My Problem with “Community Service”
September 26th, 2009
I’ve recently been thinking about this issue and I wanted to pour out my thoughts and see what ends up on the page. My problem with communtiy service/donations/volunteering is 3 fold. Keep in mind I am not saying that unequivocally volunteering/service/donating is bad, just when it has to do with one of the following 3 scenarios then I would give it pause…There is room for some ‘good’ volunteering in section 2 of my argument, but I think there is no room in section 1 or 3.
Section 1) The idea that entreprenurs ‘owe it to society’ to ‘give back’
Section 2) How volunteering causes someone to subsidize the costs of another’s behavior so they don’t incur full costs of their behavior
Section 3) Mandatory Service = Slavery
Section 1
This section deals with a particular problem of mine with community service, and volunteering, and it stems from the idea that well-off entrepreneurs need to ‘do good’ and ‘give back’. This assumes that somehow they have ‘taken’ from society and ‘owe it’ to the community to produce something of value for them.
Getting paid for something means you are ‘taking’ from the community? So earning a profit is evil?
When you trade voluntarily, it is mutually beneficial.
Every time a sale occurs, whether for a purchase of a product/service or for the wages for labor, it is a mutually beneficial arrangement (both sides gain from the transaction, it is not zero sum, at least in the ex ante sense). A businessman ‘does good’ everytime he sells a product/service. The only time this doesn’t hold true is in the rare occasion when ex post someone regrets the trade and thinks they were misled prior to the trade, and this informs the persons involved so that next time they are more careful about who they trade with.
Example: I trade you this dollar for that tie. The only way this trade can happen is if you decide you like my dollar more than your tie, and likewise, if I like your tie more than my dollar. When this happens voluntarily, both parties profit in some form, either monetarily or psychically, w/e.
Profit is the reward given to entrepreneurs for meeting consumers demand.
What makes profit emerge is the fact that the entrepreneur who judges the future prices of the products more correctly than other people do buys some or all of the factors of production at prices which, seen from the point of view of the future state of the market, are too low. Thus the total costs of production— including interest on the capital invested—lag behind the prices which the entrepreneur receives for the product. This difference is entrepreneurial profit.
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It is silly that some people try to defend American capitalism by declaring: “The record of American business is good; profits are not too high.” The function of entrepreneurs is to make profits; high profits are the proof that they have well performed their task of removing maladjustment of production. (Profit & Loss by Ludwig von Mises)
I can’t describe profit any better than Mises so I didn’t want to try here, I suggest all who don’t believe me when I say ‘profit is good’ — please read the above linked PDF by Mises. It’s free. Only 57 pages. First work of Mises that I ever read and it’s just fantastic.
Now back to my point. I am disturbed when I here that so-and-so, former founder of XYZ Inc., is donating a large chunk of his money to some non-profit institution. If the service offered by the non-profit was in sufficient demand wouldn’t it be offered by a for-profit? Companies who are beholden to profits, are by definition beholden to consumers. This is not so for government or non-profit firms. They need not concern themselves with anticipating what consumers want in the future, because they don’t get paid for pleasing consumers like all other companies.
Example: Mr. Altar from Advanta donated a boatload of money to Temple Unviersity in order to partially fund the new mega-huge Business school. Even though I benefit from the use of this new building, Altar Hall, I still wish he wouldn’t have done that. This is an entrepreneur, who earned his money by profits. He succesfully anticipated consumer wants and reallocated societies resources before other entrepreneurs or existing businesses to adjust the factors of production to what society was going to want in the future. He made his money by helping society allocate it’s resources to it’s most urgent needs. Now he is told it’s time to ‘give back’, that all that time he was earning profits was time he was ‘taking from society’? This is incorrect. In fact, Mr. Altar has shown he does a very good job helping society by reallocating the factors of production in anticipation of future wants. In fact, Mr. Altar could have done society a great deal more good by using his money to start/fund more businesses and, if he continues to successfully help society by reallocation factors of production, he will earn more profit. Instead, now he gives his hard earned profits to Temple University. A non-profit who is not beholden to consumers. Temple gets donations from private individuals and government funding, and some of it’s money from tuition. Temple doesn’t have to correctly anticipate student wants and needs because they don’t really rely on our money. I’ll stop there (don’t even get me started with Temple…)
So we see now, that a successful entrepreneur who earned a lot of money from their business has already done society a great ‘good’ and that them giving away this money, instead of using it for further entrepreneurial endeavors, is a big mistake and costs society as a whole.
Section 2
I will now move on to my 2nd ‘beef’ with community service. The subsidization of others costs.
On this point I think their is room for both ‘good’ subsidizing of costs, and ‘bad’ subsidizing of costs. So I am not saying categorically that ‘helping people is bad’, what I intend to say is that in many cases helping people is actually counterproductive to getting people to help themselves. When we subsidize the costs of peoples decisions, they don’t incur full costs of their decisions. So, if a person is repeatedly making bad decisions, but their mistakes are constantly subsidized — they may never change their behavior because, as economists say, the Marginal Benefit exceeds the Marginal Costs.
Example: Walking to the train station from Temple Unviersity everyday I pass through a section of HUD housing. HUD housing, for those who don’t know, is the government owned and subsidized housing for low-income folks. I have a whole different problem with this particular HUD development, but thats for a different blog post… Anyway, this section of HUD housing is always littered with trash. Keep in mind this is not trash from college students, this is trash from the residents of the HUD housing. I can’t offer empirical proof of this point, but by looking at the trash and the types of products thrown here, I think it looks like it is not from college students walking in between train station and the campus but more like household products. SO, back to the story, one day I was walking by here and I saw a lady picking up trash and throwing it in a bag. She was an adult white woman, so it’s safe to assume imo that she was a professor at the University (I later saw her waiting at the train, saw her TU ID pass). Well, this got me thinking. Sure she has nice intentions, she perhaps wants to help the campus look a little bit better, perhaps she wants to clean up the HUD housing area, perhaps she is trying to help the environment? Anyone of these is surely a noble cause. However, what are the effects of her actions? She is subsidizing the costs of the HUD housing residents. They throw their trash all over the place, and then just let the woman volunteer pick up the trash. Why should they change their behavior? They aren’t having to deal with the yard getting knee-high thick of trash they threw there, it’s getting cleaned daily by the free-maid. There is far less incentive for these folks to stop littering because of this persons generosity.
So, like the example above, I think a great deal of volunteering efforts may actually distort incentives and allow people to continue in destructive behavior because the burden of their behavior is being at-least partially (sometimes, entirely) paid for by others generosity.
Section 3
This will be short. Mandatory service is slavery. There is no other way about it. If it is not voluntary, and you cannot come to a arrangement on terms/payment/etc. then it is not any form of service at all — it is absolutely slavery.
Example: Now my mom didn’t complain about this, she’s far too nice, but I’ll complain for her. My mom went to Nursing school at Roxborough in Philadelphia. On Martin Luther King Day there was mandatory service or all Nursing students. If it’s not voluntary, and someone is forced to do something against their will then what is it other than slavery? If it’s a nice gesture then let people opt-out, making ‘nice gestures’ required kind of defeats the purpose don’t you think? Especially if this nice gesture coincides with a form of service like that mentioned in Section 2. In that case it can actually end up downright counter-productive.
Someone might say, “hey, maybe they don’t mind doing it!”, well then I would say, maybe some of the Hebrew slaves of the Egyptian times didn’t really mind hauling giant rocks all over the place building pyramids and the sphinx, does that make it not slavery? It’s still slavery whether or not the person being forced to do something is angry about the mandatory service or not.
Thus ends my rant about community service. Interested in getting peoples feedback. Like always, don’t consider anything written here as written in stone, I am constantly working with ideas in order to find ‘truth’ and I will not be offended if I discover in the future that I was incorrect here because it’s all an intellectual journey and we have to start somewhere.
Categories: Service
