The Necessary Inadequacy of Charity

A common libertarian and conservative response to questions about how beneficiaries of government programs will carry on after the removal of their subsidies is that charity should take care of them. This answer is often overly glib, even when combined with the observation that a lower burden of taxation might foster more giving (charity is already tax-deductible after all). Charity will always be insufficient to meet basic human needs, and in the absence of government programs, some people will fall through the cracks. (In the presence of government programs, some people will fall through the cracks.)

This aspect of charity is a feature, not a bug. Charity suffers from the same problem that government welfare programs do: the Samaritan’s Dilemma, as economists call it. The more you help those in need, the more need there will be, because people’s behaviors will change as they come to expect assistance. To the extent that libertarians and conservatives oppose welfare programs because of “dependency” issues, they must also oppose charity for the same reason. Of course, charity is superior to government programs in at least two respects: lower administrative expenditures and, more importantly, greater respect for the moral autonomy of the donor. To the extent that we can reduce extreme human deprivation, many of us will think it worthwhile to do so even if it somewhat reduces the productive efforts of those less deprived, whether through charity or through government assistance. Nevertheless, it is possible for charity to be excessive.

To see the point, consider the argument I made that libertarianism does not preclude mandatory health insurance for children. One response I got here and on Facebook was that such a mandate is unnecessary because charity should be there to cover the health care expenses of children that parents cannot afford. Therefore, parents should be under no obligation, moral or legal, to buy health insurance for their children.

But consider what would happen if parents knew that charity would cover whatever they could not afford. Fewer and fewer parents would actually purchase health insurance for their children. Those responsible parents who would rather buy health insurance for their children than rely on charity would be embittered by the prospect of irresponsible parents’ successfully mooching off charity. Incredible pressure would soon develop for parents to stop taking care of their own family and let society do it. The “need” for charity would balloon to the point that those truly deserving might not be able to get help after all.

Thus, if we believe that it is irresponsible for parents not to buy insurance to cover the remote but nonzero probability of their children’s incurring health care expenses that they cannot afford, we should be wary of any charity or government programs designed to subsidize children’s health care in general (as opposed to targeted, ad hoc assistance in cases of the most extreme need). Instead, we should put moral and, possibly, legal pressure on parents to fulfill their responsibilities, and possibly help them with the costs of insurance (rather than care).

10 thoughts on “The Necessary Inadequacy of Charity

  1. Jason, it’s hard (indeed impossible) to argue with the incentive effects you speak to here. But it seems to me that there are 2 important features of privately-provided assistance (charity) that speak to this point, and that you underplay.

    1. Private institutions (in particular, their multiplicity and non-monopoly status) allow for experimentation in ways of counteracting those incentive effects. Moreover, those giving have incentives to try to get the balance right. In public assistance systems there are neither those incentives nor the possibility (beyond, say, inter-state experimentation) in methods of provision.

    2. Private assistance allows for a liberal difference of opinion on what assistance is merited, on what grounds, and to some degree. It is sadly true that for some people this will be a free pass to ignore the needs of others. But others are free to assist others in ways that are congruent with their values and commitments. (This is genuine civic virtue!) That, it seems to me, is a really significant moral benefit.

    1. Yes, I agree – point 1 I unduly ignored, and point 2 I meant to encompass within the meaning of respecting the moral autonomy of the donor, but you give it much fuller and more eloquent expression.

  2. Right — the way that came out it was mostly an autonomy point, but I was thinking as I was writing it that it was a development of character point! Of course, those two probably ought not to be thought of as much divorced.

  3. Where is the self respect,self reliance and responsibility of the Charity recipient? 55 years ago,when I was a young teen, in my community to go on Relief(welfare) was an act of shame that was almost always temporary in nature. My friends never talked about their fathers “going on unemployment.” Or their moms getting food stamps(which,of course didn’t exist at the time)but food vouchers were distributed by the counties and or the charities and churches. This was during an era when a family’s breadwinner was the head of a functional family. With a stay at home mom nurturing and watching the children. When we had fairly stable currency with little inflation and where a breadwinner’s paycheck wasn’t looted by endless taxation. What has arisen in the last 2 generations,beginning in about the late 1960s, was the phenomenon of the dependency class. It is not only the “poor” who live generation after generation off of the government gravy train, but much of the so called “middle class” who because they pay a dollar into the system think that they are entitled to 10 dollars worth of government services. When the government stays out of the way and people are held responsible for their own and their families welfare,then the self reliance ethic clicks in and people then take seriously their responsibilities as adults. In the end,Welfare States almost always bankrupt themselves. We can see that happening today in America. The only thing to do to save our nation is to dismantle the American Federal Welfare State along with the American Empire and it’s Military Industrial Complex and thus return America to the fiscally sound Republic that our founding fathers envisioned.

  4. Shame is also an important feature of charity. It encourages the recipient to use it as little as possible. Welfare now is an “entitlement” which completely removes the stigma.

  5. Jason,

    You don’t mention anything about mutual aid societies. In 19th Century America, mutual aid societies were able to offer a year of services for a price roughly equal to a day’s wage (Pennington, Robust Political Economy). It also rids itself of the moral hazard and dependency of private or public donations. Here, the individuals who receive the benefits pool their money in a way to incentivize others to live under better health. Certainly, this doesn’t solve the problem entirely of the poorest of the poor (who are thrown out of these mutual aid societies) but I think it would be a more efficient institution than either public or private donations, however small or large they may be.

    1. Yep, that’s a good point. The guy who’s done most of the original research on this, I believe, is David Beito @ Alabama.

  6. One reason charity is preferable is that it is usually local and the donor knows something about the recipient – for example, is the recipient deserving of his help or is the person simply freeloading.

    The anonymity of welfare is a problem since others don’t necessarily know you are receiving it and therefore there is less incentive (at least today) to make the changes necessary to get off it.

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