Saturday, April 24, 2010

The Paradox of Welfare and Charity




If by some strange event I was to become a gazillionaire and inclined to give it all away, there are a ton of causes I could and would give the money to. I would fund scientific and medical research. I would give generously to groups like The Innocence Project and the Institute for Justice. I would contribute to advancing the cause of freedom. I would consider even environmental and wildlife preservation. But there is one thing I would never do. I would never give a red cent to alleviate the poverty of another person. This is because all forms of welfare and charity do more harm than good.

When you bail out someone, you do two things. You alleviate their suffering, and you also increase it. It's like giving poisoned food to a starving man. In the short term, his hunger will have abated. In the long term, he will be dead. This is what happens when you extend charity to human beings. You fix their short term need but also give them no incentive or even a bad incentive to change the causes of their problems. I make no distinction in this between private charity and government welfare programs. The only difference between private charity and government welfare is that private charity will cease at some point. Welfare is forever.

This phenomenon is something I call the "welfare effect." I don't want to be judgmental on this because we are all susceptible to the welfare effect. To a greater or lesser extent, we profit from the labor of other people that we did not pay for, and it creates the wrong incentives. If the government gives me a check, I am going to cash that thing and save the dough or spend it. But knowing about the welfare effect makes me eschew certain things like applying for unemployment or counting on Social Security as a retirement plan or using my paid vacation. At this point, a lot of people will think I am a complete idiot, but I have found that the loss of free money is more tolerable than gaining it. This is because welfare does not make you richer. It makes you poorer.

The cause of poverty is elementary. You only have to do nothing to be poor. We were all born poor. Do nothing all day, and you will be poor. Wealth comes from activity. For wealth to exist, someone must work. This work can take many varieties, but it all boils down to human activity. I am sitting in a chair someone made. I am typing on a keyboard that someone else made. This computer is another item someone made. And I paid for it all with my own labor in exchange.

People who receive welfare and charity receive wealth they did not earn. They are being paid to not work. The result is that they stop working. This is why socialism fails. This is why socialist countries and communist countries see a decline in their living standards. People have no incentive to work. As this accumulates, the entire economy goes straight to shit. Welfare is a cancer. It doesn't make people richer. It makes them poorer. If you doubt this, look at Cuba or North Korea.

In order for an economy to work, someone must produce. Someone has to work to make the things we need to live and thrive. Welfare destroys this system because it pays people to be idle while telling the productive people they are suckers for working. People will decry capitalism for being heartless and evil, but it is this heartless and evil system than give the poor of today a better standard of living than that enjoyed by royalty a century ago. In addition, the difference between the poor and the rich today may be huge in terms of dollars but is only marginal in terms of quality of life. Bill Gates might drive a Mercedes while I drive a Toyota. But we both drive and watch the same movies and TV shows. And I can tell you that shitting in a gold plated toilet is not much different than shitting in one of those regular ones made from porcelain.

On a personal level, we all know people who are forever broke. They can't ever pay their bills. They are always in a perpetual state of need. The funny thing is that this perpetual need often comes with generous welfare support from friends, family, and the government. When you talk to these people, their ideas about money are very different than my own. For them, money is purely a matter of luck. Wealth does not come from production but by chance. I am able to pay my bills because I am lucky while they are unable to pay their bills because they are unlucky. The irony about these welfare junkies is how much they gamble which is totally in keeping with this worldview. When they hit a lucky streak, they can be quite generous with their winnings which is why so many lottery winners end up back in poverty.

I don't believe in luck. I believe in work. Luck is to be at the whims of nature which made us all poor from birth. A hunter may happen upon a buck, but it is the rancher tending to his herd that eats steak every night. This is why farming displaced hunting and gathering.

People that work hard and save their money are always castigated for their selfishness. They are hated which would be understandable from a hunter-gatherer viewpoint. By sharing the luck, everyone has something. By not sharing the luck, others will starve, and you will starve as well when your luck turns, and you need the "community." But this is a lie. You don't need the community. You need the marketplace but not the community. The community is the lie of shared poverty. The undeniable reality is that you are better off alone. This is why people with money have few friends. They can't afford them.

Welfare addicts hate work and will work diligently to avoid working. A welfare addict knows every freebie the system offers. They game and scheme to cash in on it. And they will do anything to avoid the misfortune of falling into a job. Once established in a stream of free income, they will quit working even though they are able to work.

As an individual, it behooves you to follow certain rules to avoid the welfare effect:

1. As much as possible, decline free money. Never apply for unemployment compensation, food stamps, or any other government assistance.

2. Never depend on friends and family for hand outs, loans, gifts, or anything else. Never borrow and never lend.

3. Always be gainfully employed. If you find yourself unemployed, treat the job hunt as your new job and work your ass off to find work. Take any work you can find.

4. Get rid of welfare addicts in your life. Do not associate with people who refuse to work or pay their own way. This may even require estrangement, a break up, or a divorce.

5. Realize that even with high taxes and other forms of government theft, you are still better off working. Being a taxpayer is still better than being a welfare recipient.

6. Never give to charities devoted to poverty relief. There is only one relief for poverty. It is work. The only charity hard working people need is freedom. Support that instead.

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