Wilson Greatbatch, 92, died this week a wealthy man. Investing $2,000 of his own money way back in 1958 and tending a garden to feed his family, Greatbatch invented the pacemaker. He licensed it to Medtronic, a company now valued at $36 billion that sells and continues to improve pacemakers and defibrillators. Greatbatch did his part to improve society, create wealth and increase, quite literally, our standard of living. But apparently that's not enough. President Obama suggested under a Cincinnati bridge this month that "if you've done well . . . then you should do a little something to give something back."
Give something back? Greatbatch did well specifically because he provided something that society needed. His and Medtronic's profits are what you and I are willing to pay above costs for these life-enhancing devices. This is true of Apple iPhones and Genentech Herceptin and Google Maps and Facebook Likes.
Ever since the mid-19th-century era of so-called Robber Barons, this country has had a philosophical divide over the role of business in a democracy. It's time to set the record straight.
History has proven that the road to increased standards of living and wealth was built on productivity—doing more with less. It was the Industrial Revolution that got us out of the growing fields and into factories, which allowed us to pay for roads and teachers and civil servants. And now the move out of factories into air-conditioned offices is creating anxiety. It shouldn't. Labor replacement is productivity. James Spangler's vacuum cleaner. The Walker brothers' dishwasher. Clarence Birdseye's flash freezing. DuPont's Kevlar. And John Simpson's guidewire catheter for angioplasty and heart stents—the list goes on. Each invention generated wealth because it improved our lives, not because someone "gave back."
Aside from outsized government-assisted profits (think telecom, asbestos removal and Derek Jeter), it is the delivery of these productive goods and services that increases our wealth. The inventors get wealthy but society gets wealthier. No forced giveback needed.
Steve Jobs gets taken to task for his lack of visible charitable giving—"no hospital wing or an academic building with his name on it," wrote the New York Times's Andrew Ross Sorkin recently. Never mind how much more productive and wealthy we all are because of Apple. Jeez. The old "I already gave at the office" has never rung truer. And don't get me wrong—I'm all for charity. I give, but those who collect it and spend it need to appreciate both where the money comes from in the first place and that they can never match the power of free enterprise to improve lives. Never.
Sorry, but the egg comes first. The welfare state doesn't exist without productive businesses and workers to pay for it. Yes, we need bridge builders, park rangers and even a few postal workers, but our economic policies need to encourage wealth-creating productive industries, not crush them with the burden of an unproductive state.
According to a 2004 MIT study, a modern worker needs to work 11 hours to produce as much as someone in 1950 working a 40-hour week. In other words, we could have knocked 30 minutes off the average work week every year since 1950 and still maintained our 1950 standard of living. But of course we don't run in place. Who wants black and white TV? And no Boeing jets? Nor do we want to be stuck in 1970 with three TV stations, or 1990 with 386 PCs, or even 2010 with the mere iPhone 3GS. So we work constantly to increase our living standards.
The Bill and Melinda Gates Foundation is spending billions to eradicate malaria and other diseases in Third World countries. I admire their work and hope they succeed. But note that Bill Gates's fortune came from Microsoft, whose software has done more to help bring Third World countries out of poverty than any charitable or government program.
Google founders Larry Page and Sergei Brin have saved all of us hundreds of billions of hours of research and driving around, far more value than their $20 billion each in wealth. They can give to whatever alternate energy project they want and it won't match the wealth they have already created for me and you. Same for Jeff Bezos at Amazon and the founders of Facebook and Twitter and LinkedIn and the rest. Will we soon disparage these Robber Geeks?
It's inevitable but wrong. Because they, like Wilson Greatbatch, have done their part to create wealth for society by inventing and being in business and investing their profits into even more productive products and services. That's "giving back." Taxes and charity are just gravy.