State of Innovation

Patents and Innovation Economics

The Value of Charity

From President Bush’s 1000 points of light to President Obama’s biblical argument “aren’t we our brother’s keeper?” for government charity programs it appears everyone agrees that charity is good for our country and may even strengthen our economy.  We are bombarded with the message that “we must give back to our community.”  This discussion even spilled over to Bill O’Reilly and Stephen Colbert where they both agreed that charity was good but disagreed on the extent and implementation of charity.

First, let’s  examine the logic of the “give back” mantra.  In order to give something back you must have taken something.  If you live in a free and just society the only people who can “give back” are those people who are thieves.  The statement is complete nonsense, meant to associate anyone who is successful financially with thieves morally.

Yes, but we don’t want to see our fellow human beings dying in the street for lack of food do we?  About 200 years ago humans in the Western world first escaped the Malthusian Trap.  The Malthusian Trap is when humans are like every other animal, their population expands until they are on the edge of starvation.  This means that until 200 years ago some people did starve to death and it was a real threat for all but the wealthiest people.  This could not have been solved by using charity to redistribute food to those people starving.  There just was not enough food for all the people on Earth.  Even today there are parts of the World where people starve to death.  This problem will never be solved by charity.  While there may be enough food to feed all the people on Earth today, the problem is purposeful manipulation of food supplies in countries for political purposes.

People did not escape the Malthusian Trap because of charity.  The only reason people escaped the Malthusian Trap is because we increased our level of technology.  The only way to increase our level of technology is by inventing and then disseminating these invention.  This occurs when we have strong property rights, particularly for inventions (patents), and free markets.  Why don’t we celebrate people and companies that create and disseminating new technologies instead of charity?  If you truly want to help the “poor,” then you should support free markets and strong property rights, particularly for inventions.  For more information see Source of Economic Growth.

Charity takes (gives) money from a productive person and gives it to someone who has not produced anything.  Since everyone has to consume to live, charity results in a decrease in total wealth.  In addition, the money given to charity is not given (spent) on someone who is productive.  If you really wanted to maximize the “pay it forward” value of your charity, you would give it to the person who was most likely to do the most good with it.  This means you would give it to a person who is productive, which is what generally happens in a free market.

When people donate their time to charities it also destroys wealth.  When engineers, lawyers, architects, doctors, etc spend time preparing meals or hammering nails, they are trading time worth $100-$1000 per hour for labor worth $10 per hour.  This does not help the poor, it just reduces the total wealth created.

Does charity have any value?  I have been both the recipient of charity and have given charity over the years.  I am appreciative of the charity I have received and have no regrets about the charity I have given.  Charity is like manners.  It makes civil society more pleasant, when it is private charity.  Government charity is not charity it is theft.  Even when there is too much private charity it is destructive.  How much is too much charity?  When more than 10% of the people in a country receive charity it is too much.  I remember a United Way pitch I was forced to sit through where they said 40% of the people in our area benefited from the charities the United Way supported.  If that was the case, why didn’t we just pay for these things directly rather than paying United Way to take a cut and redistribute our money?

Here is what Ayn Rand had to say about charity.

My views on charity are very simple. I do not consider it a major virtue and, above all, I do not consider it a moral duty. There is nothing wrong in helping other people, if and when they are worthy of the help and you can afford to help them. I regard charity as a marginal issue. What I am fighting is the idea that charity is a moral duty and a primary virtue. (emphasis added)

“Playboy’s Interview with Ayn Rand,” March 1964.

Note that Ayn Rand believes that charity requires judgment, specifically the judgment of whether the recipient is worth of help and the giver can afford the expense.

People who push charity as a moral issue are immoral and are not helping the “poor.”

 

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December 21, 2010 - Posted by | -Economics, Innovation, Patents | , , , , , , ,

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