(Previously here and here.)
I’m going to quote Milton Friedman, who’s much less of an asshole than I thought when I was a high-school vest-pocket Marxist:
There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government. And that’s close to 40% of our national income.
This, friends and gentle neighbours, is what passes for charity in our modern mindset. Let me explain from my own perspective.
First off, relationships are vital to us, from a psychological and an evolutionary perspective. We hairless bipeds are, will-we nill-we, social creatures; we have evolved in an environment within which we depend upon our relations with others. (This is, for my money, the biggest flaw in much libertarian philosophy; we tend to forget that relationships are more important, from an evolutionary and/or natural-law perspective, than even Murray Rothbard cares to consider. Ah well.) Way back when, we’d die without the support of those closest to us — and somewhat further removed, without the support of the other members of our tribes. This may explain why enlightened self-interest is as common as, uh, common sense.
Consider, then, Dr. Friedman’s first way: spending your money upon yourself. This is a straight cost/benefit proposition. It’s an optimization problem. I want to get as much value (whether that means “improving my chances of survival” or “making myself as happy as possible” or what-the-foxtrot-ever) as I can for each buck I spend. This particular way concerns primarily myself — and if you get a little shiver of guilt here, go clear your head before you continue. We are all evolved organisms, evolved to pass on our genes in the strongest form possible, and without looking out at least a little for ourselves we can neither pass on the collective effort of all of our ancestors nor help others do so. Here’s my point: unless you’re buying shit to improve your social status, this is a bounded and self-contained problem. It’s nothing but utility. What’s the motivation? Commerce. We make a mutually agreeable transaction, and we both come out ahead.
Consider next Dr. Friedman’s second way: spending your money upon someone else. Now we have a more interesting transaction! Suppose I want to buy you a computer. I might consider a PC with Ubuntu Linux to be the best practical solution to your computing needs, but I can’t just go ahead and do that — I have to consider what you want in order to maintain (or improve) our relationship. Maybe I’ll spend a bit more money on you than I will on me — there’s more at stake than the utility of the purchase; I’m affecting our relationship. When I spend my money on you, I’m making two transactions: one between me and the seller, and one between me and you. Now three people benefit: you get something you want, the seller gets money s/h/it wanted more than s/h/its product, and I get a better relationship with you.
This is proper charity, by the way: it’s a mutually beneficial transaction between the donor and the beneficiaries. I give to your cause: you get my resources, and I get your goodwill.
We’ve now exhausted the necessarily moral exchanges from Dr. Friedman’s example. Let’s move on and suggest, for the moment, that there’s no real relationship between me (the guy with the money) and you (the guy whose money I’m spending).
So. I’m spending your money upon myself. I still have an interest here: my own. I can spend as much as I want, or at least as much as you’ve given me; there’s no reason for me to economize. As Dr. Friedman says, I’ll buy myself the best lunch I can find.
Incidentally, while ordering lunch on someone else’s tab, I find myself in reality spending less than I would if I was spending my own money. The key here is that I’m not spending someone else’s money; rather, I’m determining how someone else should spend s/h/its money on my behalf. I don’t have the money to spend for my own purposes; I’m essentially asking someone else to give me money for my own lunch.
In this case, I have no reason to minimize cost: I already have your money; all I need to do is spend it how I wish. I still have an interest in this matter: I’m the one eating this lunch, so I damn well want the best lunch I can find for your money. I’m still going to spend all of your money, but I’ll be eating well.
This is not necessarily the case in Dr. Friedman’s final case: me spending your money upon an indeterminate third party. The incisive reader will have guessed that this is what modern charity has become: spending tax dollars on… well, whatever. Those who spend the money have no incentive whatsoever to see that it’s well-spent, and those who receive it have no incentive whatsoever to see that it’s well-invested. It’s really no-one’s problem, except that of the brokers in between: if I’m handling a government contract, from people about whom I give no shits and for people about whom I give no shits, I simply don’t give a shit about how I spend the money.
Witness thus the spectacular failure of government-sponsored subsidized housing projects (for example). No-one on either side of the equation gives a good goddamn about what happens to what ought to be well-built and well-maintained housing. The government has nothing invested: it’s just taxes; they get taxes every fucking year, there’s more where that came from. The tenants, by selection, have nothing invested: if they could invest in their housing, they’d have rented from private landlords. The only people who benefit are the sanctimonious demagogues who peddle their agendas into improved relationships with the rest of our extended tribe (see above).
