Various Economists on Scrooge, Charity and Coercion

Paul Krugman began “The Humbug Express” with an allusion to Dickens’ "A Christmas Carol” in which he compared Newt Gingrich and other Republicans to the old Ebenezer Scrooge because they oppose various programs that program supporters claim help the needy.  It is an unfortunate allusion because Krugman gets it wrong, distracting from his main point that the Obama administration has not created an explosion of government jobs as claimed by the “well-developed right-wing media infrastructure in place to catapult the propaganda’…to a wide audience where it becomes part of what ‘everyone knows’.”.  Scrooge’s sin was a personal lack of care and attention to friends and family as well as the poor and not a lack of support for government programs. 

It is foolhardy to try to impute twentieth century sense and sensibility into a nineteenth century man, but I will “rush in where Angels fear to tread.”  The old Scrooge was ungenerous and believed that paying taxes to support government programs relieved him of the responsibility of assisting the poor.  When Scrooge was asked by two gentlemen to give to charity, he replied,

`Are there no [debtors] prisons?' asked Scrooge.

`Plenty of prisons,' said the gentleman, laying down the pen again.

`And the Union workhouses?' demanded Scrooge. `Are they still in operation?

`They are. Still,' returned the gentleman, `I wish I could say they were not.'

`The Treadmill and the Poor Law are in full vigour, then?' said Scrooge.

`Both very busy, sir.'

`Oh! I was afraid, from what you said at first, that something had occurred to stop them in their useful course,' said Scrooge. `I'm very glad to hear it.'

…`I don't make merry myself at Christmas and I can't afford to make idle people merry. I help to support the establishments I have mentioned -- they cost enough; and those who are badly off must go there.’

Did the unrepentant Scrooge support the government programs to aid the poor or did the state coerce his contributions?  Dickens does not describe his political opinion beyond having Scrooge observe that “they [welfare programs] cost enough.  I am inclined to believe that his participation was coerced.  David Henderson distinguishes between coercion and compassion in “The Lesson of Ebenezer Scrooge.”

Indeed, the modern Scrooge, instead of asking, “Are there no prisons?” would ask, “Is there no Medicaid? Are there no food stamps?” The modern Scrooges, in short, are those who advocate government programs for the poor rather than charity for the poor.

But aren’t government programs for the poor a form of charity? That issue came up in the sales-tax controversy. The short answer is no. But the longer answer is worth stating also. During the campaign over the measure to increase the sales tax, my co-leader, Lawrence Samuels, and I were in a debate with two doctors from Natividad Hospital, which was to receive the large subsidy if the sales tax measure passed. The 200-person audience was composed almost entirely of Natividad workers and their families and friends. As you might expect, they were fairly hostile to Lawrence and me. At one point Melissa Larsen, one of the doctors on the other side, said that increasing the tax and giving the money to the hospital was “the compassionate thing to do.” I ignored her gall in calling “compassionate” a tax that would clearly have benefited her personally. Instead I responded, “No, it’s not. It has nothing to do with compassion. If you gave your own money to the hospital, that would be compassionate. But taking other people’s money without their consent is not compassion; it’s coercion.”

There is an argument to be made for coercion.  The poor and destitute create a negative externality.  Many feel compassion for their suffering; others may wish to avoid seeing the poor out of a feeling of revulsion.  If most citizens experience this negative externality but free ride off the compassion or revulsion of others who donate to the relief of the poor then coercion may be justified. 

In “Tea Partiers and the Spirit of Giving” Arthur Brooks claims that there is a measurable correlation between a person’s belief in the redistributionist role of the state and a charitable giving.

When it comes to voluntarily spreading their own wealth around, a distinct "charity gap" opens up between Americans who are for and against government income leveling. Your intuition might tell you that people who favor government redistribution care most about the less fortunate and would give more to charity. Initially, this was my own assumption. But the data tell a different story.

The most recent year that a large, nonpartisan survey asked people about both redistributive beliefs and charitable giving was 1996. That year, the General Social Survey (GSS) found that those who were against higher levels of government redistribution privately gave four times as much money, on average, as people who were in favor of redistribution. This is not all church-related giving; they also gave about 3.5 times as much to nonreligious causes. Anti-redistributionists gave more even after correcting for differences in income, age, religion and education.

The unrepentant Scrooge may not have been a Democrat but he certainly was not a small government antiredistributionist Republican. 
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PhRMA, Advertising and Competitive Free Speech

People often assume that business leaders support legislation that strengthens markets, but this assumption is usually false.  Business leaders support legislation that increases the profit of the firms they own and manage.  Given the assumption that drug companies Represented by the Pharmaceutical Research and Manufacturers of America (PhRMA) which represents the country’s leading pharmaceutical research and biotechnology companies, are self interested profit maximizers, Chris Frates of Politico provides evidence directly from PhRMA's advertising budgets that their profits will not be harmed by current reform legislation in his informative article ("PhRMA plans $6 million pro-reform ad buy in 38 House districts").

PhRMA agreed Tuesday to fund an initial $6 million ad buy in the districts of 38 wavering House Democrats. The pro-reform ads will come from the industry-funded coalition Americans for Stable Quality Care and could hit the airwaves as early as today, a top industry official said. The deep-pocketed trade group didn’t decide how much it would spend in total on the campaign; officials are waiting to review the bill first. The decision to flip the switch on five or six days worth of advertising will come when the industry is comfortable with the bill’s direction.

The emphasis added is mine.  Presumably, "comfortable with the bill's direction" means that these firms will benefit from the reform legislation.

A recent Supreme Court decision allowed corporations to spend freely on elections.  Many speculated that the decision would allow corporations to buy elections (see "Justices, 5-4, Reject Corporate Spending Limit").  In a blog post, I noted that business interests were not monolithic and that elections would be competitive.  Frates provides evidence that special interest funding would indeed be competitive.

The drug industry is really the only pro-reform group able to match the millions being spent by opponents like the Chamber of Commerce.

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The Pope and Selfishness

In a My Way article, Frances D'emilio reported that Pope Benedict XVI said in his Christmas message,

"Wherever an increasingly uncertain future is regarded with apprehension, even in affluent nations...In each of these places may the light of Christmas shine forth and encourage all people to do their part in a spirit of authentic solidarity...If people look only to their own interests, our world will certainly fall apart."

The Pope has an obligation to speak on moral issues. I dispute the economic order that may be implied in, or insinuated into his statement by others.

I assume that "a spirit of authentic solidarity" refers to generous behavior towards others as taught by Christ. Let's now assume that we double our authentic solidarity by cutting selfishness in half. How would this alter economic institutions?

I would guess that little would change in the market oriented Western world, and that poor nations would institute economic reforms that would make them more like us.

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