Voluntary versus Coerced Charity: All the Difference in the World

            A common charge levelled at libertarians is that they are not ‘compassionate’ enough. The accusation typically comes when a libertarian criticizes some ‘welfare state’ policies of the government. Libertarians may protest in vain that they all are in favour of private charitable efforts, it’s just coercive welfarism that they oppose. They are accused of not being ‘compassionate’ enough nonetheless.

            

           In this post, I will endeavour to show how voluntary charity is a perfectly good alternative, and in many respects a better alternative, than coercive welfarism.

            

           Before I do though, I would like to begin by attacking the basic premise itself: the premise that one must give to charity (give material help to someone without expecting material reward), either through taxes or through voluntary contributions, in order to be considered compassionate. According to the Oxford English Dictionary, being compassionate means: “feeling or showing sympathy and concern for others”. This is a description of a subjective state of mind. Translating it into active terms, a compassionate action can be defined as an action that advances the well-being of others. It is this active sense of the word alone that matters when considering policies. What’s the use of compassion if people just feel or show sympathy or concern for one another but never act effectively on that emotion?     

            

           Thus, a compassionate action is one that advances the well-being of others. It is not feelings of unrelated persons but results alone that count when evaluating actions and policies. Considered in this way, there is a grievously unacknowledged form of compassionate action that frequently occurs in a capitalist free-market economy: the act of saving and capital accumulation. A man, seeking to improve his own well-being in the future, does not spend all the money he earns but saves some to invest either in his or somebody else’s business, where he receives interest payment for his trouble. The man curtails his present consumption and in exchange receives interest payments at specified points in the future from the person who employs his savings (or implicitly from himself if he invests in his own business). The benefits do not stop there though: the savings increase the relative demand for capital goods in the economy and increase the general amount of production time available for production processes, thus enabling more time consuming/more complicated production processes to take place, thus increasing the productivity of labourers who now have access to the capital equipment, thus leading to an increase in the real wages of almost all labourers in the economy. (For a lengthier discussion of capital accumulation and its benefits, see tip #27 here: http://thinkingabouthumansociety.blogspot.ca/2013/03/how-to-think-about-human-society-tips.html  )   

           

           Whether the saver is aware of all these diffused benefits of his action or not, they exist nonetheless and cannot be disregarded by careful social scientists. A very good case can be made that over the years, saving and capital accumulation has led to far more benefits for your average member of the human race, including the poorest classes, than what is considered to be ‘charity’ has. If the observing social scientist is a compassionate person, in the subjective state of mind definition of the term, and thus cares about the well-being of others, he should cheer on the actions of savers and policies which promote capital accumulation with all his heart, even if their intent may have been selfish.

           

           This leads right to another issue: why is it that the adjective ‘compassionate’ is reserved for social scientists and political commentators who advocate redistributive policies which may improve the short-run well-being of poor people, at the expense of undermining the foundations of long-term economic growth for the society as a whole, while those who oppose such policies are deemed to be ‘callous’ and ‘hard-hearted’? Is long-run, general prosperity less worthy, or less ‘compassionate’, of a goal than short-run increases in prosperity for relatively less well-off groups alone? I really can’t see why this would be the case.

Let me use an analogy to make the point. Imagine that there is a giant apartment building that has rooms for rich and for poor people. Someone proposes to take some pieces of timber out of the building's supporting walls and pillars and use them to make cabinets for the poor people's rooms, which did not have them before. The building's structural foundation is undermined though, making everyone's life worse and putting everyone in serious risk of further worsening of their circumstances.

I would venture to class this action not as compassionate, but as reckless and ignorant. And the same applies to egalitarian redistributionist policies, undermining the foundations of the economic system that produces wealth in order to distribute some of this wealth to poorer people. Like the above, this is certainly not compassionate towards everyone who isn't poor, and in the long-run isn't even compassionate towards the poor people supposedly favoured because they will soon feel the repercussions of a weaker economy.

With all that said, let us now move on to the comparison between voluntary charity and coerced charity. We will discuss three main differences between the two and their implications:

1. Coerced charity is funded through taxation rather than voluntary contribution:

If a human being engages in a voluntary action, we know that he expects that the benefits of the action will outweigh the costs. If a man gives money to charity, we know that he expects the action will increase his psychic well-being, for whatever reason, and that he expects the action will increase his psychic well-being more than any other known action he could have engaged in using the money (this being the cost of the charitable action).

            

           By contrast, if the man were forced to pay taxes for ‘charitable purposes’, we know only that he preferred giving up the money to facing severe physical punishment by the government. Though it is possible that in the absence of coercion, the man would have used the equivalent amount of money that would have been taken from him through taxation to give to the exact same charitable causes as the government uses the money for, it is highly unlikely, and if by some incredibly remote possibility it were true, the government coercion would be pointless anyway, as the results with or without it would be the same. In the vast majority of cases, the charitable causes benefiting from the tax money are extracted at the expense of the tax payer, who would have engaged in more subjectively beneficial actions with his resources otherwise.

            

           Assuming, as is probably the case, that if all the tax money contributed to government welfare policies were returned to the tax payers, a non-negligible fraction of that money was used to fund charitable causes formerly advanced by welfare policies, even for this portion the psychic well-being of the charitable giver is increased with voluntary charity as opposed to coerced charity. This is because when governments take your tax money, they do not, as a rule, tell you exactly what causes that tax money is going to. In fact, you do not know if it is even going to a charitable cause at all, it might be going to defense spending or corporate subsidies, or anything else the government does. I imagine that for most people, a significant part of the pleasure they experience from giving to charity is observing the good results that their money helps to achieve. If, for instance, you decide to use your charitable donations to fund the education of a poor but promising young person and they use that education to become a brilliant and productive member of society, I would imagine that most people would gain more pleasure from this than they would gain from having the equivalent amount of money sucked into the maw of government and spat out who knows where.

           

           It is likely that government welfare schemes will be funded through the mechanism of ‘progressive’ income taxation. This kind of taxation especially, and to a lesser degree all forms of taxation, have effects that reduce the general economic strength of a society, as outlined here: http://thinkingabouthumansociety.blogspot.ca/2013/03/issue-analysis-higher-taxes-on-wealthy.html

            

           Thus, the fact that coercive welfarism is funded through taxation, while voluntary charity is funded through voluntary contribution, means that the former method funds itself at the expense of charitable ‘givers’, thus reducing their happiness, and reduces the general economic strength of the society through taxation, effects that the voluntary method avoids.

 2. Less scrutiny by charitable ‘givers’ of government charitable activities than of private charitable activities:

Party governments, in a democratic system, rise and fall based on votes, private charities rise and fall based on dollars allocated to them by donors, both being related to their respective reputations for doing good things with the money that they get. In fact though, the private charities would be more responsive to this need, because buyer scrutiny of the charitable activities of the private charity will be closer than voter scrutiny of the charitable activities of governments. This is because political elections are decided based on so many other issues, besides charitable/welfare ventures, at the same time, while buyer scrutiny of private charities is based almost exclusively on perceived effectiveness handling charity money.

Imagine that contesting a political election are two major parties. Party A espouses a general economic philosophy that you agree with, although they impose socially conservative, moralistic laws on the populace which you dislike. In terms of ‘charitable causes’, they support general education programs for poor youth, programs that help send kids to religious summer camps, and emergency medical programs for people in desperate need of prompt medical attention. Party B espouses a general economic philosophy that you fervently disagree with, but they do not impose socially conservative laws on the populace. In terms of ‘charitable causes’, they support food banks, homeless shelters, drug addiction treatment centres, and give money to youthful ‘street artists’ who make graffiti art. Among the charitable causes, let us say that you support the general education programs, the emergency medical programs, the food banks, and the homeless shelters, but you do not support the rest and do not want your money going to them. I ask you: which party do you vote for? Whichever you vote for, a part of you is going to remain very unsatisfied, given that the choice made is the lesser of two evils. In reality, the issues party governments decide upon are much more numerous than depicted in this hypothetical, making your voter scrutiny of their actions even less precise and effective.

Contrast this procedure with allocating money to the private charities of your choice. Here, you are not presented with giant, wrapped up packages of political, social, economic, and charitable issues as you are as a voter in political elections. Rather, every dollar you allocate makes some kind of difference, and you can pick and choose which causes you support, which you do not, which you care most about, which you care moderately about, etc… and allocate your funds accordingly. If you think charity A is not using your money effectively, you can switch to charity B for your next donation, and this scrutiny will force them to be effective and support causes that people really care about if they wish to survive. This kind of precision and precise and effective scrutiny is simply not available to the political voter.

To this, the response of some statists will invariably be: ‘we can trust the government, it is made up of good men, such precise scrutiny is unnecessary’. This violates tip #28 (http://thinkingabouthumansociety.blogspot.ca/2013/03/how-to-think-about-human-society-tips.html) by assuming, without any good reason, that government bureaucrats will generally be more honest and more competent than private charity operators.

Another response might be that charitable givers are ignorant of their options and have no idea how to allocate their charity money effectively. If people are generally ignorant as charitable givers though, they will also be generally ignorant as political voters, probably more so due to the amount of issues involved in political elections and the knowledge required to disentangle them all. Unless we are to assume that authoritarian governments or governments elected by ignorant people will automatically be benevolent and wise, which is a heroic assumption to say the least, this objection does not logically lead to calls for coerced charity. Also, private expert information organizations reporting on the effectiveness of charities, such as Charity Intelligence, have already sprung up to help people allocate their charitable money effectively, even in our current statist society where government crowds out a lot of potential charitable giving.

Thus, scrutiny of charitable activities and their effectiveness as well as precise choices by individual givers as to what causes to fund will simply be greater under a voluntary charity arrangement than under a coerced charity arrangement. Unless one has blind faith in the benevolence and wisdom of an un-scrutinized government, this must score as another point in favour of voluntary charity against coerced charity.               

3. Coerced charity implies a legal right on the part of the receiver, whereas voluntary charity is a potentially revocable stream of gifts:

In order to reduce the chances that governments will become excessively tyrannical and arbitrary, the details of the administration of government programs are not generally left to the unlimited discretion of officials, but are fixed by ordinances or rules of some kind. In the case of many government charity/welfare programs, provided that they meet certain criteria, individual citizens are legally entitled to receive certain benefits, as fixed by the rules. In the case of voluntary charity, no such legal obligation exists. It is not the legally enforceable right of beneficiaries of private charity to continue being benefited  Their benefits are given as voluntary gifts, and further benefits can be cut off if the giver so chooses.

            

           What are the effects of this difference? Firstly, the average private charitable giver will have less patience with charity recipients who he thinks are taking advantage of his kindness than the average government, bound to adhere to strict procedures and the charity administrators’ (government officials) own money not being on the line. In addition, well-meaning private charitable givers will have more of an opportunity to seek out and help poor people who they think have potential and are good people, but who have been held back by bad luck and could just use a helping hand to get going. Governments, bound by strict rules, will have less leeway to be selective in handing out benefits. The result, to use unfashionable Victorian language, will be a more effective separation through voluntary charity of the ‘deserving’ from the ‘undeserving’ poor, and the channelling of more charitable resources to the ‘deserving’ poor who will be able to use the money more effectively and not just take advantage of the gift.

              

           Secondly, acknowledging the legal right of certain poorer people to claim resources that have been taken by the government from richer people is a dangerous political precedent. It means a partial affirmation of the egalitarian, production-incentive killing, Marxist principle of “From each according to his abilities, to each according to his needs”. This is not the general political principle that I think is a suitable intellectual foundation for a peaceful and prosperous society, I prefer the general political principle of individual freedom for that, as readers of this blog will know by now. This egalitarian principle, if strengthened, will likely lead to more coercive transfers of wealth from rich to poor than the supporters of the initial coercive welfare policies would have imagined or would have supported. This dangerous political precedent, with the potential to seriously undermine the economic strength of a society, is affirmed through coerced charity, but is not affirmed through voluntary charity.

            In conclusion, it is untenable that the adjective ‘compassionate’ should be exclusively attached to charitable activities or proposals for charitable activities, voluntary or coerced. Rather, any action or endeavour, including intellectual or political endeavours, that seeks to increase or results in increasing the well-being of others must be labelled compassionate to the extent of its success in this regard. Saving and capital accumulation and favouring policies and principles that lead to general prosperity are examples of such actions and intentions, not generally considered ‘compassionate’. 

           In addition, we have found that for the reasons outlined above, voluntary charity is in many ways superior to coerced charity, and these advantages should not be ignored when deciding on whether to support a coerced charity policy or not. All this is not to say that coerced charity must always be rejected on these grounds, in fact I support a very limited kind of coerced charity in the post which can be found here: (http://thinkingabouthumansociety.blogspot.ca/2013/03/issue-analysis-welfare-social-safety-net.html). My goal was simply to point out many of the advantages of voluntary charity over coerced charity which must be considered by anyone making related policy decisions or evaluations, and to provide a defense of libertarians who seek to replace some of the useful functions of the welfare state with voluntary charity.