Saturday, November 15, 2008

Those Poor Unfortunate Souls part II

In 1991, private citizens gave roughly 300 billion dollars worth of charitable donations, both in time and money. That included approximately 42% physical resources and 58% donated time. The same math gives us a total of nearly 700 billion dollars worth of resources donated in 2006. By comparison the American government spent approximately 1.3 trillion dollars on welfare in 1995, both through direct benefits and tax credits, roughly 20 percent of GDP. In 2006, the percent of GDP was roughly similar, but the growth in GDP in the United States resulted in that twenty percent increasing to roughly 2.6 trillion dollars in welfare expenditures.

So while the government stole and redistributed approximately 2.6 trillion dollars of private assets, individuals donated nearly a fourth as much on their own, free from government coercion, even after as much as 70% of their nearly worthless money has already been stolen from them.

But there is evidence that government subsidies to private charities actually decrease individual donations. This occurs for two reasons, one, private individuals are willing to allow their seized tax monies to replace their charitable giving, but also, charities reduce their fund raising efforts after receiving government grants. So when the government gives money to charities, it decreases the amount given by individuals.

And what about the people who are receiving money from the government? While there is some evidence that approximately 18 percent of welfare recipients move out of poverty within one year, studies show that more than twice that percentage amongst the poor not receiving welfare are able to do so. When left to their own devices, people are forced to find ways to survive. The majority of those who receive government welfare, more than 80% of them, do not move out of poverty.

One reason for that is the welfare trap. A person receiving welfare has an incentive to stay on the dole. People don't like the argument, and some will argue that it's cruel to point it out, but the reality is that in economics, you get more of what you subsidize, and you get less of what you tax. Welfare creates a perverse incentive, where some recipients are arguably better off to stay on the dole than to attempt to join the workforce.

Not all will feel that way of course, but the maximum amount of possible benefits ranges from $11,000 to $36,000 in some states. Those benefits can include housing, food and food stamps, utility subsidies, and even clothes, transportation, and a variety of other services. Not all people will be eligible for all benefits, and not all those eligible will elect to take advantage of all the services offered, but some will and many could. And those benefits are tax free.

So why would a person who was receiving between ten and forty thousand dollars a year, tax free, for doing little or no work at all, choose to get a minimum wage job working forty hours a week making less than $12,000 a year after taxes? Perhaps because they have pride. Perhaps because they see it as an opportunity to get ahead. Perhaps they see it as the start of a new life where they can move up from an entry level position through hard work and promotions. But perhaps they don't see the incentive at all. And that's why many of them, once on the dole, stay on the dole.

Private charities on the other hand are in a much better position to see to private needs. If a person on the dole has their car break down and can't get to work, the government will tell them to wait until their next check comes in. A private charity on the other hand, could give them money today to get it fixed, or pay for a taxi, or give them a new car. They are able to diagnose and address the need immediately, while the state can only incorporate them into their bureaucracy. Under the state, some will be helped, most will be hurt, and all will be oppressed.

I come from the teach a man to fish school. Even toiling under oppression, people are willing to do what they must to survive. Those who support the state as the solution to perceived social injustices believe that they are doing people a favor by adding their names to the welfare roles. I believe that we would do people a greater good by encouraging them to become self sufficient. And we could. And when we did, there would be far fewer people in need of real aid. And those in real need could receive it.

I've already shown how a stateless society would do a better job of educating the people, and education is an important part of staying out of poverty and off welfare. In fact, a study from 1992 showed that more than two thirds of welfare recipients had the lowest levels of literacy, well below that of unskilled laborers. Additionally, victims of child abuse are more likely to be on welfare later in life, and I've shown how a stateless society can address psychopathic behavior and reduce violent crime. Already we can see how the number of those applying for assistance would decrease in the absence of the state. But would charitable giving increase in the absence of the state? I believe it would.

And there's evidence to support that belief. For one thing, when comparing people with similar incomes, those who work give more than three times as much as those who receive government assistance, even though they have roughly the same expendable income. For another, those who believe that the government does not have a responsibility to take care of those who can't take care of themselves are 27% more likely to make charitable donations than those that do. The reality is not that people who don't support social welfare are selfish, or cruel, or uncaring. It's provably the opposite. They believe that charity is important, and should be the responsibility of individuals, not governments. Accomplished not through theft and violence, but consciously and freely given.

So once we reduced the number of people applying for charity by improving education, health, and opportunity, while decreasing violence, crime, poverty, and disease, what would we be left with? Well, there would still be some who through no fault of their own became mentally or physically disabled. There would undoubtedly be others who chose a life of poverty. I believe that the $700 billion dollars we already give would cover those truly in need, without even taking into account the increases which would occur in the absence of the state. When their money had more value, and 70% of it wasn't being stolen from them, people would be more willing to give to charity. So could a system with fewer hungry mouths and more to go around support those truly in need?

The answer is yes. And it wouldn't rely on violence and theft to do the job. No matter the need, there can never be a justification for inflicting suffering on one person so another person can benefit. That yellow brick road leads to evil. We tiptoe down it, thinking one step at a time can't hurt. But the reality is it hurts not only the person we intend to suffer, but also the person we intend to help.

Able bodied people can and will find ways to survive. The truly unfortunate can and will find help in the charitable acts of their neighbors. We need to find a path to humanitarianism which does not sacrifice the rights to life, liberty, and happiness of some for the sake of others. The dogs of society will howl, but we have to ignore them.

We have to decide where our future lies.

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