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Fun Facts to Know and Tell: Nah, Private Charity Cannot Work Edition
April 11, 2011 incentives

In 1910, it is estimated that there were 13 million Americans in Mutual Aid Societies (things like Life Insurance societies, fraternal organizations, etc.). That year, the US census estimated that there were 92 million Americans. Therefore about 14% of Americans were members of these voluntary aid societies. This was at a time when America was about 6 to 7 times poorer in per capita terms than we are today, and when the money required to provide the “basic necessities” of life made up a huge portion of a typical family’s budget.

I would not claim that private, voluntary, mutual aid would be able to provide relief to 100% of people in need today, but I would strongly argue it would provide a safety net nearly as wide as today’s public one, and with far better incentives for good behavior by the recipients and far lesser chance for them to be abused and taken advantage of by the providers (imagine the political backlash of closing down all of the government welfare offices). One thing mutual aid societies generally did was require the aid to be formally requested from the organization, rather than handed out as a rule-based entitlement. While some people view that as humiliating, I view it as humanizing. I’d sure support that reform of our current entitlement programs – even for the rich. Imagine a rich homeowner having to publicly declare to his neighbors why he “needs” the mortgage interest deducation.

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