“At this festive season of the year, Mr. Scrooge,” said the gentleman, taking up a pen, “it is more than usually desirable that we should make some slight provision for the poor and destitute, who suffer greatly at the present time. Many thousands are in want of common necessaries; hundreds of thousands are in want of common comforts, sir.”

“Are there no prisons?” asked Scrooge.

“Plenty of prisons,” said the gentleman, laying down the pen again.

“And the Union workhouses?” demanded Scrooge. “Are they still in operation?”

“They are. Still,” returned the gentleman, “I wish I could say they were not.”

“The Treadmill and the Poor Law are in full vigour, then?” said Scrooge.

“Both very busy, sir.”

“Oh! I was afraid, from what you said at first, that something had occurred to stop them in their useful course,” said Scrooge. “I’m very glad to hear it.”

“Under the impression that they scarcely furnish Christian cheer of mind or body to the multitude,” returned the gentleman, “a few of us are endeavouring to raise a fund to buy the Poor some meat and drink, and means of warmth. We choose this time, because it is a time, of all others, when Want is keenly felt, and Abundance rejoices. What shall I put you down for?”

“Nothing!” replied Scrooge.

“You wish to be anonymous?”

“I wish to be left alone,” said Scrooge. “Since you ask me what I wish, gentlemen, that is my answer. I don’t make merry myself at Christmas, and I can’t afford to make idle people merry. I help to support the establishments I have mentioned: They cost enough. And those who are badly off must go there.”

“Many can’t go there; and many would rather die.”

“If they would rather die,” said Scrooge, “they had better do it, and decrease the surplus population . . . It’s enough for a man to understand his own business, and not to interfere with other people’s. Mine occupies me constantly. Good afternoon, gentlemen!”

— Charles Dickens, A Christmas Carol

To many critics of libertarianism, the foregoing portrait of Scrooge perfectly captures the libertarian attitude to the poor: “I mind my own business; they should mind theirs. If they can’t support themselves, let them starve.”

We libertarians know better, of course. Yet even we tend, all too often, to let ourselves be cast in the role of stingy Scrooges, and to concede that being a libertarian involves some sort of deemphasis on or devaluing of compassion. This is a mistake, and it hurts us not only in our attempts to gain converts to libertarianism, but also in our attempts, even among ourselves, to visualise and formulate the institutions of a free society.

Let whom eat cake?

The idea that libertarianism and compassion conflict is wrong for three reasons. First, it presupposes that libertarians are invariably to be found among the affluent, rather than among the potential objects of compassion. The libertarian is always portrayed as saying “I should not be forced to help you,” rather than “you should not be forced to help me.” Yet of course libertarians say both these things. To suppose that the rejection of welfare rights evinces a lack of compassion toward the less fortunate is to suppose that libertarians are always well-off and looking for an excuse to avoid giving charity or paying taxes; but in fact libertarians are to be found at every economic stratum. I have known libertarians who were multi-millionaires; I have also known libertarians who weren’t sure where their next meal was coming from. Many libertarians are willing to undergo serious hardships rather than seek to gain benefits through what they view as coercion; what is and is not required in this area is a matter of frequent discussion and debate among libertarians. The Marxist view of libertarianism as a rationalisation of the economic interests of the capitalist class does not reflect reality. The “capitalist ruling class” are more likely to be lobbying Washington for special favours, protectionist legislation, and grants of monopoly privilege while their libertarian neighbours struggle to make ends meet.

Generosity versus justice?

But second, suppose it were true that libertarians are all rich. Would it follow that the libertarian rejection of welfare rights is at odds with the values of compassion and generosity? No. To begin with, libertarianism is not a comprehensive moral theory; it is simply a theory of justice — a theory about what rights people have. Generosity is the virtue that guides us in giving what we have a right to withhold; justice is the virtue that guides us in giving what we do not have a right to withhold. Hence libertarianism as such has nothing to say one way or the other about generosity or what it requires of us. To blame libertarianism for not dealing with generosity is like blaming physics for not talking about mammals. Physicists have nothing against mammals; by and large, they are mammals. But physics is not a theory about mammals.

A libertarian may say with perfect consistency that generosity requires the rich to give to the poor — while saying at the same time that justice requires the poor, or their advocates, to refrain from taking the property of the rich unless the rich consent. Hence libertarians need not be stingy or ungenerous. (If the poor really did have a right to the surplus property of the rich, then libertarianism, in denying this, would be unjust — but still not ungenerous.)

Or is the complaint that libertarians are stingy in handing out rights — that if they were truly generous, they would “give” welfare rights to the poor? But this seems to assume that rights are matters of social convention. If that were true, then any social convention, even Nazism, would automatically be just if enough people accepted it. That seems absurd. Hence rights must be matters of fact to be discovered through moral reasoning, not something to be “given” in greater or lesser quantities depending on whether the giver is generous or stingy.

It is true that libertarians refuse to be “generous” with other people’s money; but whatever may be said for or against the willingness to sacrifice other people’s property rather than one’s own, “generosity” seems like a singularly bad term for it.

The state versus the poor

But third, suppose it were correct to think of rights as objects of distribution, to be handed out on the basis of generosity and compassion. Would libertarianism then stand condemned as stingy? Again, no. The most generous, compassionate system of rights would presumably be one that most improved the lot of the poor and unfortunate. Critics of libertarianism — and, all too often, libertarians themselves — suppose that welfare rights are in the interest of the poor, and that libertarianism requires the poor to sacrifice that interest in the name of property rights.

But are welfare rights in the interest of the poor? The poor need welfare, all right; but do they need welfare rights? A hungry person needs something to eat; and you can’t eat a right to food. On grounds of generosity and compassion, therefore, a system that guarantees a right to food, but isn’t too successful at supplying actual food, is surely less desirable than a system that reliably supplies food but recognises no right to food. Only a belief in the omnipotence of coercive solutions and the impotence of voluntary solutions could justify the assumption that welfare rights are necessary and sufficient for actual welfare.

In reality, the situation is exactly the reverse; it is the coercive system of enforced generosity that keeps the poor poor — while the libertarian system of voluntary cooperation, without any welfare rights, is a welfare system more efficient and beneficent than any socialist’s dream.

The principal cause of poverty is government regulations that legally prevent the poor from bettering their condition. Minimum wage laws increase the cost to businesses of hiring unskilled workers, and so decrease the supply of such jobs, causing unemployment. Rent control laws increase the cost to landlords of providing housing, and so decrease the supply of such housing, causing homelessness. Licensure laws, zoning restrictions, and other regulations make it nearly impossible for the poor to start their own businesses. Two examples: Urban black teenagers have been prosecuted for braiding hair without benefit of expensive beauticians’ degrees; and in many cities, a taxi license costs as much as $100,000. Such low-capital enterprises as hair-braiding and taxi service are a natural avenue for people of little means to start earning money and achieving independence; but the coercive power of the state prevents it. (For an example of how medical licensure laws have deprived the poor of low-cost health care, see “How Government Solved the Health Care Crisis.”)

All these laws conspire, whether intentionally or otherwise, to entrench the better-off in their current positions by holding the poor down in their poverty and preventing them from being able to compete. (Similar principles apply higher up the economic ladder, as tax laws and economic regulations entrench the power of big corporations by insulating them from competition by smaller businesses — incidentally helping to ossify these corporations into sluggish, hierarchical, inefficient monoliths.)

The Marxists were right in thinking that present-day society is characterised by power relations that systematically impoverish the lower classes while increasing the power of the wealthy. Their mistake, however, was to identify capitalism as the culprit. Adam Smith, a more observant social critic than Marx, recognised that capitalists may well be the chief enemies of capitalism. The rich often prefer to buy special government privileges rather than face the discipline of free-market competition. (The recent debate over farm policy has largely ignored the fact that most agricultural subsidies go to giant agribusiness conglomerates rather than to family farms.)

Indeed, government magnifies the power of the rich. Suppose I’m an evil billionaire, and I want to achieve some goal X that costs one million dollars. Under a free-market system, I have to cough up one million of my own dollars in order to achieve this goal. But when there’s a powerful government in charge, I can (directly or indirectly) bribe some politicians with a few thousands in order to achieve my million-dollar goal X. Since the politicians are paying for X with tax money rather than out of their own pocket, they lose nothing by this deal.

Government regulation — in its effects, regardless of its intentions — is Robin Hood in reverse: It robs from the poor and gives to the rich. One of the worst instances of this is inflation, caused by government manipulation of the currency. An increase in the money supply results in an increase in prices and wages — but not immediately. There’s some lag time as the effects of the expansion radiate outward through the economy. The rich — i.e., banks, and those to whom banks lend — get the new money first, before prices have risen. They systematically benefit, because they get to spend their new money before prices have risen to reflect the expansion. The poor systematically lose out, since they get the new money last, and so have to face higher prices before they have higher salaries. Moreover, the asymmetrical effects of monetary expansion create artificial booms and busts, as different sectors of the economy are temporarily stimulated by early receipt of the new money, encouraging over investment that goes bust when the boom proves illusory. The unemployment caused by this misdirection hurts the poor most of all.

“So maybe in a libertarian society, it would be easier for poor people to rise up out of poverty; but what helps them while they’re doing that, if welfare programs are eliminated?” The answer is that welfare programs are not eliminated; they are privatised. In formulating descriptions of the critical institutions of a free society, we must always remember (for the statists will surely forget) that not all of these institutions must be codified in law.

Private charity is simply more efficient than government welfare, because inefficient charities get bad publicity and lose donations to competing charities, while inefficient government programs collect their income by force, are not subject to the discipline of the market, and so waste most of their revenue on overhead.

Not only would a higher percentage of the amount given for welfare purposes actually reach the poor in a libertarian welfare system, but the original amount itself would probably be higher too. Why? Because those who give to charity would have more money to give, as a result of a freer and consequently more prosperous economy, higher employment, and no taxation. (Since government monopolies with access to tax revenues have no incentive to cut costs — remember the Pentagon paying one thousand dollars for a screwdriver? — what the government pays for in taxes costs far, far more than it would if private individuals and organisations, spending their own money, were to pay for the same things themselves.)

So people would have more money to give to the poor, and more of the amount they gave would actually reach the poor. In addition, there would be fewer poor people needing the money in the first place, for reasons I’ve already mentioned. Thus, in the absence of government regulation and redistribution, proportionally larger slices of an absolutely larger pie would be going to absolutely fewer poor people. A free society would see the virtual elimination of poverty.

“Are there no prisons?”

Let us consider again our friend Scrooge, taking a second look at the passage I quoted earlier. Scrooge has no use for private, voluntary forms of charity. His solutions to the problem of poverty are all governmental solutions: Prisons, with their forced labor (the treadmill), and government welfare (the Poor Law), with its Union workhouses. His visitor’s plea that these solutions are inefficient at best and maleficent at worst falls on deaf ears; Scrooge regards governmental solutions as sufficient, and dismisses private charity as a waste of time.

And this fellow is supposed to be the archetype of libertarianism? Hardly. But Scrooge’s attitude toward the poor does indeed exemplify an ideology. It’s called statism. And we’ve had enough of it.