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The Perennial Problem of Philanthropy 4

We simply can't afford to subsidize the unproductive.

By Will Offensicht  |  December 6, 2011

Earlier articles in this series explained the major issue in philanthropy - should government take responsibility for poor relief, or should poor people be helped by individuals?  This debate has raged for centuries.  The "government should do it" factions have won the debate in Europe and increasingly in America.

The American welfare state started with the "New Deal" during the Depression.  Our expectations of government changed profoundly over FDR's decade-plus in office.

As Newsweek put it in 1993, “We gradually moved from an era in which people did not want to use government for anything to today when people use government for almost everything.”  The Daily Telegraph explained how Britain followed the same road:

The welfare state, as conceived by the great social reformer Sir William Beveridge and implemented by the Attlee government after the Second World War, was a sublime idea. It rescued millions of British citizens from the degradation of poverty and lifted the fear of illness. It guaranteed employment or, if jobs were not available, universal benefits. It offered security in old age.

Welfare advocates assumed that even though penalties for idleness and failure were removed, people would work as hard, be as responsible, and look after their families just as well as when survival depended on their own efforts.  They assumed that the welfare system would not reduce individual work incentives.  They convinced themselves that tax revenue would not fall and that welfare costs would remain small.

Unfortunately, the pro-welfare faction underestimated human laziness.  Instead of supporting a few people who collect welfare only under extremely difficult circumstances, we're raising generation after generation of people who have no expectation of ever working.  This makes taxpayers feel ripped off, so that they are less and less willing to pay their taxes.

The reluctance of working people to pay into the welfare system is exacerbated by the ingratitude shown by the recipients.  Instead of being grateful, welfare recipients rioted in London, Greece, and in many other places when it seemed that their unearned benefits might be cut.  We've been conducting an 80 year experiment in how to manage poverty and the results are in:

The Way It Was

A give-away newspaper described the mission of a volunteer-based Children's Home that has been taking in orphans for 118 years.  The mission charter was written in 1892:

Whereas because of a presumable need of a temporary home for unfortunate children of this city, the Women's Christian Temperance Union (WCTU) has appointed a committee of seven women authorizing them to test the need.

Instead of just starting a program based their perceptions of need, the WCTU conducted a study to see just how many "unfortunate children" needed help during the recession of the 1890's.  Thirteen women volunteered to pay the rent for a house where room and board were set at ten cents per week.  The home had 38 children in 1989 and 44 by 1913.  Population averaged 60 during the 1920's and 1930's.

Although funding is and has always been a problem, the home keeps going with the aid of contributions and volunteers.  This private program succeeds because the volunteers care about the children.  The children know that their care is based on sacrificial giving, and they know that resources are limited.

The article explained how the staff related to the children:

In recalling one of the home's successes, a young girl who later went on to a successful medical career, Donna [a staff member] had to take a moment as tears filled her eyes.

"She came back to take us all out to lunch.  She said, 'If it wasn't for the Dover children's home, at that moment in my life, I wouldn't be alive today.'"

When did a grateful welfare recipient ever take a taxpayer out to lunch to show appreciation?  How many taxpayers get teary-eyed recalling stories of recipients who've been helped to pull themselves up by their own bootstraps and go on to useful careers?  The very thought is ridiculous.

People who receive from the government always feel that there's plenty of money, particularly when our leaders complain that some people aren't paying their fair share of taxes.  After all, what better use could there be for increased government revenue than increasing welfare payments?  The more our leaders rail about those who aren't paying enough, the more demanding the recipients become and the less likely they are to ever find work, or even to want to.

I, personally, saw the differences between government and private philanthropy at a recent Thanksgiving service.  Various members of the congregation had identified those who were having financial difficulties and collected food for them.  The people who had received the food realized that their neighbors had given of their own resources and appreciated it.

The gifts of food were accompanied by suggestions where to find work and otherwise deal with the situation in a more productive way.  The recipients appreciated the implicit assumption that they were capable of supporting themselves.

Government-run welfare, in contrast, destroys incentives to work and locks people into the welfare system instead of helping them climb the economic ladder.  It divides society between workers who resent being forced to support idlers and idlers who resent workers not paying enough taxes to support them in the style to which they'd like to be accustomed.

The reason the girl from the Dover Childrens' Home succeeded was that she knew that the adults cared about her.  She was grateful because she could see them pouring themselves into her based on love and duty.

Government agencies can never get such results because they don't help people out of love, it's because they're paid.  They don't want their clients to graduate out of the system because that would reduce the budget.  Government can't care for people properly because government employees don't care about them.

We've got to get back towards the earlier, private system, which offered a "hand up, not a hand out."  We have to turn as many welfare recipients as possible into productive citizens, both for the sake of their humanity and to cut welfare spending.

And if we don't cut spending?  As we're seeing in Greece and the rest of Europe, the system will collapse, and the poor will be worst hit.

We've got to reform welfare, other entitlements, and the whole panoply of government spending.  Economists have a saying - "When something can't go on, it won't."  The question isn't how can we expand welfare, that's no longer possible.  Cuts are coming, the only question is how they come.  It will either be the hard way through reasoned cuts, or the very hard way through economic collapse.  The choice is ours.