How Businesses "Give Back"

We talk about businesses “giving back” to the community so much that even the most capital capitalist has it burned into his brain that that is just what businesses are supposed to do.

The unstated premise is that successful businesses got that way by taking something away from the community, and therefore are morally obligated to give it back. This “giving back” usually takes the form of monetary contributions or political support of liberal causes.

That unstated premise is, of course, completely wrong, and the whole concept of “giving back” is a form of moral blackmail used by losers against achievers.

Here’s The Economist on Barak Obama’s attitude about “giving back” (aka, “paying their fair share”):

But let’s suppose for the sake of argument that it’s best if government provides the public goods business needs to become a viable and successful enterprise. Even in that case, Mr Obama’s conclusion, that the rich ought to pay more in taxes, does not follow. As it stands, high-earners do “give something back”: 35% of yearly income. But that’s just to the feds. Here in Iowa, they pay an additional 9% to the state. Maybe it’s just me, but that seems like a lot! According to the Tax Foundation, in 2008 “[t]he top 5 percent earned 31.7 percent of the nation’s adjusted gross income, but paid approximately 58.7 percent of federal individual income taxes”. If that’s not giving something back, what is? 

In this light, it’s easy to see why Mr Obama’s observation that it takes a village to make a fortune is in one respect irrelevant and in another offensive. It is irrelevant because the class of people Mr Obama wants to “give back” has already paid most of the tab, and continues to pay most of the tab, for the tax-financed public goods upon which they, and the rest of us, so crucially depend. At the federal level, the top 10% percent of the distribution paid over 70% of income taxes in 2009 (again, according to the Tax Foundation). Mr Obama’s in-it-together point is mildly offensive in context because it is used to imply that top-earners who resist paying an even larger portion of America’s tab do so only because they are in the grip of an absurd myth of self-reliance.

Businesses (even unsuccessful ones) already pay the lion’s share of the freight for the public works that the president values so highly. But the taxes are only part of the story.

Businesses give back to the community by providing goods and services for the people who live in that community. They provide jobs, and the benefits that go with jobs. They increase real estate values. (Have you ever seen a property advertised as being “close to shopping”? Where do you think that “shopping” comes from? The Federal Shopping Department?) If you really like infrastructure, nothing encourages investment in more and better infrastructure like a few successful businesses in the neighborhood.

In short, businesses give back to the community by simply existing. They don’t owe anybody anything more than that, least of all the insatiable maw of the federal government.

And in honor of his 100th birthday, let’s hear what Milton Friedman has to say about obligations to the government in the name of the less fortunate:

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