Comments (7)

• Jeff

  Would it not be more beneficial to, instead of manipulating the price system, just directly give those individuals in need direct support though a gift of something more "marketable" than gasoline, say...money?

  That way the price system is maintained, allows more freedom for the individual to choose what to spend it on (best allocation of resources), alleviates the individual in need from bad "price gougers", and encourages entrepreneurs to meet the newly created higher demand for goods and services in exchange for the more marketable money.

  Published: September 23, 2008 10:41 AM

• David Ch

  Jeff

  2 problems with your approach

  1. where does the money come from? If from private voluntary hands, fine, if taken under duress, not.

  2. How do you reliably identify 'those individuals in need' without being arbitary, and encouraging free riders who don't 'really' need it?

  this is a common problem with notions of 'fair' or 'equitable' distribution. Even if you take the allegedly 'fairest' distribution method (common in wartime rationing as in the UK during WW2 ) 'everybody gets the same amount', that method takes no account of the differing strength of desire for the good in each individual's context.

  Only an honest market price can account for how badly someone wants something - by forcing him to reveal the strength of his need through what other things he is prepared to forego to get it. the honest market price of any scarce commodity is the ONLY , ahem, rational, way to ration something , by clearly identifying those who want it most badly and putting them at the front of the queue. There are no 'bad' gougers - When last did you see a price ceiling at an auction, and nobody says the seller is a gouger......this is no different in principle.
  Only a 'gouger ' who doesn't find a buyer at his price can be said to be a bad one - buyers vote with their wallets, thereby signalling that they value the commodity more than the dollars they parted with, whatever they might SAY over a drink afterwards.

  If you really needed the gas, would you rather pay a higher price than last week and know you can get some, or be told that the stock ran out because of the long queue of opportunists who filled up and cleaned the seller out at the old low price before you got there?

  All of us want lots of things we can't afford, but thats no reason to force the manufacturers to give them to us free, or to get handouts to subsidise them. We just dont want them badly enough to pay the going price BECAUSE WE HAVE MORE IMPORTANT THINGS TO BUY WITH OUR EARNINGS. In any shortage of any commodity, why should that principle be any different?

  Published: September 23, 2008 11:23 AM

• magnus

  What Jeff is describing is welfare.

  I generally agree with the idea that, as between two very bad alternatives, welfare is less harmful to the overall economy than price manipulation.

  Welfare programs are, however, often harmful to the supposed beneficiaries. Cash gifts do nothing to alter the behavior that produced the poverty in the first place, and generally perpetuate and deepen the problems of such behavior. (This is true on both ends of the income scale, as I have never known more screwed-up hard-core substance-abusers with wasted, ruined lives and broken families than I have among those who inherited a bunch of money.)

  Loans to people in this kind of distress are usually no better. Under these circumstances, they are typically little more than a form of debt-slavery. Loan sharks, credit card companies and the IMF/World Bank (but I repeat myself) understand this idea fairly well.

  Published: September 23, 2008 12:43 PM

• Jeff

  Yes, I agree with this article, opinion, and response. I was trying to put forth an alternative approach that the church could have taken that would have been more "market minded" if you will than with just providing the free gas.

  I was simply suggesting an alternative approach that the church pool voluntary contributions and send a Representative down to the area of need and give people money. While this would still be an arbitrary distribution, it would also be voluntary.

  Published: September 23, 2008 1:14 PM

• Eric

  I don't see any conflict with charity and libertarian economics. Since charity, by definition, is a voluntary giving of one's own property to others, this is totally proper within libertarian ethics. Other ethical systems, especially those that permit forceful transfers of private property between non-consenting individuals, likely will have inconsistencies with notions of charity.

  The one libertarian violation (mentioned briefly in the article), was the assumption that other people would have to pay for the security during the give-away.

  The part of the cost of the giveaway that involves security should be privately paid for. If even one person has their property confiscated to support this give-away, then that is un-libertarian.

  It comes down to two questions. Where's the initiated force (if any)? And who owns what (if anyone)? Those are the 2 questions that a libertarian should pose before deciding if some action is ethical. These are key questions that should constitute a litmus test for any rules that can result in the use of force.

  Note that the other problems described, such as economic inefficiency is a non-issue. What is thought to be economical for one, might well be the opposite for another. It all depends on the desires of individuals. There is no such thing as a maximally efficient economic choice for a group of individuals. This is because we cannot sum up the psychic benefit to many individuals for several actions and then pick the one with the higher score.

  Rothbard has written that this summation is not possible since wants and desires are not absolute quantities. Rothbard differentiates between ordinal and cardinal values. (Ordinal compares order while cardinal is an absolute measure). At best, we can only know which of several outcomes an individual may prefer. There is no metric for satisfaction that can compute some absolute "social benefit" for some action. We cannot say that this giveaway provides 62 units of physic benefit whereas punishing price-gougers provides 93 units.

  We cannot even tell if one individual prefers one outcome more than another individual prefers that same outcome. We can only compare how much different individuals are willing to bid for some outcome. In a libertarian society, without initiated force and where property rights are upheld, choices are made by voting with ones wallet. Any intervention is, well, simply un-libertarian.
  

  Published: September 23, 2008 1:51 PM

• Outside Observer

  I think you'll like this one.
  There's a totally private charity organization (Pa'amonim) in Israel that is like no other: the recipients are required to take in a course in money management. Families in need submit a complete report of income and expenses and are advised as to how to balance their budget. When the family's car is too expensive a more economical one is found. When the family's housing is over budget a different arrangement is made. Where appropriate job training and help in placement are given. No-interest loans are favored over gifts of money. Each family is matched with a trained staff member who guides the family for a period of time until the organization is satisfied that the family will not go back into debt. In the end, many families rescued from their overdrafts are able to help rescue others.
  Another unique feature is that people who would like to help others but can't afford to give a donation are able to lend money to the organization (at no interest), and thereby help without parting permanently with their own savings.
  The organization also gives preventative lectures to families, especially young couples, because indeed, an ounce of prevention is worth a pound of cure.
  More charities should be encouraged to use this approach.

  Published: September 23, 2008 2:46 PM

• Ron

  The Mormon church here in the U.S. operates in much the same way as Outside Observer describes. There's a focus on "teaching people to fish" rather than just giving them a fish, including such things as job training and short term loans. This, in my opinion, is what charity should be about...helping people overcome obstacles on their own, thereby giving them the tools to prosper.

  Published: September 23, 2008 3:22 PM