Necessary Roughness

Here in the U.S. we’re not unique in our amount of social concerns, though we may be unique in the types of social concerns that we have, such as giving up gas for haunted houses. Certainly there are more serious social issues that tug at our conscience, and we employ government and non-government methods of dealing with them.

Without knowing which method is better, we inevitably waste money by not evaluating the performance of our investments. Economists call this “opportunity cost”. If there are two equal seats at a Dallas Cowboys game, and Ticketmaster sells one seat for $78 (ugh) and a scalper sells the seat for $150, we incur an opportunity cost of $62 should we rely on the scalper to supply the ticket. It’s called an opportunity cost because that $62 has the opportunity to be used elsewhere, like more tickets!

For Tax Year 2004, according to Fairmark Press, at the single rate someone making $29,050 pays $4,000 of federal tax, leaving aside deductions for the sake of argument. If you make $70,350, you pay $14,325, and if you make $146,750, you pay $35,717. Thanks to the changes in the tax code, if you are married the brackets and the taxes are only doubled, rather than more than doubled as before. These taxes result in effective tax rates of 13.7%, 20.4%, and 24.3%, just to the federal government. State and local taxes produce further burdens, to the point where Tax Freedom Day had crept into May for the year 2000. Recall for just a second that 42% of the 2-trillion-dollar federal budget is spent on Medicare, Medicaid, and Social Security alone. In addition, more money is spent for other domestic programs, such as education, AFDC, etc. Also recall that the income for these expenditures is coerced from you, whether it is hidden in withholding or paid on April 15.

By contrast, those within the memberships of most Judeo-Christian churches and synagogues are merely asked to contribute a tenth of what they earn, no matter how much that person or family earns. One has to admit, that’s an easy calculation to make. Other religions have different rules on tithing; The highest-taxing religion, the Baha’i, ask for 19%, still below what is considered the lower-middle tax bracket.

Granted, this isn’t the most even comparison, but it does give pause. The Salvation Army reports (link dead) that it had 107,724 employees in 2002. Some of their numbers are astounding, such as: 17.7 million people helped in general relief, 3.8 million in emergency relief, 934,667 in outpatient medical services, in 109 different countries. It is difficult to find the total revenue this charitable organization online, but the website does reveal grant revenue upwards of $10.8 million (link dead). Local churches may be even more efficient, considering an average of perhaps 1 or 2 full-time pastors, but most of the other staff is usually part-time: secretary, janitorial staff, music directors, and nursery attendants. One only has to look at the incentives for such efficiency: they feed mouths so they can feed souls (I thought that was a Mother Theresa quote, but it doesn’t show up on Google). Another incentive to be efficient comes from being dependent on the generosity of donors, who demand an accounting of how they spend their funds. I stopped contributing to the United Way after some of their chapters cut funding to the Boy Scouts of America.

Without such psychological incentive from the divine, the incentive for mass action falls upon the state. The median for a social worker’s salary according to salary.com is $38,649. The entry for social workers on iseek.com reports 628,000 social workers nationally, 40% of them on the public payroll. Would it be reasonable to assume that these social workers make more than their didactic counterparts? Unfortunately there seem to be no readily available statistics for the amount of people social workers help, but can you imagine a social worker helping 164 people (17.7 million / 107,724 employees) a year, with the amount of time and paperwork that the state demands? Moreover, anyone who has worked with budgets knows that if a department does not spend all the money in its budget, it is bound to get cut the next year. There is no incentive to be efficient!

I freely admit that this comparison is probably completely unfair statistically, because different jobs are performed, etc., but it makes sense that those helping people just for the sake of being good will be more monetarily efficient than those who help people because they get paid by dispassionate institutions.

I am not advocating President Bush’s proposal that we take tax money and transfer it to “faith-based” institutions. Ron Paul has an excellent article about this faith-based socialism. I am advocating instead that we divorce the state from its abuse of the general welfare clause ( Article I, Section 8 ) of the U.S. Constitution, because such a divorce is intuitive economically and morally. It is economically intuitive because more people can be helped at a lower cost. It is also morally intuitive because each person decides how their whole dollar is to help someone, and each person gives that dollar, rather than that dollar being taken from them to avoid going to jail for tax evasion.