Is Money the Answer or the Problem? Part III

The previous post started to discuss the inconsistency that collectivists have regarding the use of redistributed wealth by those who receive it – that it will be used for its intended purpose.  One of the main arguments for government forced redistribution is that people who have wealth will not do the right things with it.  On the other hand, collectivists assume that those who receive the redistributions will do the right things with them, or at least will be better stewards of what they receive than those from whom it came.  Why else would a redistribution be warranted unless it were to be used for some greater good?  Otherwise a redistribution is simply legalized theft.  The assertion underlying wealth redistributions implies that virtue among those receiving the redistribution is greater than those whose wealth is redistributed.  During the Middle Ages, the general view was that those who accumulated wealth possessed greater virtues related to physical things (stewardship, frugality, etc.), while those who were poor possessed greater spiritual virtues (piety, humility, etc.).  It was not thought that one group’s virtue was greater than the other; but rather that the virtues they possessed were merely different – neither was better than the other.


Charity during the Middle Ages was performed by both religious organizations and the laity, and included many different types of organizations.  However, all of these organizations, regardless of whether they took a contemplative or active view of charity, were motivated by concern for others which had a religious character.  Relationships between those performing charity and those receiving it were generally direct.  While money was often collected, services were generally provided to those in need, and those in need were defined to be those in special circumstances as most people during this time lived on the edge of subsistence.  The spheres of civic and religious society remained separate during the Early Middle Ages.


By late in the High Middle Ages, and into the Renaissance and Enlightenment, these views had changed.  The Feudal System was firmly in place, and a degree of freedom had developed, particularly within many of the city-states of Northern Italy, the Lowlands, and England.  As their rulers were also Christian, they came to believe they had a moral duty to care for the poor within their kingdoms.  The notion of religious and civic societies transformed once more into one where they were viewed to be one and the same.  One implication of this is that many of the charitable organizations created during the Early Middle Ages were placed under the direction of municipal associations alongside of the municipal charities created by the local government.  This was all done in the name of efficiency in caring for the poor.  It was thought that fewer large organizations under the control of the civic government could better care for the poor than many small ones under the control of individuals.  Sound familiar?


This trend continued during the Renaissance.  Charitable organizations were placed under increasing control of the local ruler.  This control not only included the actions of a charitable organization itself, but in some cases local rulers began directly appointing a charity’s deacons and elders, or the ruler’s approval was required for those who were to be placed on lists for consideration by church their congregations – the civic sphere began to consume the religious sphere. 


There were several effects from this increased centralization and government control.  Compare them to what we see today.  First, there were promises of increased revenues and decreased costs based upon efficiency gains to be made in association with the consolidation.  These never materialized.  In general, revenues decreased while expenses significantly increased due to increasing amounts of regulation.  After all, a ruler now saw it as their money being spent, collected through taxes, and they demanded an accounting to know that it was being spent wisely.  One quick example from the city of Florence.  It was noted that some record keeping for the poor had previously taken about two volumes of two hundred pages each per quarter.  After implementing some additional municipal government requirements, the record keeping increased to the point where it took four volumes of five hundred pages each for the same time period – an increase of about four hundred percent! 


Second, the purpose of these charitable organizations began to shift.  Although they still took care of the poor, their purpose shifted from a religious basis to a means of trying to control the poor.  Initially this took the form of offering charity in return for changes in behavior – trying to improve the morality of those in need.  Third, there were increasing conflicts between the goals and objectives within these charitable organizations.  This led to the misdirection of charity related funds into non-charitable purposes – the development of patronage.  Fourth, the distance between the giver and receiver of charity increased, leading to a decrease in the closeness of the relationship.  At the same time requirements for receiving charity were increased.  These two changes encouraged fraud and deceit by the recipient.  The virtue of those receiving redistributions from the municipal charity decreased as the level of effort necessary to receive that assistance was increased.  Instead of charity helping someone in need, it created an incentive to cheat – to lessen one’s virtue, or increase their vice.  This fraud in turn further increased a charity’s costs as it spent resources to combat it, this in turn led to diminished revenues as people’s confidence in a charitable organization decreased, often because they became financially insolvent – they became poorer stewards of the resources they had received.  Many of these organizations were continually pressed to request more and more funding from rulers and the public to continue their operations – the very opposite of their mission and reason for their consolidation.


Money is almost never the problem or the answer.  Instead it is our reliance on money which is often the problem.  We must look instead to man for an answer.  And when we look to man we must look toward his actions as these indicate where his heart is.  This is difficult to do, and I believe this difficulty is one reason why charities during the Renaissance were allowed to devolve by coming under municipal control – it was an easy path – one in which people thought they could abdicate their responsibility.  We are often all too ready to believe this type of change is okay if we think the responsibility now falls to someone else, but it does not.  It remains with us, and we are still accountable at the end of the day. 


So what can we learn?  First, assisting those in need while still achieving our purpose would appear to include:


  • Receiving an education in both reason and faith, so that virtue and morality are taught.  Virtue and morality are also learned from life.  While a formal education is not always required, it certainly can serve to shorten the learning curve.  We are not born with virtue, including wisdom, but we are created in a way to acquire it – through our own effort.

  • Maintaining close relationships between those giving and those receiving so that redistributions are more likely to be effective.  This means it must be left in the hands of individuals, or the local community.  Increasing the distance decreases the connection and eventually leads to poor stewardship.

  • Focusing on providing the things that are needed and teaching stewardship.  Habitat for Humanity, at least within the U.S., provides an excellent model for this approach.  Local charitable groups and individuals work together to teach a form of stewardship to those wishing to own a home for their family.  Individuals are more ready to exercise the responsibility that comes with ownership when the home is completed.  This type of focus means concentrating efforts on identifying needs such as food, clothing, shelter, education, and care, instead of focusing on money and funding.

  • Shifting from the short-term focus of simply providing things to the long-term development of skills, self-worth, and hope within those in need.  This is the equivalent of no longer simply giving someone fish, but instead teaching them to fish.  The first leads to dependence and despair, the later to independence and fulfillment.


Second, larger organizations generally have not delivered more efficient results, as the organizations themselves generally become less efficient the larger they get.  This was true during the Renaissance, and true in the twentieth century as indicated within the 1941 monograph Concentration of Economic Power published by the Temporary National Economic Committee, a portion of which states:


‘The superior efficiency of large establishments has not been demonstrated; the advantages that are supposed to destroy competition have failed to manifest themselves in many fields.  Nor do the economies of size, where they exist, invariably necessitate monopoly. . . . The size or the sizes of the optimum efficiency may be reached long before the major part of a supply is subjected to such control.  The conclusions that the advantage of large-scale production must lead inevitably to the abolition of competition cannot be accepted. It should be noted, moreover, that monopoly is frequently the product of factors other than the lower costs of greater size. It is attained through collusive agreement and promoted by public policies.  When these agreements are invalidated and when these policies are reversed, competitive conditions can be restored.’


While larger organizations generally do not create greater efficiencies, it is true that fewer larger organizations are easier to control than many small ones.  Seems like we’ve come back to power again, and perhaps this is the real motivation underlying such changes as were noted above. 


Finally, Einstein offered another view to consider.  He suggested that the definition of insanity is repeating the same actions and expecting something different to occur.  It is a failure to learn.  We always hear from collectivists of all stripes that the problem is we just didn’t do enough.  We didn’t spend enough, or it wasn’t spend in the right areas, or it didn’t go to the right places, etc.  Unless we learn from history, we will continue to repeat the same failed approaches.  The U.S. is the only country which calls the depression of the 1930’s the ‘Great Depression’.  It was great in this country because it was the only place in which the depression lasted more than a few years, and it was the only country which pursued the policies of institutional poverty advocated by FDR.  His Treasury secretary, Roger Morgenthau, noted in his diary: ‘We have tried spending money.  We are spending more than we have ever spent before and it does not work. . . . We have never made good on our promises. . . . I say after eight years of this Administration we have just as much unemployment as when we started . . . and an enormous debt to boot!’  So just where is our focus today?  Is it in the right place?  Are we headed in the right direction?
Posted in: Stewardship


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About Dan Wolf

Dan WolfMy goal is that my writing will help you to get started on your own journey of discovery, or help you along the way on a journey you may have already begun. Our Founders considered education, religion, morality, and virtue to be the cornerstones for any successful society. Being successful requires understanding both the languages of reason and faith; reason alone is insufficient.