Charities and a socialist state (2)

The other aspect of charity collections I am finding problematic is that they are essentially a wasteful use of the societies’ resources. Here is why.

As mentioned in the recent post:

a socialist state already collects taxes to pay for the social expenditure. The money is then spent by various branches of the government on things like social welfare, public healthcare, education etc. What charities imply is that the state either does not collect enough money or misdirects the funds it has collected so that some urgent social needs are not being addressed.

While I am not in favour of high taxation (it tends to grow the state sector with its attendant inefficiencies) the allocation of state funding may benefit from some tweaking. So, if anyone sees a glaring hole in the social services provided to the citizens they should use the political process to communicate their findings to the government. This is why we have letters to the editor, electorate MP’s, public submissions and referenda. If enough people come to the government complaining about the same thing the ministers will have to take notice and do something about it. If only a few people complain then maybe the issue is not that serious. In any case, the obvious solution is to fix the system we have got, not to run parallel welfare through charity.

If we look at the logistics of charity collection what strikes me is its ad hoc inefficiency. As a society we already have well-paid professionals chasing up those who owe money to the state. What charities do is get a bunch of well-meaning volunteers to collect even more cash. Many of them are professional people who offer their free time to the likes of Sallies or City Mission. As well as an exercise in noble generosity this is also a monumental waste of the human resources. Do we want to have engineers, lawyers or surgeons spend their weekends at street junctions with plastic buckets in their hands? Would it not be more efficient for them to take overtime at work and generate more income, much of which would get re-distributed to the needy through taxation? Fundraising does not create any new wealth – it merely re-allocates the wealth already created through productive (and taxable!) activities.

As appealing as the populist “let’s-do-it-all-together” movements sound they have historically led to some spectacular failures. I will refer two examples here.

The first one is the Great Leap Forward policy of the Chinese madman, Mao Zedong. In late 1950s he instituted a set of sweeping social changes centred around forcing farmers to give up their land holdings to become industrial workers. The plan included follies like ramping up steel production through the extensive use of backyard furnaces. In them, the ex-farmers who knew nothing about metallurgy, burned firewood, furniture and whatever else to melt iron ore into low-grade steel ingots. So farmers, instead of doing what they knew how to do (cultivating the land), engaged in a quasi-industrial activity of some propaganda value but little benefit to the country. The Great Leap Forward resulted in terrible food shortages and death of between 20 and 40 million people.

After the disastrous Great Leap Forward China had a decade to recover before another murderous idea of Chairman Mao threw it into turmoil. My second example, the Cultural Revolution, was in some respects the opposite of the Great Leap. It forcibly sent millions of city dwellers to the rural areas and made them into peasants. Huge inefficiencies resulted and, again, millions of people perished. Driven by the communist propaganda, the Cultural Revolution caused enormous harm to China and held back its development.

I brought up these extreme examples to show that the societies are most productive when their citizens work within their field of professional expertise. Farmers making steel or urban people forced to cultivate land are a waste of human resources. As are the professionals collecting money for charities from their fellow compatriots.



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