In Luke chapter ten, Jesus responded to the question, who is my neighbor, with the story of the Good Samaritan. The story condemns a priest and Levite for refusing to help the wounded man while praising the Samaritan, whom Jews despised, for providing medical help and paying for him to stay at an inn while he recovered.
The parable ends well. But the economist and Nobel Laureate James Buchanan wanted to know the rest of the story. He asked, what if the victim refused to leave the inn? What if he decided to stay at the inn forever and let the Samaritan support him? After all, the Samaritan had given the inn keeper money to pay for the victim's room and board and told the inn keeper that if that amount didn't pay all of the expenses, the Samaritan would repay him when he passed by the next time.
Jesus said nothing about that possibility because in his day there was no need to fear people would give too much to the poor. They didn't give enough. And the leaders stole what little the poor had left. Jesus didn't exaggerate when he said the high priest had turned the temple into a den of thieves.
Still, Christians in the early church began to face the problem of charity abuse. When Peter had the church in Acts chose deacons, it was supporting mostly widows. In 2 Thessalonians 3, Paul warned that the church should refuse to feed idle men who could work. And Paul left strict instructions for the church on how to care for widows. “But if a widow has children or grandchildren, these should learn first of all to put their religion into practice by caring for their own family and so repaying their parents and grandparents, for this is pleasing to God” (1 Timothy 5:4). Apparently, widows and lazy men had been abusing the church's generosity.
Church fathers and theologians until the advent of capitalism worried little about the poor abusing charity because about 90% of people lived near starvation. Roughly 5% were middle class and 5% were rich. The need far outstripped the supply. That changed with capitalism.
In the Dutch Republic, the first capitalist nation, standards of living rose for the first time in European history and created a large middle class that gave generously to the poor. Capitalism had shrunk the number of poor people to the point that people gave more than the poor needed for the first time. That caused some abuse of charity.
The Dutch invented an odd way of trying to reform married men who refused to work and support their families. They put the man in a large barrel with a pump then began filling the barrel with water. The lazy father had to pump the water out fast enough to keep himself from drowning.
US Christians in the 18th and 19th centuries faced the problem of charity abuse, too. Marvin Olasky chronicles the history of Christian charity in the US in his book The Tragedy of American Compassion. Churches supported the elderly and widows with in kind donations, such as food and clothing. But they were so generous that many working age men could live well enough from it without having to work by taking advantage of the many charities in a city. So charities refused aid to such men.
Instead, churches kept piles of unsplit wood nearby and if a man of working age showed up, they offered to pay him to split firewood. If he worked well for several weeks, they would help him find better employment. Until the 20th century, Christians feared indiscriminate giving to the poor would encourage laziness and drunkenness among the poor as well as increase their numbers. That's why they opposed government funded programs.
Atheist socialists first proposed government programs to care for the poor. Horace Greeley promoted socialism in his newspaper beginning in the 1840s. Greeley was a Universalist, which is nothing but a sentimental atheist. Opposing the Christian view of human nature, which says all are sinners, socialists invented the nonsense that people are born good and turn bad only because of oppression. Property was the greatest oppressor. So, ridding the country of private property would restore humanity's innocence. Socialism has always been a counterfeit salvation message. Also, socialists believed they could erase all poverty by redistributing wealth to make people equal in wealth and incomes.
By the late 19th century, German liberal theology denying the deity of Christ had swept much of the nation. Though they denied the fundamental teaching of Christianity, men like Walter Rauschenbusch were dishonest enough to continue to call themselves Christians. They decided the only salvation humanity needed was financial and made Karl Marx the savior. Envy powers socialism. As Christianity receded, envy exploded and made socialism popular. Socialism elevated envy to a virtue.
Charity abuse didn't become a serious problem until Johnson's Great Society welfare programs the President claimed would end poverty in the US. The poverty rate had declined from 1900 to about 12% in 1968 when the laws took effect. That meant that as the population grew, so did the number of people in poverty. It has been stuck there since. But the worst of the unintended consequences has been the explosion in households headed by poor single mothers from about a quarter of the children before to 75% today. Socialists claimed they were merely helping poor mothers. But in effect they paid poor, young, uneducated girls to have children. And many obliged.
Watching these events inspired Buchanan to write about the Samaritan's dilemma. Charity is good, but it creates what economists call "moral hazard." Economists usually hold up insurance as the example of moral hazard. Buchanan shows how it relates to charity. He showed that government charity, or welfare, discourages people who could work from working. Many of those are addicted to alcohol and drugs. It creates a class of people dependent on welfare and discourages an ethic of responsibility. Thus, it expands the size and scope of the state. Of course, one of the goals of socialists is to make most voters dependent on the state for their income so they will always vote for more socialism.
Welfare allows the state to commit theft because the state has the authority to collect taxes for its Biblical roles of settling disputes, punishing criminals and national defense. But when it taxes people to pay for charity, the church's job, it commits theft. Socialists will respond that a majority vote for welfare sanctifies it. But if a minority opposes it, the majority merely steals from them.
Welfare programs damage the rule of law because whoever is in power at the time arbitrarily gets to decide who is worthy of charity and who must provide it in higher taxes. Finally, all charity reduces the amount of funds available for investment in businesses that create better jobs, the main destroyer of poverty.
Moral hazard still exists with private charity because people demonize the giver if he refuses to give to someone he thinks doesn't need it. But those problems explode to enormous proportions with government charity as most people can see. And throughout history, private charity has acted as a brake on abuse.
If moral hazard with welfare causes so many problems, how much more will universal basic income amplify them?
