John C. Wright (johncwright) wrote,
John C. Wright

Compassion and Serfdom

Annfirtree poses some questions about economics and charity:

"Out of curiousity, do you, Mr. Wright, feel that you are a man who has compassion or sympathy for the poor?"

"Do you think that the Food Stamps program violates "basic principles of economics"?"
Yes, but I would not single out the food stamps program in isolation. It is one of many programs meant to subsidize the poor, which ends up harming them. 

"If so, what principles and how does it violate them?"
The principle that you cannot get something for nothing.

Welfare recipients are under a perverse incentive not to economize and not to invest. One welfare Mom, for example, saved from her welfare checks enough to send her daughter to college. Under the perverse incentive of the welfare system, however, that behavior had to be discouraged. Another example is the disincentive for the poor to marry: single Moms get more welfare than wives. 

Also, the principle that whatever you subsidize, you get more of. Unlike private charities, state-run transfer payments encourage poverty. Imagine any man whose income is three dollars an hour above the welfare line. Suppose welfare pays the equivalent of four dollars and hour. For so long as that man works, he is, in effect, loosing a dollar an hour, not to mention the disutility of his manhours of labor.

At a time when medicare and medicaid and social security are budget items larger than the military budget, the burden on the taxpayers is so immense that it discourages investment and job creation, not to mention charitable giving. At the moment, the average American works for the government from January to mid-April. That is the number of manhours of his labor for which he receives no benefit, or no direct benefit. Americans spend more on taxes than on food, clothing, and housing combined. A healthy chunk of that is spend on some sort of allegedly compassionate transfer payment.

Not just economic principles are violated. A basic principle of morality says that forced charity is not charity. A transfer payment is a matter of right, not a cause for gratitude. A basic principle of the way bureaucracies works tends to make the money go more to those who need it less, the able-bodied poor, or the undeserving poor, and not where it should go, toward the deserving poor. (Indeed, the mere fact that talk about the 'deserving poor' seems an odd anachronism is a sign of some of the perverse incentives built into state-run forced charity schemes.)

Anyone serious about feeding the poor would merely ask grocery stores to put out bins of rice, or potatoes, or day-old bread they cannot otherwise sell, and let any poor man willing to push a broom for an hour get a meal, or without pushing a broom if he is crippled. Put a cashbox or collection plate next to the bin for patrons of the store to make contributions.

I used to work on weekends in a charity, where we gave away food to the poor. Any food we got locally from stores we stocked on our shelves, and it was no problem. Any food we got from the Feds had strings attached, and all manner of petty bucreaucratic rules and regulations we had to follow--we had to follow rules just to give food away to the hungry, if it was federal food. Local food, we could distribute as we saw fit. That made a big impression on me. The federal attempts to help ending up hindering our local efforts.

"Do you really think we should abolish the income tax completely?"
"If so, how should we pay for the military and pay off our national debt?"
We could pay for the military the same way we paid for it before 1913, (the year of the Sixteenth Amendment), when the national debt was 7 percent of gross domestic product: by customs duties. There are, of course, corporate taxes, sales taxes, land taxes, and other forms of taxation aside from an tax on incomes.

Paying off the current national debt is impossible, either with or without an income tax, so I cannot answer that question, nor can anyone.

The national debt is a product of going off the Gold Standard, so that the Omnipotent State could produce fiat currency to fund otherwise unsustainable 'Great Society' type programs that have rotted the strength and soundness of the nation. Prior to that, national debts were minor, usually related to war expenses.

Here is a chart. Note the spike circa 1940-1945. How much of this is WWII debt, how much due to war rationing, how much due to boneheaded Keynesian meddling in the credit cycle, I leave to economists to debate. Going off the Gold Standard was a contributory cause.

I am not sure what relation national debt has to compassion for the poor: I do not see how the poor are advantaged if they live in a society where jobs are scarce and the prices of all goods are high.

The basic economic principle violated in this as in all leftwing thinking is Ricardo's principle of comparative advantage, which says that even a poor man is benefited by trade with a rich man, if he specializes in doing best what he does well. The richer the rich man is, the more people he can hire, the more goods and services he buys, he is a blessing to the community. The way to get rich is to work. 

The leftwing thinking is primitive, cargo-cult thinking, which sees life as a zero-sum game: the more the rich man has, the less the rest of us have, so he is a curse to the community. The way to get rich is the loot the rich and take their stuff.

If welfare were a sign of compassion for the poor, Soviet Russia and Nazi Germany, both socialist totalitarian states with massive welfare and protectionists schemes in place, would be the paragons of compassion.

Compare pre-income-tax America, the American of the turn of the Century, the America of Henry Ford and John D. Rockefeller, when no bureaucracy stood between a man and his self-made fortune, to post-Revolutionary Russia, the gulag utopia, where the bureaucracy fed, clothed, housed, and owned all men. Which was more compassionate?

At another place, Annafirtree makes this comment:
"Having a political opinion about what is best for the poor (one way or the other) is not the same thing as, say, having imagined in vivid detail the complex set of emotions that happens in people contemplating whether they need to apply for food stamps or not, a process that I would consider much closer to sympathy than a predetermined belief that welfare is or is not best for the poor."

I have no need to "imagine" this process, since I can remember it. I went through this mental process back when I was unemployed, bankrupt, and could buy no food.

I was weak enough that I went to the welfare office and spoke with the bureaucrat about taking food stamps and unemployment insurance. But, thankfully, I resisted the temptation, and walked out, and tore up the paperwork.

Instead, like an honest beggar, I got food from the local church, rather than from Caesar.

So I have been there. Consequently, I have far less sympathy--in your meaning of the word-- for the able-bodied and undeserving poor than someone who has never been that poor.

The same thing happened to me just recently, when, due to a bureaucratic error, I was left without health insurance for six months. During that time, I had weekly visits to the pharmacy, and two hospital visits. I paid the damn thing out of my own pocket, like a man, without complaining and without asking Caesar to rob my neighbors for my benefit. The fact that the price of a hospital visit is perversely high due to government meddling in the health care market was something the deep wounds in my pocketbook can attest.

My own opposition to socialized medicine is prompted, not just by right reason, but also by self-interest. I will perish without the medicines that keep me alive, and so I have no reason to want them to become more pricey, more scarce, or subject to rationing.

I assume socialists either do not know, or do not care, that artificial price ceilings cause scarcity. One yammerhead I spoke with -- and this was a man who, knowing nothing about economics, pompouly scorned me for my ignorance -- did not even know that there was a cause-effect relationship between price ceilings and rationing.

The thing I don't like about socialists is that they are dead to shame. They see nothing wrong with begging, nothing wrong with robbing, nothing wrong with being a tax-eater rather than a productive member of society. They see nothing wrong with a man not providing for his family, nothing wrong with breaking up families, nothing wrong with exploiting the poor for political gain, nothing wrong with dishonor. Instead they spend their time consumed with mock-outrage at honest men who make an honest living.   
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