Thursday, May 11, 2006

Giving or Fixing?

[Jon sez: read this one to the end! It's good! It builds to a point! Honest!]

Long-time BBC correspondent Matt Frei recently published a piece on the BBC's website in which he argues that the rest of the world (by which he means Europe) could learn something from America's "culture of giving." He points out that Americans give more money to charity than any other people in the world.

It made me feel all warm and tingly. Until I thought about it, whereupon I realized that it doesn't make much sense.

First off, there Frei's piece begs major factual questions: do American’s give a higher percentage of our income than the rest of the world, or do we just have more money to give? After all, only Norway has the same per capita GDP as the US. So (making up numbers), is our 2.2% trumping Belgium’s 2.8%? Further, do we give a higher rate of the money not required for physical survival than the rest of the world? That is, after deducting the cost of minimal food and shelter, which might be (again making up numbers) 50% of the paycheck of an American earning the median income, are we giving at a higher rate on the remaining 50% than Italians, who may only have 40% left over?

But let's assume for the purposes of debate that we not only give more money to charity but that we also give to charity a higher percentage of our non-survival income than do Europeans.

Does that mean Americans are more generous? No. It means that we're differently generous.

Frei himself could easily have reached the same conclusion. He points out something that makes that conclusion obvious: "It is impossible to imagine modern America without philanthropy, because so many of the institutions funded by the state in Europe are financed by private citizens in this country."

So, Europeans are in fact shelling out for many of the same things Americans are. They’re just doing so in the form of taxes rather than charity. For them, this means fewer take-home euros, but it also means more guaranteed social benefits including but not limited to: cheap or free higher education, cheap or free health care, substantial workers' protections, and meaningful protection against the problems of unemployment. We Americans tax ourselves at lower rates, which means we don't have those things. The only major collective expense that we outspend Europeans on (in terms of percentages) is military spending, which accounts for 1.5-2.5 times more of our GDP than does military spending in most European nations.

So if Americans want to do something about poverty and its consequences, we have to give to charity because a much smaller percentage of our tax money is going to basic social services than Europe's tax monies.

You might say that it's six of one, a half-dozen of the other. The social services in place in Europe help people one way, while charitable organizations in the US help them another. To an extent that's true, but it’s not true enough. In terms of helping everyday people, guaranteed social services are a better bet.

First, they're guaranteed. You don't have to hope that donors will step up for your particular distress. You know that the government will step up because you or your parents paid taxes for the safety net you're about to land in. Second, because everybody in the country is enrolled, the economies of scale are tremendous. You get cheaper insurance through your employer (if you have a large employer) because your employer can get cheaper service bargaining for 2,000 people than you can bargaining for one. And your insurance company can get cheaper drugs bargaining for 2 million people than you can bargaining for one. So imagine the benefits of having 200 million people bargaining for the same drugs. Also, despite the inevitable waste of government bureaucracy, governmental social services are still probably more efficient than charitable ones (especially if the departments aren't run by halfwit cronies of the President) not only because charities have no particular fixed standards of efficiency but also because the governmental model requires coordinating the efforts of only a handful of government organizations rather than scores of private charitable organizations each with their own fixed (and partially redundant) overhead costs.

Also, in this country the charitable model tends to cost more money for certain very expensive problems. People who don't get the education and health care that make them productive citizens tend to become major drags on society--criminals or people incapable of paid or unpaid labor. Criminals and mental patients are incredibly expensive to the taxpayers. Strangely, we're willing in this country to pay taxes toward law and order (and even sometimes psychiatric institutionalizations) even though we'd pay less if we paid earlier for education and health. Even people who are just too chewed up to work require a lot of resources from the state and from their families.

My biggest problem with Frei's piece, though, is its embarrassing adulation of wealthy philanthropists. He breathlessly talks about parents who donate $24,000 to their child's school, about Andrew Carnegie, James Smithson, Bill Gates, and Ted Turner.

But what he doesn't mention--and here's the problem--is that such rich people give as much as they want to give rather than give as much as the problem requires. Now, Turner and Gates are both phenomenally generous men, particularly by the standards of billionaires. (Americans earning comfortable middle-class incomes are, percentagewise, more generous than people making more.) But as Turner points out, he can afford to give the UN a billion dollars even after losing $6bn in the late 1990s. As Turner puts it, "It's not as if I'm missing any meals or anything." The same is true for corporations, which tend to give only if they in some way turn a profit on it (tax write-offs and image enhancement being the main reasons).

Parenthetical note: Turner chose to be that generous to the UN because the US (Republican) Congress is too cheap, petty, and isolationist to pay its back dues. There's a nutshell version of the American "culture of giving."

Moreover, the Gates Foundation’s hugely valuable work notwithstanding, the super-rich and corporations tend also to give not where the money is most needed as measured by standards of human suffering and desperation but instead to causes that they most want to be associated with. "The Metropolitan Opera House in New York," Frei reverentially tells us, "would not exist without philanthropy. Nor would the Museum of Modern Art or the New York Public Library."

Now, I'm an aspiring artiste. I value the arts. Any healthy society has a healthy appreciation for truth, beauty, imagination, and creativity. But any healthy society has--first--healthy citizens. Citizens who see doctors. And it has trained citizens, i.e. people who can read, write, and understand math, science, and history well enough to vote knowledgeably and to organize around their beliefs effectively. If I had to choose between better and more effective schools and health care on the one hand and the Met and the MOMA on the others, I'd go with health and knowledge, thanks all the same.

Cutting funding to the NY Public Library would a more bitter pill, but the NYPL's situation isn't not so dire as Frei suggests. In fact, it's a good illustration of the problematic choices evident in many public organizations partially supported by private charity. In FY 2003, the NYPL had a total budget of $274 million dollars. About 11% of that came from contributions. If you assume that the endowment (which provides the investment income) all came from charitable donations, then the contribution percentage goes up to 22%. Granted, 22% is a lot. Even an 11% hit would be deeply painful, but my hunch is that large charitable donations are at least as likely likely to fund exhibits than books and computers. And, though I'm a fan of the arts, I'd be able to cope if New York's philanthropists channeled an extra $15-30 million annually to AIDS prevention and literacy programs at the expense of NYPL exhibits like Joshua Levine's "SKRAWL" ("an investigation[] into genetic manipulations and scientific procedures... [featuring] pink and yellow squirrels moving against the serene sky blue wall [that] invites viewers to contemplate and to decipher the mutant-like appearance of these creatures").

So, in a healthy democracy, taxpayer-funded social programs have these advantages: they're guaranteed, they're funded according to need rather than inclination, and they're targeted at the basics, however unglamorous those might be. All of these add up to one major advantage: they are designed to benefit the society at large by offering genuine, meaningful, and immediate equality of opportunity. In America--and everywhere else--charity just does not work like that. Almost inevitably, charity ameliorates existing problems without any prospect--or even intention--of eliminating them.

For all he gives to charity, Bill Gates is still the world's richest man. Ted Turner isn't hurting either. But even there, I’m not sure they’re giving away more money annually than they make on interest and investment income from the money they already have (much less their new income). Their charitable giving might change their tax burden, but certainly isn’t changing their tax bracket. The only super-rich who change their tax bracket with charity do so by dying first and then donating.

And even there, billionaire legacies aren't necessarily stories of inspiring generosity. Take one of Frei’s historical heroes, Andrew Carnegie. All that money Carnegie so magnanimously willed away to ameliorate social ills was accrued by his ruthless pursuit of wealth during an era during which those social ills made the accrual of wealth a lot easier. It was an era in which the eight-hour day, the forty-hour-week, limitations on child labor, and notions of worker safety were all considered pipe dreams or the thin edge of the communist wedge. Naturally, those millions helped people, including Carnegie’s former employees at his still mills. But if Carnegie had paid his workers a fair wage in the first place or if the government had taken more tax dollars from his corporations and turned the money into social programs, Carnegie's workers wouldn't have needed his charity in the first place. Praising rich people who donate some of the money they earned by paying their employees the bare allowable minimum is a lot like praising the guy who steals someone’s wallet before eventually returning half the money in it.

And, like wealthy individuals, corporations--particularly publicly traded ones--are never going to donate more than they make or donate to causes that undercut their profitability, no matter how just and important those causes might be. Imagine non-union WalMart donating billions to the AFL-CIO. Or Exxon donating billions to the EPA's enforcement wing. Or private prisons donating billions to afterschool programs and legal reform groups that would reduce the number of criminals and lower the sentencing requirements for minor crimes. Can't imagine it? Of course not. Those same corporations might donate a bit of money to those causes to make themselves look better, but to give enough to actually eliminate the problem would be a deeply stupid business move. And whatever you want to say about the CEOs of large corporations, they are far from stupid about business.

Don't get me wrong. I'm not just rich-bashing. All of us make the same calculations, albeit on a smaller scale. I'll often give a buck or two to a homeless guy. I'll occasionally give slightly more to a homeless shelter or advocacy group. I pay $20 a month to an organization that helps out poor kids worldwide. I do NOT give the homeless guy $20, much less invite him back to my place, give him a shower, some new clothes, figure out how to get him whatever psychiatric services he might need, help him work on his resume and interviewing skills, and, once he gets a job, loan him the money to pay first, last, and deposit his own place.

Why don’t I? Well, maybe because I'm selfish. But so then are the vast majority of Americans. Beyond the label of selfishness, the problem is that each of us could individually go broke giving to charity without doing anything beyond making each of us a prime candidate to receive handouts from the charities we'd just endowed. Along similar lines, it's great that in a city with no mandatory recycling program I nonetheless recycle (or, honestly, that I don’t get in the way of my girlfriend doing so). But it's pretty painless for me. And even if I were to make my life radically painful, even if I were to walk everywhere and to modify my lungs to exhale oxygen rather than carbon dioxide, by myself I still wouldn't do a damn thing to fix global warming.

That's why a system of social guarantees funded by the taxpayer is ultimately a better model. If--despite bitching and grumping--everybody has to pony up what it takes to make real progress against poverty, ignorance, and illness, then a society has a real chance to fix the problems. If not, then we can take heart in knowing that there will always be a desperate need for America to continue its self-perpetuating “culture of giving.”


At 11:36 AM , Blogger indypete said...

I am a strong advocate of the position that you have taken with this post. When the bible thumpers do little or nothing for the poor, their excuse is, "We want to allow private organizations to do that." The problem is, there are lots of people out there that benefit from the charity indirectly, yet don't pony up for the expense. If anything, it's a matter of fairness and effectiveness.


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