At the charming Hudson train station in New York, volunteers sell small cups of coffee for $1. The idea is to raise money for the children’s charity in town. They only accept cash. Not everyone carries cash.
“Do you ever just let people have coffee on the promise that they will pay you later?” I ask.
“Yes, and most do, but some people do not,” says the cashier.
“We figure out who is who. When someone is taking advantage of our generosity, we say, ‘You may not have a cup of coffee. Next time bring cash.’ They figure it out and bring cash in the future.”
I left the conversation there, but what you have here speaks to a universal truth: helping people is not always an unmitigated good thing. Often help is great but just as often it’s not. Sometimes you have to withdraw that help in order to inspire people to do the right thing. Incentives matter. Set them up incorrectly, and your attempts to help people can actually hurt them — and you! — in the long run.
Economist James Buchanan coined the phrase “Samaritan’s dilemma.”
It comes from the Biblical parable in which the generous merchant helped the man beaten and lying on the road.
He pays the medical bills and gets him back on his feet. Good man.
But let’s imagine a part two. The word gets out. Next time the Samaritan travels the same road, there are three, four, and five people in need of money, medical attention, and a safe place to spend the night. He helps them. They multiply tenfold on the next trip. Pretty soon, the problem becomes obvious.
In order to re-adjust incentives, the Samaritan has to say no. He has to withdraw the aid. To help, he needs to stop helping.
This is a very difficult decision. Aid cannot be without limit, and it cannot be expected else it becomes abuse of the giver and contrary to the interests of the recipient.
Parents discover this with children. At some point, you have to cut off the financial help to inspire them to independence. It’s among the hardest moments in a parent’s life: it cuts against the grain. You have to end the support so that the child can figure out creative ways to live independently. They don’t like it. They thank you later for doing the right thing.
Aid cannot be without limit if you really want it to be helpful. Knowing when and how to do that is an art, not a science. It requires careful case-by-case experimentation. There is some moment in the stream of financial assistance at which it stops helping and starts subsidizing idleness and abuse. For maturity, for human decency, for self-respect, that point absolutely must eventually arrive at which help must come to a full stop.
The lesson applies to a huge range of human activities.
You have two siblings. One is good with money, pays her debts, and needs a quick loan. No problem. The other wastes money and is behind in bills. To loan him money perpetuates the problem. You love them both very much – enough not to enable bad choices.
So too with public policy.
If you subsidize disaster insurance for flood-prone areas, you end up disincentivizing people from bearing the full cost of risks.
If you guarantee insurance regardless of risks in any area of life, you remove the reward for reducing risks.
If you guarantee depositors will always get their money back from banks via government financing, you make businesses less like enterprises subject to profit and loss.
Foreign aid: it’s the same.
Anything you make too big to fail turns out to be inefficient and lacking in independent viability.
Or think of the homeless problem. Many cities have discovered that trying to help them is great but too much help attracts more. The problem you sought to solve gets worse. Next thing you know, you have a whole tribe coming from everywhere to live off the city’s benevolence. Even the most bleeding-heart socialist ends up rethinking this unconditional approach.
So on it goes. Helping sounds great. Can’t get enough! But actually you can get enough, more than enough, too much even.
It’s even true in spiritual life. St. John of the Cross writes of the long dark night of the soul. His thinking is that when we are new in faith, God treats us as infants providing for all our needs. It’s lovely. As we mature in faith, that closeness and care are gradually withdrawn. We must stand on our own. Finally that day arrives when the support is withdrawn, precisely so that we can grow in the strength of faith we have developed on our own. It’s the long dark night. Mother Teresa experienced it. Perhaps you have too. It’s by providential design.
Look, this isn’t such a radical idea, much less a cruel one. If you are forever cleaning up after your roommates, they will never take responsibility for their own messes. If people who take wild risks climbing Mount Everest are always rescued at public expense, the adventurous will not properly calculate the costs of the risks they are undertaking. This is why hikers should pay for their own rescues.
Sounds cruel? Not really. Sometimes you have to withdraw help to incentivize proper decision-making.
There is no hard-and-fast rule on how much help is too much help, no precise point at which you have gone too far and caused more of the very problem you are trying to fix.
Still, it is utterly foolish not to admit that the Samaritan's dilemma is real. It is part of life as we know it, and it appears everywhere. It’s the great problem faced by anyone who seeks to do good.
Which takes us to the Democratic Party’s penchant for promising everything free. Free health care. Free college. Free income. Forever jobs. No problems ever, thanks to unlimited tax dollars and the Fed’s printing press. No limits. Ubiquitous, unlimited, forever generosity! If you are against that, you are mean. Cruel. You are a bad person.
Not so. You are a rational person. You recognize that problem of withdrawing help is one of the most difficult decisions we face in dealing with others. Government is terrible at it. It’s not that government is playing God here, because, as St. John of the Cross said, even God says no to us. This forever talk of unending help stems from a different source.
We should not throw away our good sense when the topic is government policy. The approach of unconditional help regardless of the results doesn’t work in our private lives. How much worse is it when taxpayers are paying the bill?