Generous Americans

The virtues and vices of America take up a disproportionate amount of the political discussion by non-Americans. This is probably because America runs the world, but also perhaps partly because America did embark on a “wacky” experiment with free-markets and limited government. While the last century has seen America embrace more mainstream social-democratic government, they continue to be held up both by supporters and detractors of the free-market as an important example.

There is plenty of reasons for people to complain about America. And unlike some of the pro-Americans, I think it is fair and appropriate to complain about the vices of America because it is effectively the centre of the world and an important example for other countries.

But it’s worth remembering some of the virtues of America. And one virtue in particular is their generosity. According to Giving USA, in 2007 Americans gave $306 billion to charity, which is a 1% increase (inflation adjusted) over 2006. On average, this is about 2.3% of disposable income.

About 75% of this comes from individuals, and about half of that went to religious charities. An increased proportion of the money has been directed to international aid, environmental and human-services groups. Donations to international charities rose the most (an increase of about 13 percent).

Americans (as distinct from the American government) are the most generous givers in the world, with charity taking up 1.7 percent of GDP. Interestingly, Great Britain is second (0.73 percent of GDP).

Free-market advocates make the point that government charity has crowded out private charity. Consequently, it is safe to assume that private charity would increase if there was a smaller government. The benefits of this are significant, because private charity tends to be targetted better, run more efficiently, more innovative, and helps to bring people together and build a sense of community.

I believe that the private charity sector is of vital importance to building a better world. I think the nature of the free-market is that it creates sufficient wealth so that people divert more of their thoughts and resources towards building civil society. And I think that the long-term consequence of this dynamic would be to build a world that might look similar to what many leftists hope for. Unfortunately, I think this sector is being undermined and devalued by a system that concentrates on government hand-outs.

Maintaining a vibrant private civil society is vital for a free world. And I think Americans deserve credit for the role they are playing in keeping that tradition alive.

23 thoughts on “Generous Americans

  1. If they just had good taxes, they wouldn’t need private charities! And if we were equally poor and starving, we wouldn’t pass envious laws against people who have more! What is wrong with Australia’s Welfare State, apart from the perpetual clients, lack of incentive to get a job, and general laziness that it encourages? At least it gives jobs to public servants, who would otherwise be unemployed!

  2. At least it gives jobs to public servants, who would otherwise be unemployed!

    I think you should consider the possibility that they would be employed usefully in the private sector doing something productive.

  3. The benefits of this are significant, because private charity tends to be targeted better, run more efficiently, more innovative, and helps to bring people together and build a sense of community.

    That’s an ideological claim, not an evidence-based one. There are some points your post could address to beef up the argument:

    The USA is the wealthiest of all large countries so it can afford to give a higher percentage to both local and international causes. It also has the thinnest social safety net, and so must rely on local charity to fill that gap. When compared to other developed nations it doesn’t fair well on a number of welfare measures which would suggest that even a higher level of charity doesn’t trump government intervention.

  4. Trinifar; Are you seriously suggesting that a person giving his or her own funds to a charity is not going to demand a better outcome than a bureaucrat allocating other peoples money.

    A private charity if it is genuine has to be far more accountable.

  5. I just wrote a long response to Trinifar and my fucking computer ate it. Damn.

    I think all of those points about private charity can be supported. There is overwhelming evidence that the private sector tends to be more efficient (because they care about costs more) and innovative than the public sector. I think you would need an ideological bias to assume this correlation breaks down when convenient. I think it’s self-evident that civil society helps to build a community more than annonymously paying tax and receiving cheques in the mail. For proof — go join a civil society group. As for targetting, half of current govt welfare is distributed to people who don’t need it (middle-class welfare) while private charities are more able to cater their response for individual circumstances.

    On America — they are not the richest (Qatar, Luxemburg) and not even always the richest big country (often swapping that title with oil-rich Norway). And many other OECD countries have a similar level of wealth.

    But I agree that wealth is correlated with charity. That’s a good reason for promoting policies that lead to economic growth. It is also a reason for believing that the government should shrink as we get richer, as opposed to the current trend of ever increasing government.

    I’m not sure which welfare measures you think America does badly — perhaps life-expectancy or relative poverty. Both can be explained by the significantly higher racial/cultural diversity in America and their greater acceptence of immigrants (generally poor). If you compare like with like, America does very well on most social/welfare indicators.

    America doesn’t have the thinnest social safety net in the OECD… though perhaps they do if you only count “white” countries. But that is not necessarily a bad thing as government welfare often creates welfare traps (helping poor people a little bit, but then keeping them poor in welfare guettos) and it crowds out private charity.

    Charitable giving would certainly be higher if we had a smaller government. The smaller govt would also lead to more economic growth, leading to fewer people needing charity and more money going to charity. Given the amount of charitable money already available and the virtuous upward cycle of lower poverty and more charity in a free-market system, it is hard to believe that it could not deal with current social problems. The potential up-side to this approach (for everybody) is huge.

    Yet in contrast we have a system of non-innovative, non-efficient programs which undermine civil society, slow economic growth and cannot adjust to the necessarily diverse needs of those in trouble. And every time we notice the problem, the “solution” is apparently to further intrench the broken system by handing it more money.

    Civil society is genuinely a great thing, and we need to start appreciating it’s value more before we lose it.

  6. On America — they are not the richest (Qatar, Luxemburg) and not even always the richest big country (often swapping that title with oil-rich Norway).

    I know that this will smack of Yankee pomposity, but I don’t think of Norway as a big country. Its population is less than 5 million, Qatar less than a million, Luxembourg less than a half million. Of the 50 states in the USA all of them are bigger (by population) than Luxembourg, 45 bigger than Qatar, and 22 bigger than Norway. Two are bigger than Australia.

    It’s probably a fair guess that you could find several spots in the US with the population of a Qatar, Luxembourg, or even Norway that far surpass any of them in per captia income (nominal or PPP take your pick).

    I stand by the statement that the US is, per capita, the wealthist large country. In this same neighborhood are the UK, Germany, France, and Japan — all generally more social democratic, all with universal health care, and none of them have invaded another country recently.

    We agree that charity and civil society are good things. But I don’t see that free markets produce better societies than the more regulated markets of the UK, Germany, France, and Japan (although I don’t know much about Japan). Heck, here in American we work longer hours than people in those countries, and real wages haven’t changed in 30 years. All these toys and no time to play.

  7. I’m sorry Trinifar, all the countries you mentioned have occupied Afghanistan, Iraq or consider Iran a good place to bomb, please cut the BS.

  8. Trinifar — I agree that Qatar & Luxemberg don’t count as big countries. In international comparisons of “big” countries, Norway is normally included… but this is semantics so it’s not worth debating. We both agree with the general point that America is very rich.

    If you are complaining about American foreign policy (ie your comment about invading other countries), I absolutely agree. I am not trying to say America is all virtue and no vice. I criticise America often. But to be fair, I think it’s also appropriate to recognise it’s virtues… including a relatively stronger civil society than other OECD countries.

    If you are disagreeing with the work-life balance that many people have these days, then I also agree. As you may know, I “down-shifted” nearly 4 years ago and my standard piece of advice to everybody I meet is “don’t work too much”.

    But there are a few points to note about this. First, I don’t think it’s appropriate for me to force my lifestyle choice on others. I recognise (now) that my lifestyle is not for everybody. While I still think some people work too much, I think it’s better to let each person make those decisions for themselves. Second, issues of work-life balance exist in all of those countries you mentioned and many others. Legislation is not good at solving moral issues, and often raises additional problems.

    Finally – it is not true that real wages haven’t changed in 30 years. They have increased.

  9. What’s happened to real wages over the last several decades is arguable at the margins (how you account for inflation etc). What’s not, I think, is that wage growth has not kept up with productivity growth. (I’m only considering the US case.)

    We’ve had this enormous productivity growth and growth in GDP, but we aren’t living appreciably better. That just seems silly to me.

  10. The USA should not be analysed as a country. It is too big. If you treated the EU as a country it would also have the worst of the worst and the best of the best. Lets talk about Texas. I like Texas. 😉

  11. TerjeP, could you elaborate on ‘I like Texas.’? It sounds like you have been there. What most impressed you about Texas? (Please keep it under 1,000,000 words.)

  12. Good point, Terje. The USA could be cut up into 10 nations each with more than 30 million people and lots of natural resources. I’d be happy to draw the boundaries. California and Texas are both larger in population than Australia, New York and Florida a nearly as large.

    CA and TX are both highly productive agricultural states comparable to many of the world’s countries in physical size, natural resources, GDP (if you can call it that), and population. They both have not one but several large metro areas. CA has several world class research universities (Berkeley, Stanford, UCLA at a minimum), TX has one (U of Texas). Compared to most of the world they are swimming in wealth, yet in both the agriculture sector is dependent on illegal immigration. Both are water-challenged and import energy.

    California is a net exporter of tax dollars to the rest of the states. People tend to think of CA as liberal and progressive, but that’s only true in the LA to SF region. San Diego and the Central Valley are very conservative. In northern CA where I live, you’ll be happy to note that libertarianism is alive and well, even in my small town of 350 people.

  13. Trinifar, you need to stop saying silly things like “NATO isn’t occupying Afghanistan” “we have the same standard of living as in 1978” etc.

    These are strawmen. The discussion is about the viability of civil society, not about misconceptions about European military policy or misinterpreted economic data.

  14. Trinifar – so what do you get in exchange for all those tax dollar exports other than a rather groovy little flag and super power status?

  15. Nicholas – I have never been to Texas. However they wear big hats and elect libertarians to congress so they must be nice people.

  16. I like some of the things I hear about Texas, though Chuck Norris wasn’t the best advertisement for the place. Unfortunately, I have never met any, but their hats and voting habits seem exemplary.
    Has anyone been to Texas?

  17. Regarding #13. Presumably you’d also allow them to get rid of the silly one size fits all centralised minimum wage planning. They could be more like the EU or Canada and have such things figured out purely on a regional basis.

    For what it is worth I’d be happy to follow suit and chop up Australia into several separate nations. We have never really liked Queensland that much anyway even though some people say it is a bit like Texas. And the Victorians don’t understand football or how to turn at an intersection. Whilst West Australia is simply too far away to care about a whole lot. We could be united in mutual contempt. 😉

  18. Yeah… I drove through Texas over a few days back in 2002. I liked it, but then I like everything so that’s not a useful indicator of quality. 🙂

  19. Come to that, TerjeP, Tasmania might make an alternative libertopia! The borders would be fixed, private companies could set up wind-power rigs, and it would no longer be subsidised by the taxpayers (you and me).

  20. P.S. Tassies new name could be Texmania! We could all have big hats! And we’d only vote for libertarians to whatever government structures were allowed!

  21. Mark (#14): I didn’t say those things. When you put words in quotemarks you imply I did.

    TerjeP (#15): I guess the “groovy little flag and super power status” is enough, but, more tangibly, we get to be part of a national economic system and system of common governance that includes the other 49 states (and another 265 million people). I think the consistency of federal laws across the 50 states and the common ties that bind us as a culture make up for fact that California subsides some of the slackers. Funny, though, that the slackers are generally the more conservative states, not the progressive ones like California and New York.

    Another advantage of being a US state that pays in more than it takes out is you get to be driver of change rather than a follower. California consistently sets the bar for the other states economically and socially — and history shows that the others end up following along.

    Temujin (#20): There’s much to like about Texas. Geographically it is large and resource rich. Musically, it has Austin; maybe this doesn’t translate well, but in the US Austin is known for the diversity and support of its musical culture. They still pump a lot of oil in Texas and are the hotbed for the development of wind generation.

    Aside from that, however, Texas is the opposite of an innovator. It has perhaps the worse pollution problems in the US (associated with the petro-chemical factories along the Gulf coast) and absolutely the most draconian, backward-looking penal system. Without Austin and the U of Texas, Texas would have no incubator interesting technology, and Austin isn’t very large (more like an oasis in a vast intellectual desert).

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