Leroy Fick does not need to live on food stamps anymore. His luck changed when he won $2 million in the Michigan state lottery recently. To see someone’s life take such a turn for the better warms the heart. The troubling part of the story, though, is that eleven months after becoming a millionaire, Mr. Fick continues collecting food stamps from the government. And he is doing this legally, because his assets don’t count towards his eligibility. In other words, millionaires are entitled to food stamps. Who knew.
Our system of government charity now comprises roughly thirty percent of government spending, depending on what one counts as charity. That’s $727 billion for welfare, $887 billion for education and $356 billion for healthcare. The grand total: $2 trillion, annually. This is not necessarily an unreasonable amount of charity in a society as rich as ours. That’s not the issue. The issue is whether government is right for the job.
Consider a few things. First, when government takes money from one person to give it to another, it burns about forty cents of every dollar taken in the process. The losses are a combination government bureaucracy and economic drag. This means we could collectively save around $800 billion dollars per year by not using government to middleman our charitable donations, and the recipients of charity would see not a penny less.
Second, when government gives money, it does so almost indiscriminately so long as the recipient falls below certain income thresholds. Just take a look at Mr. Fick. Government does little to merit-test its charity. Those who really need the money get too little; those who don’t get too much. The collective power of millions of individuals each merit-testing their charitable donations far exceeds the capabilities of any government bureaucracy.
Third, when government takes and gives money, it foments class warfare by destroying the mutual benefits of charitable exchanges. Rather than feeling sympathy for the poor, the rich come to see the poor as looters who use the strong arm of the government to reach into others’ pockets. While the poor, rather than feeling gratitude for the rich, see them as cold hearted, selfish snobs that have to be forced to care about the plights of others. In other words, the government makes thieves of the poor and despots of the rich.
Fourth, government charity is ineffective at achieving its primary goal of reducing poverty. It is sad comparing the poverty rate in 1969, shortly after the Great Society’s initiative to eliminate poverty, with the poverty rate in 2009. In 1969, we had a poverty rate of 12%. By 2009, after nearly half a century of waging the war against poverty, the poverty rate has risen. Based on the figures from the United States Census Bureau, it rose to 14%. In other words, our trillions and trillions of dollars bought us a 2% increase in poverty. A private charity that failed to lift its beneficiaries from poverty would quickly see its funding dry. Donors would not continue to flush money down the toilet for nearly half a century, as government has forced us to do with welfare.
Which brings me to the fifth point. Taking someone’s money under the threat of force is what we know as theft. It does not matter if I am holding the gun, or if you are. It does not matter if another gang happens to be bigger than ours. It does not matter if the gang is large enough to vote someone into government to point the gun at us on their cowardly behalves. Just because government’s gun has a silencer emblazoned with the word “charity” does not make it so. Theft is theft. Not only has the government’s threat of force kept a failure of a welfare system alive for nearly half a century, it has trampled upon our rights as individuals. It needs to stop.
So here’s an idea. The government should give us back the $2 trillion dollars of charity money that it takes from us on a yearly basis and let us decide how to allocate it. While it is likely that not everyone will spend this money on charity, that’s fine. When you couple the increased efficiencies of private charities with the merit-based testing of millions of individuals, we don’t need anywhere close to $2 trillion dollars to achieve much better results than what government has given us thus far. This will renew the pleasure in giving, the respect and dignity in receiving, the morality of our society, and will ensure that the money reaches the hands of those who need it most.