I can understand the thought. If not forced by the government, why would anybody want to take care of anyone else? Capitalism just means everyone is out for themselves right?

I do understand that thought…

The problem is it doesn’t hold water. The most obvious refute is that government welfare spending, is in fact, capitalism, left alone, working to take care of its people.

That’s exactly what it is. The government, with free elections and the majority consent of the governed, created these programs, in a capitalist society, in an attempt to take care of it’s people.

So I don’t think there is any argument to be made that in a capitalist society people aren’t interested in helping other people in need. Reality itself refutes that notion.

This really only comes down to, is the government any good at it?

So, Is The Government Any Good At It?


Wait… maybe you want proof. Ok. Let us see what I can dig up.

Well, there is this…

That graph is from 2011, so I can only imagine how much it is up to now.

If the government ended every single social welfare program tomorrow and simply sent a $60,000 check to every household under the poverty line, I think just about anyone would say those people would be objectively better off than they are from being piecemealed these government “benefits”.

Just think about that for a minute. The government could literally write a $60,000 check to every household under the poverty line that they could then use for any of the care they couldn’t afford.

Since nobody under the poverty line actually receives $60k in government welfare each year, clearly there are some inefficiencies in government causing waste.

But Dan… Obviously there are going to be costs involved with helping people…

True. Even the best charities can’t spend every dollar directly to their intended purpose. So how does government stack up?

Well. This Study discovered that government agencies spend about 66% of every dollar in their budget on overhead and some spend as much as 75% on those costs.

…agencies are estimated to absorb about two-thirds of each dollar budgeted to them in overhead costs, and in some cases as much as three-quarters of each dollar. Using government data, Robert L. Woodson (1989, p. 63) calculated that, on average, 70 cents of each dollar budgeted for government assistance goes not to the poor, but to the members of the welfare bureaucracy and others serving the poor. Michael Tanner (1996, p. 136 n. 18) cites regional studies supporting this 70/30 split.

So how does that stack up to private charities?

“In contrast, administrative and other operating costs in private charities absorb, on average, only one-third or less of each dollar donated, leaving the other two-thirds (or more) to be delivered to recipients. Charity Navigator, www.charitynavigator.org the newest of several private sector organizations that rate charities by various criteria and supply that information to the public on their web sites, found that, as of 2004, 70 percent of charities they rated spent at least 75 percent of their budgets on the programs and services they exist to provide, and 90 percent spent at least 65 percent. The median administrative expense among all charities in their sample was only 10.3 percent.”

So you might be thinking “Yeah, but people would never donate enough money to replace all of the government benefits.”

Well maybe… and maybe you might have already realized this because it is quite obvious but…

If the charities only raised half as much money as the government spends through compulsory taxation, they could deliver the same amount of benefits. If the president told us tomorrow that all government welfare would end and all the taxes would be returned to us… would you donate to charity?

I would.

Like the majority of Americans, I don’t mind spending some money to make sure those in need get help. I bet you don’t either.

After all the only reason these programs exist in the first place is because a majority of Americans don’t mind spending a little money to help those in need.

So this would be great. More effective help for those in need, more money in everybody’s pockets… the same social safety net, the only difference being we actually get to choose where our money goes.

Dan, I’m just not buying it though… no way people will donate that much to charity.

Ok… I get it. People can be selfish, no doubt about it.

Although… people can also be quite generous. Even with the governments’ compulsory tax used to help those in need, Americans voluntarily donated $427.71 BILLION to charities in 2018 alone.

Imagine how much more they would donate if given back the majority of their taxed income? If your taxes went down by 60% I bet you’d be in a very generous spirit.

Nope, Nope, Nope… People are just greedy. They will not spend that money willingly to help people.

Ok, fine… let’s just ignore all evidence to the contrary. At the very least it would seem to make more sense to take those tax dollars and instead of putting them into some government program, directly donate them to charities.

The government is objectively bad at helping people. Charities are objectively good at it. Could we at least agree that this makes more sense than what currently is occurring?

The people could vote on what charities can receive the money, they would have to compete on the open market and show that they are the most effective at providing their care.

You see, that is the inherent problem with government. It has no competition. This is why the DMV sucks… This is why the USPS sucks…

This is why no matter what, any time you have to deal with the government you are pretty much guaranteed to have a less than stellar experience. The government has no incentive to be efficient and it has no penalty for being crappy.

The government we have is the only option. I guess you could move to another country but practically, you are stuck with it. That’s why it sucks at pretty much everything.

Sure, many people in government mean to do well and they even go so far as to do good things but government, by the nature of being government, simply can’t be an effective means to our collective goals.

Just as you have to be superior to your competition in the marketplace, or risk going out of business, so do charities. Governments have no such problems to worry about.

Nope, I’m still not buying it. Even if the government is less effective, they are doing some good and that’s good enough for me.

Ok… we are really going out on a limb here but let’s just pretend everything else I said isn’t actually true.

The government actually does harm by continuing its programs.

VOLUMES have been written on this, so I’m not going to re-invent the wheel here. I’ll just link to this seemingly unbiased article going over the pros and cons of the US welfare system.

Just in case you don’t want to click the link, here are their cons… They certainly aren’t all…

from https://vittana.org/11-pros-and-cons-of-welfare

Welfare doesn’t support the modern household.
In the US, the federal poverty level for an individual is $12,060 in 2017. For a married couple with one child, the poverty level is $20,420. Because household size is the determining factor for how people qualify, modern households are not often accommodated. A family of six, for example, qualifies at $32,960 in 2017, which means having one working parent making $16 per hour would disqualify them from many benefits.

It can create a system of abuse.
The goal of welfare is to provide resources when there is a need, but there will always be people who try to take advantage of this system. Although this is a small minority of most applicants, often below 1% in many areas, it is still a potential cost to taxpayers and abuse removes the aid that a household with a genuine need may be able to receive.

Welfare can create a pattern of dependence.
When multiple needs are being met, from housing to food assistance, then it can create a system of dependence for some individuals or households. When every need is being met, then there is no incentive for an individual to better themselves. They can receive the benefits each month and live off the dime of taxpayers. That is why many welfare programs look to put in limitations to the amount of access that is provided.

Many welfare programs don’t address the root cause of poverty.
We live in changing times. Some industries are fading away into history while new industries rise. People caught in this transition need new skills to provide for themselves. That is why many welfare programs are including job training provisions within the benefits being provided. Not every program offers this option, however, and that means people who were once skilled workers are now unskilled workers with few job opportunities.

Some countries have highly variable programs.
In the United States, every state has the ability to set their own rules regarding welfare. This also means that there is the possibility of some states offering welfare access programs and other states refusing to offer those programs. This can make it more difficult for some households to obtain the services they need and for which they may qualify for in other geographic areas.

It creates societal cliques.
Who deserves to receive welfare benefits in a society? The presence of a program creates a debate as to who should receive benefits. Does being an alcoholic disqualify someone from receiving benefits unless they are receiving treatment? What happens if that person cannot afford treatment? Should drug addiction stop welfare benefits? How long should someone receive unemployment benefits, even if they are trying to find a new job? These cliques create societal separation and that has the potential to polarize a country.

So in closing…

How would a capitalist society take care of people in need? In short… just as we currently do… not very well. In a truly capitalist society, without the government playing robin hood… well all evidence suggests it would work much better.

Without the government, costs would go down, service would go up and freedom would prevail over force. It wouldn’t be utopia, because utopia doesn’t exist.

Though it would be fair, efficient, and therefore the truly needy. Without government standing in the way, fewer people might actually need it. That might just be as close as we can get to utopia.

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