Classic Charities
The 1806 Russia depicted in War and Peace had three big ways to “help others”: medicine, school, and alms (= food, shelter, etc. for the weak, e.g., old, crippled, poor, etc.). From this, I suggested:
Modern liberal obsessions with such areas are not a local historical accident.
Seeking more data, I found a book on what foreigners saw in 1700s England, which also lists these same three as the main forms of charity (quotes below).
What about charity-related spending today?
US direct donations of $291 billion by organization type is 35% religion, 14% school, 8% medicine, 5% arts, and 9% “human service”, containing most local alms, and 5% “international affairs”, containing most foreign poverty assistance.
US non-profit revenue of $1800 billion breaks down to 51% medicine, 14% school, 2% arts, 1% religion, 7% “multi-purpose and other human services”
US government spending of $3,800 billion (41% of US GDP) breaks down to 16% military, 18% medicine, 16% pensions, 15% school, and 11% “welfare.”
As government spending is now 13 times direct donations, if voters treat any substantial fraction of that a substitute for private charity, then most “charity” today is channeled via government. Pensions plus welfare makes 27% of government spending apparently going to alms, or about 11% of GDP. Total US education spending is $972 billion, about 10% of GDP.
Bottom line: About 18% of US GDP goes to medicine, 11% to alms, and 10% for school. So we now spend huge sums (~40% of GDP) on areas related to what were once the three main charities.
I’d guess that 1750 spending on alms, medicine, and school was far less than 40% of GDP. This all raises two questions:
Why such a consistent focus on the same three charity-related areas over such a long time? In general the simplest way to help folks is to give them cash. One needs other relevant factors to explain a desire to help in other ways. And to explain a consistent focus over many centuries, such factors must stay relevant over many centuries.
Why did charity-like spending grow from a tiny to a huge fraction of GDP? Why are we today so much more eager for charity-like spending?
Those promised book quotes:
If the foreigner was often critical of our customs and way of life, he usually had nothing but praise for our charities and the methods by which the poor were provided for in England. … There were “more almshouses in and about London than in all the cities of Holland which prided itself on them”.
“No rich person … dies without leaving large legacies. Most parishes in London and the country have hospitals for the sick, the poor and the aged, also charity schools, where poor children are fed, taught and clothed.” … [By] hospitals he is probably referring to some kind of almshouse, for … there were very few hospitals anywhere out of London. … As the century advanced more hospitals were built both in London and in the country towns.
Sophie de la Roche tells us of a Maternity Hospital for the wives of the London poor … These lying-in hospitals were generally well managed. From them came the maternity nurses who attended the well-to-do, and a ladies’ committee superintended their organization. The Foundling Hospital was one of the sights to which foreigners were taken. … built … so that its inmates might enjoy pure country air, was one of the beautiful things of London. (more)
Added 2p: I changed “charity” to “charity-related” in several places.
The US certainly could pay back what it has borrowed from the SS trust fund. US tax rates are at historic lows. Much lower than during most of the time when that SS surplus was being accumulated.
http://krugman.blogs.nytime...
If you look at the chart, taxes as a fraction of GDP are lower than they have been since 1950.
If Congress would raise taxes back to what they were during the 1960's, when growth was high, unemployment was low and to the rates that were present when the SS surplus was accumulated there would be no deficit. Or even better, back to the levels during Clinton when there was much higher growth.
When Clinton left office, revenues were 20.5% of GDP. What did the gigantic Bush tax cuts produce?
http://krugman.blogs.nytime...
The people who were taxed for those SS revenues were paying SS on wages. That was in addition to income taxes. Why is it ok to screw over wage earners but not to tax hedge fund operators?
I would like to stop corruption in government too, but throwing poor people under the bus to die in the gutter isn't the way to do it.
SS contributions were spent as general revenue because we elected people that wanted to spend more money than they were willing to impose taxes for. In other words, they were lying about going even deeper into debt as a society than the "deficit" admitted. This was done by the political class, both Dem and Rep, because WE ALLOWED IT. The politicians that spent it KNEW IT COULD NEVER BE PAID BACK. They also knew that wouldn't be obvious until they were retired on fat pensions and that the American people are so stupid that they would blame the people who finally said "We are broke" instead of the people who made us broke.
The SS money (the 2T you mention) is GONE. If you loan money to someone that can't, or won't, pay it back, you are a fool. As a society we were fools. Wanted to have our cake and pretend we were saving cake for later. We ate it all already. We had the sugar high. Our society cannot be taxed heavily enough to without economic collapse. That is why Obama and the Dems did not raise taxes during 2009-2010. They just increased spending because that money was "free" as long as the US can borrow. That time is almost up.
SS is charity because it was set up (intentionally) to give people something for nothing. Originally, it was a way for FDR to buy votes by giving money to people that had not paid into SS. Ever since then, it has been a way to buy votes from old people, the disabled, etc. by giving them more and more generous benefits even after it was obvious (from an actuarial standpoint) that the benefits were unsustainable. We have long known that cutting benefits, raising contributions, raising the retirement age were required and Congress has done a little bit, but never enough to fix SS longterm. They pretended to fix it and left the real pain for later. LATER IS HERE NOW!
Tax credits are not charity. They are a legal way to give money to political supporters. This is why Congress (and the President) love to give money to any group that will pay them bribes (ie political contributions). Right now it is "green" energy (GE, windmills, solar, ethanol) and unions. In the past it has been railroads, oil, farmers, homeowners, etc. This has gone on since governments first started because the real purpose of political organizations is to trade favors for power.
Governments are not the solution to corruption, they are the source of corruption. Governments must exist (to provide a legal system and national defense, for example) but to minimize government corruption you must minimize what government does. Today the government is about 30% of the entire economy (more if you count state and local). 90% of that is corruption. If you want more government, you want more corruption. The communist governments were the most powerful governments ever seen; they were also the most corrupt.
Finally, I accept SS because I must live in the world that we, as a society, have created. I contributed to SS for 40 years. It would be foolish not to get something back from that.
I wish we would face the fact that entitlements are going to destroy our society and our freedom. We obviously will not face that and therefore we are doomed. Not in centuries, not decades, but in years. Our young people cannot pay all the bills that we ran up. If we cut benefits, raised retirement age, etc. we could prolong the ponzi (i.e. SS), if we cut enough, we could even turn SS into a viable system, but we will not face facts. We talk about an imaginary $2T and pretend that we can just pass laws to paper over the fact that we are broke (as is Europe, Japan, and, yes, China). Greece today, England tomorrow, the US next week. We have run out of other people's money.