Thursday, 28 June 2012

The Private Charity Myth

It is often argued by Libertarians and other free market advocates that private charities provide far better services then public charities do. When funded by the government, they argue, programs such as welfare and the likes result in a fair amount of the money being lost in the form of payments to members of government bureaucracies. Compared to government programs, private charities do the job so much better they claim. Without bureaucracies the costs of providing effective aid to the poor are diminished and the poor flourish from these charities. Meanwhile, government programs keep people on welfare while pocketing the taxpayer's dollar for government employees.

This is classic free market dogma and ignores information asymmetry and the role of regulation in business performance. In the case of a government bureaucracy, information is symmetrical since the data is made available to the public in yearly releases and these bureaucracies are required to adhere to certain rules and regulations. Private charities are not subject to the same regulations but also do not have the same degree of information symmetry that government programs do. Due to this lack of information symmetry private charities largely end up with far more corruption and accounts of charity theft.

Charity theft is actually one of the most common forms of theft and it is under-reported. Typically, charity owners and volunteers are assumed to be benevolent folk who just want to help out but in today's competitive society a lot of volunteers wind up in it for the resume... and could give less of a damn about those they are caring for. Although corruption exists in all areas, corruption is far more rampant in the private domain. Information asymmetry, a lack of regulations and a belief in the market to price goods at their actual worth is a pipe-dream at best and a debt-fueled bubble destroying more of the middle class at worse.

Leave the welfare programs alone... we wouldn't need them if we had actual worker unions, worker rights and a stronger work force as a whole. People need to wake up to the fact that private companies do not give a damn about worker's rights and that we need to fight for them as we did in the past. We need to get unemployment down to like 2 or 3%... and then we will barely need welfare!

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