Arnold Kling  

Is the Government an Efficient Charity?

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Tyler Cowen agrees with me that the most interesting sentence in Shikha Dalmia's essay is


in 1979, households in the bottom quintile received more than 50 percent of all transfer payments. In 2007, similar households received about 35 percent of transfers.

Many people interpreted my essay on the decline of middle-class jobs as an excuse/appeal for government to redistribute income. In fact, as I thought I made clear in the essay, I think that government is a lousy vehicle for redistributing income. Any private relief organization that gave only 35 percent of its transfers to the neediest households would be viewed as scandalously mismanaged. Donors would withdraw support and give their money elsewhere. It will be a great day when we can withdraw support for government and give make our donations to organizations that are better managed.


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COMMENTS (12 to date)
David N. Welton writes:

The nagging doubt I have about your point of view is that private charities might end up being too much of a 'patchwork', whereas the government is going to be able to provide some set of agreed upon services for everyone, everywhere, without regards to race, religion or other factors. In other words, the government may not be perfect, but it's got some standards.

It'd be an interesting question to put some facts/stats to, rather than just discuss it based on beliefs about what works best.

Rick Hull writes:

> whereas the government is going to be able to provide some set of agreed upon services for everyone, everywhere, without regards to race, religion or other factors.

Government services are completely distinct from transfer payments. Transfer payments are, by their very nature, not provided to everyone, everywhere. Many may in fact regard race or religion.

> In other words, the government may not be perfect, but it's got some standards.

How does this distinguish government from private charity?

nazgulnarsil writes:

David, gov redistribution programs are a patchwork of poorly thought out programs that ensure a 100% marginal tax rate up to a certain (surprisingly high) income in many cases. Most of these programs do feature a hodgepodge of qualification mechanisms. Navigating these programs externalizes significant frictional costs onto the poor.

Becky Hargrove writes:

I like that this question is finally being posed: if not government, if not just charity, who and how? Until now if one even expressed concern and resolve to do something for those now marginalized, people immediately jumped to the conclusion that the ultimate responsibility lay somewhere far from ourselves. Not so. What's more, wealth can be created in the process.

twistedone151 writes:

>How does this distinguish government from private charity?

Consider a world with absolutely no government safety net (no welfare, no disability, etc), and only private charity. Now, consider how much of that private charity is likely to be religious in nature, particularly large, organized religions (for example, Catholic charities)? What happens to adherents of smal religions (e.g. Wiccans, Norse neopagans), the unchurched/spiritual-but-not-religious, or outright atheists like myself? Should we be forced to choose between slow death by starvation or pretending to convert to a majority religion so as to receive charity?

Or consider how much more charity will go to women, or to "disadvantaged" minorities. What happens to the disabled or down-on-his-luck white male?

Or consider the mentally ill. With the stigma still attached to mental illness; I've encountered those who hold that "If somebody's top crazy to hold a regular job, they're too crazy to be allowed amongst sane people, and need locked up." In private-charity-world; odds are likely that the "charity" for the mentally ill would be in the form of good-old-fasion Victorian style "Asylums" not much different from prison, except an inmate's "term" is most likely to be the rest of their life. Do you really think this to be an improvement on the current (flawed) system.

So, you prefer a system where a white, male, mentally-ill atheist must choose between forced conversion, inprisionment, or death? Good to know where you stand, then.

Becky Hargrove writes:

twistedone,
There is no reason why anyone needs to go backward, the only way that would happen is if people just can't find solutions in the present. One goal would be to make sure that everyone finds ways to remain economically connected, so as to shift as many of our life responsibilities to the present as possible. And from a technological viewpoint, one goal would be to make simpler environnments so that it would be easier for people to remain independent as long as possible.

Shangwen writes:

Why stop at transfers and direct redistribution efforts? Effective rapacity by the better-resourced is a natural occurrence in the welfare state. Look at the Canadian healthcare system: the system is clogged in almost every setting, but our biggest users are the educated and relatively affluent (the upper 50%), a group heavily populated by public-sector workers.

A lot of redistribution is done through programs that require beneficiaries to navigate a system using private time costs and knowledge. If you open a restaurant that you say has planned seating, but then say everyone has a right to dine there, then you will have rush seating. And the people with the best seats will rarely be the hungriest.

Captain Profit writes:

@twistedone151
I'm sure your benevolent concern for "the people who no one cares about" is as heartfelt as it is ironic...

John Fast writes:

So if the government were a private charity, it would be on the "warning list" for being so inefficient that it's practically a scam.

I'm shocked, shocked, I tell you.

Twistedone151: As a pagan- and New Age-sympathetic Christian, I want to make sure that white, male, mentally-ill atheists get charity when they need it. I'll point out that the Salvation Army and Goodwill Industries, although both are "faith-based," operate shelters and other programs that are open to everyone, without any sort of religious test.

In fact, if America were really a nation filled with bigoted Christians, an atheist would be *worse* off if welfare were controlled by the government, because government welfare would go only to Christians.

I'm also curious: Exactly what is wrong with the concept that "if someone is too crazy to hold a regular job or otherwise support themselves, they are probably too crazy to be allowed out by themselves"? Or are you talking about people who are capable of handling their own finances and/or household chores, but who can't handle the stress of working a "real" job? Because that's exactly why there are places like Goodwill Industries and other vocational rehabilitation programs. And I'm sure people would rather pay a relatively small amount to support someone living on their own, than a larger amount to support them living in an institution with 24/7 care and supervision.

Eric Morey writes:

"It will be a great day when we can withdraw support for government and [sic]give make our donations to organizations that are better managed."

That great day has long passed. Charitable donations have been 100% tax deductible for some time now. So are contributions to government. You can literally choose between the 2 options with your marginal $. Or you can choose the third catchall option of neither.

rpl writes:
Charitable donations have been 100% tax deductible for some time now. So are contributions to government. You can literally choose between the 2 options with your marginal $.
I've been staring at this for a while now trying to figure out how you think this relates to what Arnold said. It's true that he can get back some of the money he pays in taxes by making charitable contributions, but it's a very inefficient process. For each dollar he gives to charity he gets back a fraction of a dollar in taxes. In order to completely remove his support for the "inefficient charity" (to use his metaphor), he would have to give at a much higher level than he probably wants to give to any charity.

I suppose you could say that for any giving on top of his taxes he can choose between government and charity, but that doesn't change the fact that before he can gain that choice he must first contribute a lot of money to the inefficient charity that he disfavors (again, sticking with Arnold's metaphor).

Charlie writes:

Perhaps the most important and most effective anti-poverty program that we have is the Earned Income Tax Credit. As this is a tax credit, it is not counted as a transfer and thus not included in the reported figure. Tax expenditures ought to be counted as true federal outlays, but that is a rant for another day.

The expansion of the EITC would likely improve the appearance of this worrying figure.

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