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The Race Against Government

Tags Free MarketsInterventionism

02/08/2010Robert P. Murphy

I'm a professional economist, which means I can't just be happy when people try to help others. Instead, I feel compelled to analyze whether their altruistic actions are efficient or if they seem to be a waste of resources. In a recent flash of insight, I came up with a way to make charitable impulses more productive, but I had to abandon the idea once I realized the government wouldn't approve.

Bell Ringing and Marathons

I really hope I don't offend anyone by saying this, but I find a lot of standard fundraising in this country to be silly. For example, when I was younger I lived for a few months in a fairly rough suburb of Chicago. Sometimes at night, when I'd get off the "el" train to walk back to my apartment, a woman in her 20s would be standing outside the station, collecting money for the Salvation Army.

Now, this always struck me as ludicrous, but, not being a complete jerk, I just smiled and kept walking. Yet here's what I was thinking:

Miss, are you nuts? I'm a little apprehensive coming home this late and having to walk ten blocks in this neighborhood. This station is deserted right now, and the people who get off here are broke.

How much money do you actually collect per hour standing there ringing the bell? It's great that you want to raise money for people in need, but wouldn't it make more sense to work overtime at your job and donate the extra money from your paycheck?

I have similar misgivings about the way my school got us kids to raise money when I was growing up. I went to a Catholic grammar school that had annual marathons. So I was a little kid going door-to-door in my neighborhood and asking people to pledge a certain amount of money for each lap I walked around the school. (Some donors would be tough guys about it, asking me how long the laps were and sizing me up like I was a racehorse.)

In my high school, we had candy and magazine drives, where we again went door-to-door and guilt-tripped people into buying stuff they didn't want. We didn't get to keep a cut of the proceeds, of course, but the school would give out prizes to motivate us. It was always ridiculous because this one kid would get his parents to get orders at their jobs, so you never had a chance of beating him. I bet Ellery Queen Mystery Magazine owed half its subscriptions to that kid.

Of course, there are adult analogs of these things. For example people raise money for cancer research by "Walking for a Cure" and so forth. Please note, I am not criticizing the people who participate in these activities. I understand that they are social events, and you raise more money than if you simply went around to your coworkers with a hat. But my point is, isn't there a way we could tap into people's philanthropic side without doing something intrinsically useless, like having a bunch of fourth graders walk around the school parking lot eight times, or asking people to spend money on candy or magazines they don't really want?

A Better Way

In the above context, here's my idea: Suppose there were an organization that eventually gained a reputable name in the community, such that all the schools and many types of charities relied on it to coordinate their fundraising. Rather than kids selling boxes of almond candy bars or asking for pledges based on laps around the school, instead what the students would do is ask people to buy volunteer hours from them.

"Unfortunately, I don't think my idea would be legal. If it actually got to the point where the fundraisers were doing something useful for others, it would probably cease to be charity and turn into work."

For example, a fourth grader would show up at your door explaining that he's raising money for his school's winter trip to the ski lodge, and that he's selling volunteer hours at $20 each. You say, "A ski trip, heh? Sounds fun. OK I'm game, put me down for $5."

Then, after the kid had raised a bunch of money, he'd turn it into his school, which would relay the information to the organization. Let's say the kid had collected $80 from the people in his neighborhood. Then on some Saturday he'd go down to the organization, where they would assign him to teams with other kids. Depending on their ages and abilities (and the number of adult chaperones available), they might ladle out soup in a homeless shelter, pick up litter in the local playground, help an elderly widow clean her yard up, or go to an orphanage and play with younger kids.

The idea is that the philanthropic organization would need to make sure that the "volunteers" were doing things that most people in the community would appreciate, so that they would be more willing to "buy hours" from kids (and even adults) who were trying to raise money for various causes. For accountability, after their volunteering, the participants would get a set of vouchers from the organization that they could go hand out to the various donors as a "receipt" for their minutes.

If the idea caught on, it could really increase the amount of charitable giving in a certain area, and more importantly it could focus the philanthropic impulses of everyone in order to make the community a nicer place to live. People driving home from work would see teams from the organization cleaning up bags of garbage others had dumped on the side of the road, and they'd think, "Hey, I wonder if my neighbor is out there? I pledged 30 minutes for him last Tuesday when he was raising money for his school trip to Europe."

The Government's Monkey Wrench

Unfortunately, I don't think my idea would be legal. If it actually got to the point where the fundraisers were doing something useful for others, it would probably cease to be charity and turn into work. I'm no legal scholar, but I bet it's perfectly fine to pay $20 to have a fourth grader walk aimlessly around his school, whereas it's a violation of child labor laws to pay the same kid $20 to vacuum old lady Jenkins's living room.

In fact, as Jeff Tucker observed, this issue of taxes and labor laws might go a long way toward explaining the seemingly absurd waste of human effort in the current structure of charitable activities. Remember when I wondered whether that young woman made more per hour at her job, than she collected ringing the bell? Well keep in mind that the relevant number would be her after-tax earnings. The government puts a huge hurdle in front of any activity that provides direct benefits to others. That might be the reason so much of fundraisers' efforts do not provide such benefits.

But never fear, dear reader. Even though government regulations rule out my proposal for voluntary charity, the government is there with its own programs to improve society.


Contact Robert P. Murphy

Robert P. Murphy is a Senior Fellow with the Mises Institute. He is the author of numerous books: Contra Krugman: Smashing the Errors of America's Most Famous Keynesian; Chaos Theory; Lessons for the Young Economist; Choice: Cooperation, Enterprise, and Human Action; The Politically Incorrect Guide to Capitalism; Understanding Bitcoin (with Silas Barta), among others. He is also host of The Bob Murphy Show.

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