Private Charity Beats One-Size-Fits-All Government

Charities are free to help people who truly need help.


Many of us will give money to charity this month. Americans give more than any other people in the world.

Good for us.

56 years ago, because American charities hadn't ended poverty, politicians said they would end it. They declared a "war on poverty."

That "war," so far, has cost $27 trillion.

Some people were helped. But the handouts also had a bad effect.

My new video shows a moving graph of America's poverty rate. It reveals that before the War on Poverty began, Americans had been steadily lifting themselves out of poverty. Year by year, the number of families in poverty—defined as earning less than three times what they need to feed themselves—decreased.

Then welfare began, and for about seven years, progress continued.

But then progress largely stopped! That downward trending poverty line now rises and falls with economic conditions. America now has an "underclass," generations of people who stay poor.

"Welfare taught them they didn't have to work," says Yaron Brook, of the Ayn Rand Institute. Handouts perpetuate poverty, he says, "because if you get a job… your checks get smaller."

That's why charity is better. Charities are free to help people who truly need help while giving a push to people who need "a kick in the butt." Government's one-size-fits-all rules discourage that.

I donate to a charity called The Doe Fund. It tries to "break the devastating cycle of homelessness" by teaching men to take pride in work. Many are helped.

But not all charity helps. Facebook founder Mark Zuckerberg gave $100 million to improve Newark's public schools.

The money disappeared into the education bureaucracy.

Education consultants and friends of politicians got some. Teachers union contracts grew fatter.

"But the public schools didn't get better," Brook points out. "The performance of the students didn't get better."

This year's booming stock prices increased America's wealth gap. Billionaires got richer while store clerks lost jobs.

"Progressives" gathered outside Amazon founder Jeff Bezos's home and set up a guillotine. The message: "Behead the rich." They think that when Bezos makes billions, the rest of us have less.

That's ignorant, says Brook. "All of our lives are dramatically better because of somebody like Jeff Bezos. Things just appear at our doorstep. They hire hundreds of thousands of people. They make it possible for poor people to make a living by selling me something that I want!"

I push back. "But he has so much—when others have so little."

"It's his money!" Brook responds. "He created it. Once we start deciding what you can or can't do with your property, what we will get is…extreme poverty for everybody. Only one system has brought people out of poverty, capitalism."

That's what I finally learned after years of consumer reporting.

Consider three ways to help people: government, charity, and capitalism.

Government is needed for some things, but it's inefficient, and its handouts encourage dependency.

Charity is better because charities can make judgments about who really needs a handout versus who needs a push. But charities can be inefficient, too.

Oddly, what helps the most people in the most efficient way is greedy, self-interested capitalism.

"Two hundred fifty years ago," recounts Brook, "almost all of us were earning what the United Nations today defines as extreme poverty, $2 a day or less. That was 94 percent of all people on planet Earth. Today, only about 8 percent are that poor. Why? Not because of charity, not because of foreign aid but by employing people….Businesses are the most efficient because they have the right incentives. They won't survive if they're not efficient. Government has no such incentives. And charities are mixed."

So, why do billionaires and entrepreneurs now rush to donate, rather than doing what they're best at: innovating?

"They want to be liked," replies Brook. But "they're buying into false ideas, both economically and morally. They are acting against their self-interest, and against all of our interests, including the interests of the poor."


NEXT: Disarmed but Not Dangerous

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  1. I’d like to see that “poverty” graph start a few years later. 1959 seems a strange date, just a few years before the War on Poverty. How about we go back 15 years to the end of WW II?

    1. How about we go back further since you’re cherry picking. Make up any start date and time span you want. The natural state is poverty and government is a parasite. That is the past present and future.

      1. How about the last 250 years where the poverty rate went from 94% to 8%?

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      2. Oh pshaw! I know capitalism lifted billions out of poverty while socialism murdered 100-200 million. But this article is about US poverty as it related to US welfare and teh US war on poverty.

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  2. The billionaires aren’t acting against their self interest they’re buying power. They want to be elites and the rest of us their peons.

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  3. Well – somewhere in recent history someone decided it wasn’t criminal to be poor….

    And of course that evolved into it not being criminal to not pay what you owe people.
    And of course that evolved into it was criminal not to pay poor people just because.
    And of course that evolved into paying your bills is criminal because you have too much money.

    1. End result —
      30% being employed by gov to count jelly-beans
      30% being unemployed but getting more than jelly-bean counters
      30% being employed to check the jelly-bean count
      10% making jelly-beans

      90% is the peoples ‘happy-approval’ level of the Cares Act “commie-money” check too bad there’s only a few jelly-beans to go around.

      1. “10% making jelly-beans”

        We have heavily automated the jelly bean production process and will be reducing staffing by 90%.

        1. Who’s going to innovate, create and make the next generation jelly-bean?

        2. Put another way; from experience — There certainly isn’t any shortage of NEED for competent work. I could probably hire 100+ people today in a *FREE* market. But no-one want’s help from the massive amount of government regulated self-entitled incompetent legally price fixed help being offered today.

          The criminals have lobbied everyone out of the competency market.

  4. And now many ‘charities ‘ don’t use most their donations for their stated purpose. I only give to the Salvation Army.

    1. This a good point. I always check out charities with a rating service like Charity Navigator. Charities that don’t measure up don’t get my money.

  5. I wish Stossel wrote here more.

  6. The problem with John Stossel’s thesis is that charity can not really meet all the need. Government safety net programs were not developed to replace charities but to meet needs. Many government programs work directly through charities. Government providing needed funds and the charity have the local footprint to provide help. Another point made by Bill Gates is that foundations like his have flexibility to find solutions for problems, but once they find a good solution they often need government to take over and scale up that solution.

    I give to charities, I also pay my taxes and expect some of that money to go to provide a safety net for those less fortunate than me.

    1. If you had to pay only, say, half the taxes you do now, what would you do with the extra cash on hand? Many people would donate a good portion to charity, and would probably do due diligence to select the most effective ones, meaning that their money would be used more effectively, and with less overhead, than if the government had it.

      1. First I don’t think government safety net program account for 50% of the budget so I would not expect my taxes to go down by half. Second I don’t believe people would donate enough to offset the loss.

        Say you went to church on Sunday and the priest or minister got up and noted that the government safety net programs have been eliminated. Our church will need to help make up the difference and we need to double out charitable work and so I am asking all members to double your tithe from 10% to 20%. Would that go over?

        1. Mandatory spending programs such as SSA, Medicare, Medicaid, SNAP, unemployment, welfare, etc. make up almost 3/4 of the Federal budget. Cut that in half and use the efficiency of good private charities, and you could lower your tax bill considerably, and give the savings to charities you can wholeheartedly support.

    2. Sure, government-funded charities help people. Just not as efficiently as private charities. Private charities attract people who are passionate about the purpose of the charity, government-funded charities tend to attract the sort of people more interested in doing well by doing good. People like Jesse Jackson and Al Sharpton, for example. Private charities have incentives to be as tight with a dollar as possible, government-funded charities not so much.

      1. Another issue with government-funded charities is they tend to get grants based on who’s running them, not what they can do with the money (cronyism)

    3. The difference between ARMED theft and charity is *Individual Freedom*… People who have ‘needs’ needs to learn how to WORK for those needs or BEG for them; not just demand them by ARMED theft!

      Government safety nets are nothing short of SUBSIDIZING criminals with 3rd party government guns. If people are willing to let the truly needy (which lets get real here is maybe 1-in-a-million) die right in front of them instead of offer charity that is their GOD GIVEN RIGHT because the alternative is SLAVERY!

      No; Needy isn’t what the government addresses. Spoiled is what the government safety system supports. I just bought a new car and can no longer pay rent or I just bought a new house and can no longer buy a car. Where’s my *free* PONY!!!! All summed up into WHERE’S MY SLAVE’S!

      1. …And if one so happens to be happy about being part of the SLAVERY-Party let’s talk about the idiocy of forcing people to fund the Multi-Trillion dollar medical industry of which the party of slavery loves to fuss about… Where the HECK do you think all that “commie-money” ends up! You think the poor is just going to hide it under the bed????? You’re not helping the poor you’re stuffing MORE stolen money into markets that produce goods that are already over-inflated. School, Medical EVERY stupid expensive market has government “Safety Nets” because there is NO Personal Responsibility to WORK or BEG for what one is trying to obtain.

      2. And P.S.; Whatever “safety net” the community decides is needed NEEDS to be CONSTITUTIONAL at the LOCAL LEVEL!

  7. As I always say, “Give a man a fish and he eats for a day, teach him how to fish and he eats for a lifetime” is a fine and noble sentiment, but if you’re being paid to hand out fish you don’t really have any incentive to teach men to fish, do you?

    The dirty little secret of government is that a disproportionate number of the black middle class got to be middle class by working for the government, do you think they’re interested in working hard to make people less dependent on government?

    The War on Poverty hasn’t been such a failure as Stossel says – it created a huge bureaucracy of well-paid Poverty Warriors and if you think that’s not the point of anti-poverty programs, well, you just don’t understand bureaucracies. You might want to take a look at our school systems for example – we pay more and more for a worse and worse product and yet plenty of people are willing to argue that the problem with the schools is that they don’t have enough funding. As Stossel points out, we’ve spent trillions of dollars on anti-poverty programs and poverty has actually gotten worse – and yet plenty of people insist more funding is needed to fight poverty. What sort of mindfuck does it take to get people to believe that sort of shit?

  8. “Consider three ways to help people: government, charity, and capitalism.”

    Now consider four ways to get things:
    You can make things.
    You can trade for things.
    You can beg for things.
    You can steal things.

    Three of these are essentially voluntary.
    Only two of these increase the amount of things.
    Only one of these supports big government programs.

    1. 10000++; You guys are awesome which I would’ve scrolled down before going off on my rant that says the same here.

  9. Stossel still wrights for Reason? I thought they ran him off for being too libertarian.

    1. I figure he must have some kind of long term contract that pre-exists Welch with them that they can’t get out of easily.

      So they did the next best thing they could to jab a thumb in his eye, which is to put a disclaimer on most of his work stating that he doesn’t represent their (leftie) views.

      1. I’m curious what you think Reason’s “leftie” positions are. They do take a lot of not aparticularly libertarian positions these days, and have done a terrible job covering Trump and the pandemic authoritarianism. There are lots of things to reasonably accuse them of. But I don’t see many specifically left wing viewpoints (as distinguished from views that happen to be shared by many on the left, but aren’t essentially left wing).

  10. While government welfare programs have wasted massive tax dollars, perpetuated dependence on Big Brother, and achieved few of their lofty goals, many tax exempt charities (e.g. that claim to promote health, education, environment, LGBTQ, racial preferences, etc.) have exploited their tax exempt status to promote and defend many left wing policies (and politicians).

    And had it not been for massive funding by Bill Gates and Michael Bloomberg to WHO, Johns Hopkins and many other so-called “public health institutions and experts” during the past decade, Democrat Governors in the northeast (who hated Trump) wouldn’t have considered, conspired to implement or extended their unscientific, unconstitutional and economically disastrous school and business lockdowns to purportedly prevent/control the covid pandemic.

  11. The federal gubmint spent a.staggering 6.5 trillion in FY 2020. The majority of which was War on Poverty welfare spending, and much of it intended to counteract the poverty that was directly created by left liberal democrats at the state and local levels with their draconian tyrannical lockdowns, their support of violent domestic terrorist through the summer, and their shitty anti-business policies in general.

    We’re not at war with poverty in America, we’re at war with ourselves. More specifically, the left is engaged in a perpetual war on America. And the worst part is that the left is winning.

  12. In a complex system, decentralized decision making beats central planning every time

  13. Facebook founder Mark Zuckerberg gave $100 million to improve Newark’s public schools for public image purposes.

  14. “Charities are free to help people who truly need help.”

    And they are also free not to.

    Who adjudicates disputes about definitions of “truly”?

    Who decides when it’s appropriate to give “a kick in the butt”.

    If it were up Stossel and Brook, they’d spend all day kicking butt.

    1. Without a “a kick in the butt” premise growth is impossible.

      1. Sure, but who gets to kick butt and who decides? It is fine if just the market does it, but we’ll never have that. Meanwhile, stossel and brook worry more about the work ethic of poor individuals rather than crony deals with government by the already well-moneyed. Since the time that single childless men were disqualified from welfare eligibility, but crony deals have exponentially increased.

        1. Without Socialism “Crony Socialism” cannot exist. It really is that simple.

          Why do criminals rob banks? Because that’s where the money is.
          Why do criminals bribe gov? Because that’s where the POWER is.

          The POWER needs to be restored to us; the individuals as in Individual Liberty and Justice instead of Gov-Gods.

          The rut of despair lies in the fact that today’s poor work ethic individuals LOVE socialist THEFT policy. They take no pride in creating only consuming what armies of SLAVES make to no end.

          1. … and we certainly can expand “poor work ethic individuals” to say “poor result ethic of companies and/or government”. There’s absolutely no question that Socialistic Policy IS the root problem to all the problems the USA faces today.

  15. The current social programs were put into place because private charities failed to help enough. If you advocate returning to that system, then you must be ok with living in the richest country in the world while at the same time allowing millions to be homeless, live in poverty, go hungry, and not have any access to health care. This will include children, the elderly, and the disabled.

    1. Thank you. There is this idea that private charities could just replace social safety nets. How many times do you hear in church or on the news that the local food pantry is very low and in need of donations. It is just wishful thinking on the part of many including John Stossel.

      1. You know what’s funny about you idiots — Your complete IGNORANCE of the fact with ALL these gov safety nets MORE are, “homeless, live in poverty, go hungry, and not have any access to health care.” than BEFORE your THEFT ever started.

        But more can afford the NON-THEFT free-market auto insurance “safety net”. Your theories and emotional flappy gas all aimed at CRIMINAL THEFT is surrounded by lies.

        1. Not to mention being Socialist – IF YOU WANT A SOCIALIST COUNTRY MOVE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! TO ONE!

          1. If you want a country with out safety nets move to one. There are many third world nations to choose from.

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