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As an economist, how do you reconcile the emphasis of charity as aid to the poor and disadvantaged, and the free rider problem such an approach necessarily leads to?

Via the state, and progressive taxation, the free rider problem is eliminated, as is, if done correctly, administrative redundancy, another economic ineffiency of the charity approach.

In any event, using the US as an example is basically at best a red herring. Just because the Americans don't know how to do public administration (nor, often, public anything) doesn't mean it cannot be done.

It simply means it cannot be done (and this is essentially for political reasons) in America...
 

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Fri Nov 24th, 2006 at 12:11:46 PM EST
[ Parent ]
Quite the contrary, Americans, depending on the program we look at, are damned good with bureaucracy.  (If you want to see serious incompetence, come to Britain.  America looks like a dream-come-true by comparison.)  Medicare is apparently a great example.  Others on this site will presumably -- having done so in the past -- point to the US Postal Service, although, here, they lose me, as someone who has endured a near-endless number of nightmares with the absolute morons at the USPS and will, consequently, always use FedEx when it is available.

I'm not arguing for privately- or publicly-run welfare.  I'm arguing that Jerome is wrong to assume that the state will cover all the bases.

The free rider problem is a good point, of course, but is it not an even greater problem to have citizens voting for politicians who will increase the budget while cutting their taxes?  Now we've moved into an intergenerational free-rider problem, except that, in this case, kids -- whose federal credit is maxed out by their brainless, spoiled Boomer parents -- have no say in the decision.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Fri Nov 24th, 2006 at 12:47:55 PM EST
[ Parent ]
I'm afraid you've nailed the principal fiscal problem with America by your very last statement.

And you are also of course right to hold that the state will not cover all the bases. But it should cover most, and this is the point I think he's trying to make. There will always be places for philanthropy, but philanthropy is not a policy.

I reckon that Jerome is experiencing something very personal in this regard, and I can tell you that I went through the same thing in America, and instead of getting support for my wife staying at home to care for my son, I burned through savings and ultimately went into debt. (And let's not even get into the hospital bills which, despite my supposedly excellent insurance, piled up.) In America, getting out from under severe misfortune is left to charity (eg, American Children's Cancer Society, United Way, et c.)  This is as criminal as it is inefficient.

This being said, citizens may think they are voting for a simultaneous increase in the budget and decrease in taxes, but this is simply what the fools are led to believe. There'll be taxes to pay for it, one way or another, inflation being one such tax in all likelihood. A nation of rubes when it comes to governance is what it comes down to.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Fri Nov 24th, 2006 at 04:09:26 PM EST
[ Parent ]
All good points, and I, too, reckon that it is something of a personal issue to Jerome, and understandably so.  His recent diary on his son was spot on.  The health care system in America, like the K-12 education system, is a joke.  What I would argue is that governments should focus on the critical components of an intelligent welfare state -- that is, health care, unemployment insurance, funding for the sort of medical research that might eventually cure Jerome's son, and other issues of this general nature.

My essential point is that nobody should expect the private sector or the public sector to accomplish everything.  They're complements, not substitutes.  Where one falls short, the other should pick up the slack.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Fri Nov 24th, 2006 at 04:27:55 PM EST
[ Parent ]
the free rider problem is eliminated
what is the free rider program?
by wchurchill on Sat Nov 25th, 2006 at 02:27:38 AM EST
[ Parent ]
Let's say -- I am, for the record, stealing this from Wikipedia -- you live on a block that is suffering from a lot of breaking and entering.  Your neighbor suggests everyone on the block pitch in to buy a CCTV system.  It would cost £2500, or £100/person.  Everyone else might agree to this, but you might not, since you know that the syystem will protect you regardless of your decision on whether or not to throw in that £100.

In that case, you have a free-rider problem -- you, of course, being the free rider in this example.  In the case of a charity, people who refuse to donate, but still enjoy the benefits (often positive externalities), are free riders.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sat Nov 25th, 2006 at 04:22:03 AM EST
[ Parent ]

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