Burton W. - Uncle Sam Cant Count: A History of Failed Government Investments, from Beaver Pelts to Green Energy

To Adam, our favorite entrepreneur

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Entrepreneurs are a different breed. They think differently from others. They envision new products not yet invented. They see companies not yet built, providing products that benefit mankind. Society must value its entrepreneurs, or miss the advantages they provide. As Steve Jobs said,

Heres to the crazy onesthe misfits, the rebels, the troublemakers, the round pegs in the square holes. The ones who see things differentlytheyre not fond of rules. You can quote them, disagree with them, glorify or vilify them, but the only thing you cant do is ignore them because they change things. They push the human race forward, and while some may see them as the crazy ones, we see them as genius because the ones who are crazy enough to think that they can change the world, are the ones who do.

Steve Jobs and his partner Steve Wozniak believed that they could make a computer small enough, simple enough, and so efficient that every American would want one. What began in the 1970s with a handful of computer geeks working in the Jobs familys garage became the Apple Computer Companyor Apple Computer, Incand the world changed.

Other Americans prefer to change the world by using force. While entrepreneurs try to give us what we wantsometimes before we know we want itother Americans want to force on us what they want, because they believe they know whats best for all. President Obama laid out his plan in his first inaugural address. He wanted government control of three segments of American society: education, health care, and energy production. He has followed that plan. The government now controls student loans to college students. National health care is becoming a reality. And Obamas administration has chosen to subsidize alternative energy sources while limiting drilling in the Gulf of Mexico, halting pipelines across the United States, and refusing to expand refineries.

President Obama has little faith in free enterprise but much confidence in government. You didnt build that was his famous statement in a 2012 speech about businessmen, implying that the government had provided the means for their success. To President Obama, the services offered by government are more essential than the work of the individual. Somebody invested in roads or bridges, President Obama argued. If youve got a business you didnt build that . Somebody else made that happen. In other words, if government builds the roads, and merchants use them to do business, then government is the real prime mover in economic development.

The contrasting attitudes of Steve Jobs and Barack Obama toward achievement and progress run throughout American history. Steve Jobs, for example, reflects the ideas of many of the Founders. Our Founding Fathers considered the rights of the individual as bedrock to the health of the nation. Personal accountability was the duty of each citizen. And the Founders were determined to set up a society where, in an atmosphere of freedom, those citizens could work, save, provide for their families, and enjoy the fruits of their labors. The Founders had confidence in the individual American.

Faith in the American citizen doesnt mean that such freedom provides a perfect society. What it does provide is freedom of opportunity. Entrepreneurs can develop their new ideas in such an atmosphere, but often there are many bumps along the way. The story of Apple computers and Steve Jobs wasnt always a smooth road. Even after his early success, Jobs continued to use millions of dollars in profits for new designs and concepts. By 1985 he had so angered his board of directors and stockholders that they ousted him from the company. What did he do? He joined the team at Pixar and changed the way animated movies were made. Toy Story was Pixars first success, with Jobs credited as an executive producer. Disney eventually bought Pixar for more than $7 billion, and Steve Jobs became the largest shareholder of Disney stock. But Jobss work with Apple wasnt finished, either. When Apple ran into problems in the mid-1990s, Jobs was invited back into the company, and the iPod, iPad, and iPhone were the result.

Entrepreneurs succeeded in past generations in the same pattern as shown in the life of Steve Jobs. They took their ideas, and with practical experience and hard work, marketed their new products. They often angered their competitors and even their own investors. Many times they failed. But something inside entrepreneurs always drives them to try again, to succeed, to show the world that their ideas work.

We call them market entrepreneurs , because they rely on private enterprise and free markets to develop their products and make a profit. Market entrepreneurs realize that they must give others somethinga service, a product, a new means of transportationand in doing that, they succeed and their society improves. American history is full of market entrepreneurs who have changed lives for the better.

President Obama does not believe these entrepreneurs really built America. Government leaders invested in roads or bridges, and thats where economic development really started. Many Americans share this faith. They believe that spending federal money is the best way to jump-start the economy and spread prosperity. Since the founding of the United States, some Americans have sought and received federal funds to start new enterprises. Many of them have expertly lobbied Congress to get appropriations. We call them political entrepreneurs .

From the first days of the Republic, market entrepreneurs have clashed with political entrepreneurs. That battle is virtually unknown, but it was a fight for the heart and soul of America. Its outcome determined the place of the United States in world history.

Two hundred years ago, many Founders, like President Obama today, did not believe entrepreneurs had the capability to build that without government to start the process. After the Louisiana Purchase, for example, President Thomas Jefferson supported the first federal road project. Although Jefferson feared big government, even he fell into the trap of believing that government was needed to launch settlement into the new territory west of the Mississippi. In 1806 Congress voted to fund part of what became the National Road, and Jefferson signed the bill. Constitutional arguments were important in this debate. Those who favored the road argued that it was useful for national defense and also as a post road for mail delivery, which made funding the project consistent with Article 1, Section 8 of the Constitution.

When construction began, however, the route for the National Road became a political bonanza for enterprising politicians. Eventually it stretched from Cumberland, Maryland, to Vandalia, Illinois, but as it was built, the road began to twist and curve into towns based on political decisions. Congressmen with political pull tried to draw the road to their districts, whether that route made economic sense or not.

From Cumberland, Maryland, to Wheeling, (West) Virginia, for example, the road detoured through Uniontown and Washington, Pennsylvania. Why? Because Jeffersons Treasury secretary, Albert Gallatin, lived in Uniontown, and he persuaded Jefferson to swing the road there. Gallatin also urged Jefferson to run the road on a northern detour into vote-rich Washington County during an election year. The county of Washington, Gallatin wrote Jefferson, with which I am well acquainted, having represented it for six years in Congress, gives a uniform majority of about 2000 votes in our favor and that if this be thrown, by reason of this road, in a wrong scale, we will infallibly lose the state of Pennsylvania in the next election. Jefferson responded curtly that a few towns in that quarter [of Pennsylvania] seem to consider all this expense as undertaken merely for their benefit. But he still sanctioned Gallatins detours.