Today, we re-publish Economic Notes 40: Against Charity: Charity, Favours, Trade and the Welfare State. It points out that libertarians who think that charity can replace the welfare state are wrong: charity is generally inefficient and can destroy wealth, if no quite to such a degree that the welfare state can. It is trade that should replace the welfare state.

Tradesmen must sell their products to customers whose payments must more than cover the cost of the service. Therefore tradesmen are all the time being pressurised into using their raw materials and efforts in a way that is more than compensated for by the satisfaction produced by the outcome. But charitable producers need only start to worry seriously if they produce services that are literally so worthless to their “customers” that those customers consider the products in question to be overpriced at zero.

How does trade help poor people?

Once you see a “job” as something you do now, in the next half an hour, you also realise that all of those allegedly useless and hopeless people who will supposedly die without the welfare state have almost all of them got something to offer. Hey, granny, watch the barrow while I go see Billy, I’ll see you right, don’t attack any robbers, just try to get a look at their faces.” “Jason, you educationally subnormal wanker, get in here and sweep this floor, or no supper tonight.” “Kylie, keep an eye on Jason, would you, and while you’re about it, see if you can mend that sign.” Jobs. Even the lowliest of us can usually manage something along these lines. Those formerly poor countries which have got rich in recent decades, and given everyone suits to wear and regular years-at-a-time jobs to do, have been the ones where this sort of “casual” economic activity has been allowed rather than forbidden.

The gig economy, while it is allowed to continue, is reducing poverty.