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Wednesday, December 13, 2017

Americans’ Generosity Can Help the Poor Better Than Government

The powerful combination of voluntary giving and market incentives makes private charity a much better choice for poverty alleviation than government welfare will ever be.

Christmas is right around the corner, and people everywhere are in the holiday spirit. In addition to giving gifts to loved ones, Americans are also giving to their preferred charities. Indeed, about a third of all charitable donations occur during the month of December. And Americans are, in general, incredibly generous. Recent estimates have the total dollar amount of charitable giving, both cash and labor, at about $600 billion. That’s more than almost all other countries take in via taxation. Most of this money comes from those “selfish” rich people you read so much about, and all but about 5 percent of it comes from individuals. Businesses, for all their fanfare and PR campaigns, give very little in comparison. Of course, not all of this giving goes to what might be called poverty relief, but about 82 percent of it does, about $500 billion, as of 2016. And all of this giving is completely separate from what the government takes through taxation and redistributes through what is loosely defined as “welfare spending.” So how does all of this private charity compare to what the government is doing? What does the future for government welfare look like? Is the market capable of taking on the role of the “first line” of help for those who need it? Antony Davies and James Harrigan discuss on this week’s episode of Words and Numbers.

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James R. Harrigan

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  • James R. Harrigan is a Senior Editor at the American Institute for Economic Research. He is also co-host of the Words & Numbers podcast.

  • Dr. Antony Davies is an Associate professor of Economics at Duquesne University, and co-host of the podcast, Words & Numbers.