.

The president appears to have heard that argument, and it irks him. And when it came time to reprise Elizabeth Warren, he allowed pieces of his rebuttal to the claim to drift into a speech that was probably meant to adhere to the safer ground that she had previously staked out.

In Elizabeth Warren's version of the speech, taxes can be conceived as something like a fee. You want roads, police, a skilled work force, an uncorrupt judiciary, and a military to protect you from foreign invasion? Of course you do! Well, they must be paid for—and it is reasonable to ask those who benefited most from public goods to pay most for those goods. Again, we can argue about how much "most" should be, whether 28, 36 or 39%, but in principle: not so shocking.

President Obama's stray sentences however point to a bolder conclusion. If it's not brains or work that account for success, what is it? The answer must be … luck. Not maybe entirely luck, but luck to a great degree. By definition, however, luck is amoral. Nobody can deserve luck, otherwise he wouldn't be lucky. To the extent success is due to luck, success is undeserved—and to the extend that success is undeserved, the successful have no very strong claim to the proceeds of their success. Whereas Warren suggests that the wealthy should be taxed to repay tangible benefits they have personally received, Obama is indicating a possibility that the wealthy should be taxed … because their wealth is to a great extent an accident of fate.

This argument is not developed by the president. Indeed, he quickly drops it. Nor does he build any very radical policy conclusions upon his argument: he's proposing only the restoration of the Clinton tax rates—the tax rates that prevailed during the greatest period of private fortune-building since the 1920s. Yet people who believe in the morality of the market are not wrong to hear in those few stray sentences of the president a more radical critique of their core belief than is usually heard from American politicians.

Those who say that the Republicans are taking the president's words out of context to misrepresent him make a serious mistake. Even if we concede that the "that" in "you didn't build that" refers to roads, bridges and the Internet (and it's not so clear that it does, but let's concede it anyway), even if we restore the context in full, the president is still delivering the shocking news, as unwelcome today as it was when first propounded, that:

the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all.