Short Essay Regarding "Samaritan's Dilemmas, Wealth Redistribution, and Polycentricity"

The main thrust of this response is to note the relationship between giving and the desire for reciprocity as a determinant of futurism. Under monocentric administration, aggregation of charitable givers results in a loss of identifiable social values. A receiver engaging in thankful reciprocity will be unable to reciprocate in the social terms of the givers, and will instead reciprocate in what is believed to be the social terms of the administration.

The paper reviewed [Tuszynski, 2016] asserts, “It is a natural human inclination to desire to help those in need.” I agree, and I would add that another basic human inclination is to experience thankfulness and a desire to reciprocate after receiving a gift. In the case of charitable giving, the paper reviewed asserts that the giver often desires futurity. That is, a giver is usually more satisfied by the prospect of improving the life of the recipient both immediately and permanently than they would be satisfied by the prospect of improving the life of the recipient only immediately and not permanently.

A thankful receiver may realize the wants of the giver and attempt to reciprocate. An alert receiver may realize he is able to render a service which will give the giver some utility. Specifically, the receiver can engage in self-change in ways which will please the giver. The receiver might also simply assume behaviors or beliefs which are considered to belong to the giver due to the logical possibility that the giver’s status is due to the giver’s beliefs or behaviors. This second story is more about the receiver seeking self-improvement rather than engaging in reciprocity. Indeed, if we can step away from the present analysis and look at economics writ large, it is generally considered true that an individual’s social and human capital is a determinant of that individual’s productivity, income, and success.

A third story gets us to the same place. The first two stories are receiver-driven, where the receiver independently engages in self-change. Another story is giver-driven. In giver-driven cases the giver might request that a giver adopt certain beliefs or behaviors. A giver might even make such requirements contractual conditions of charity. A request-type example might be a Christian missionary who gives some food or clothing away freely but includes a religious pamphlet and some verbal encouragement to consider the pamphlet alongside the gift. A contract-type example might be a drug test as a precondition for food stamp eligibility.

The receiver-driven and giver-driven approaches are importantly similar and also importantly different. One key difference exists in the incentives. The giver-driven approach incentivizes observable conformance, but it also presents incentives for a potential receiver to game, cheat, or lie. The receiver-driven approach is perhaps a less frequent story, and it is not associated with any incentive to cheat.

The similarity between these two approaches is that either case ends with a transfer of social values or human capital from the giver to the receiver. The result is a transfer from the giver to the receiver of some notion or information regarding the way the receiver ought to behave. On this view it is possible in principle for the act of charity to directly cause futurity for the reasons previously discussed. In some way this renders charity a bit like a training program. The information might be technical, or it might be some general social capital or appreciation for fellow man.

It is important to realize that in any case the terms human capital, social capital, and so on are general terms for aggregations of specific quantities of various kinds of information which are exchanged. Such information is subjective in the sense that it originates in the mind of the giver, although such origination may of course have a mix of prior determinants. An important point is that such information is not taken as some objective truth, but it is instead a view of the giver.

Different kinds of individuals engage in charity. Religious folks and non-religious folks both give to charity, but even among religious folks the specific sets of beliefs vary wildly. For example, a Mormon and a Muslim might both give food to a poor person, but Islam and Mormonism are entirely different sets of beliefs. Consequently, while the Muslim and the Mormon would either transfer some kind of social or human capital to the receiver, they would absolutely not transfer the same kind.

When charity is administered by the state it is sourced from many kinds of givers. The result is that any particular receiver does not have a direct connection to one kind of giver, so the multi-specific value transfer is lost. Instead, the receiver can only receive two kinds of social or human capital. One kind is a perceived common ground value exchange and the other is an exchange of state values.

A common ground value exchange might proceed as follows. The receiver imagines all possible or likely givers and attempts to deduce any overlap of specific beliefs which might be held by all such individuals. Thinking back to the Mormon and the Muslim, we can see that there is only very mild overlap. The overlap is so little that any individual holding only to such beliefs would not be viewed as a proper Mormon or a proper Muslim. Now consider that the state-receiver must include the atheist and the agnostic into the pool of potential givers and the common ground is even further watered down. It is possible that the watering down may be so severe that there is literally no common ground left. Or, there may be certain basic values left in common such as the desire to treat each other well, not lie, not steal, and so on.

The state value exchange occurs when the receiver desires to reciprocate directly with the state, or else the receiver confuses the state as a true representative of the values of the original givers. In such a case the receiver will look to whatever the state deems to be good or correct beliefs or behaviors. The receiver may also begin to think highly of whatever constitutes the essence and motive of the state. The receiver might be particularly susceptible to state propaganda, the opinions of contemporary political leadership, politically correct thought and behaviors, or politically trends thought or behaviors.

The state, or at least the underlying political parties, might appreciate this state of dependency or even seek to foster a codependent relationship with the impoverished. Such a relationship is easily transformed into a scheme for cheap votes. This relationship becomes politically sustainable, although perhaps socially and economically destructive. That is, a party promising welfare in exchange for votes obtains a political and rhetorical advantage in a system where the vote of an impoverished individual is weighted on equal terms with the vote of a high income individual. In theory, a better system would obtain weighted votes. Weighting on income is perhaps second best and the real goal is to weight on productivity. Such a political system in the extreme converges to the market itself, where individuals receive payments directly equal to their own marginal productivity.

The idea that the representative Samaritan is unable to pose a credible disciplinary threat in the direction of an aid recipient is certainly true, and the logic of the aider of last resort seems well-formed, but it seems to only reflect on one side of the incentive problem. The state lacks a stick, but I would propose that it is unwilling to use the carrot. In theory, the state could provide subsidies which incentivize an impoverished individual to pull themselves out of poverty. In fact, there are many cases where the state does this in practice. Job training programs and subsidies for education are two examples. Another notable subsidy intended for the poor and also the middle class is home loan legislation.

Such policies lead to a variety of unintended consequences. For example, job programs are largely ineffective and education subsidies serve largely to inflate the cost of education. It could even be well argued in theory, although empirical work would be appreciated to make a strong case, that state charity subsidy and regulation have resulted in misallocation of resources to charity. An analyst would expect an excess quantity compared to a natural rate, and also the appearance of the wrong kinds or implementations of charitable enterprise.

Home loan legislation is a key explanatory variable in the Great Recession, and in general subsidies tend to create bubbles which collapse and damage the economy in the long run. All of these unintended consequences are not the main thrust of this paper, but it is worth noting that the hypothetical use of the carrot by the state is entirely not hypothetical, and it is also worth noting how such instances have played out.

While the state has in many cases attempted to use the carrot, the state is also presented with a moral hazard to the effect that it is expected to prefer the carrot to a lesser degree compared to the market. That moral hazard is provided through the same mechanism previously discussed, the one in which a state-like actor intentionally fosters a codependent relationship with the impoverished as a scheme to obtain cheap votes. A state-like actor may include, as previously noted, the state itself or and underlying party or set of parties. The state-like actor’s tactic can be labeled policy predation, or political predation, and the resultant behavior of voters predictably becoming attracted rather than repulsed by such predation is identifiable as a political variant of Stockholm Syndrome.

Because of the analogy, which is intended more as a serious hypothesis than a simple analogy, it is worth a brief aside to discuss the way Stockholm Syndrome is generally remedied by psychologists. The interesting result is that there is no known cure and indeed very little formal research has been carried out on the subject. A meta-analysis conducted in 2007 found only 12 papers meeting the inclusion criteria [Namnayak, 2008]. The meta-analysis further found that there was ambiguity in the use of the term and the research was largely constituted by case studies. In the 12 papers there were 5 case studies and 4 of them contained significant overlapping features. The paper concluded that there have been no validated diagnostic criteria for Stockholm Syndrome and certainly no known cure.

We have discussed political predation in the case of poverty at length, but it is worth taking a step back and noting that political predation is a general and indeed necessary component of most political systems we see in the world. In particular, is it a necessary component of political systems involving a central government or monocentric administration. The tendency for predation is expected to be particularly potent with a concentration of power, or inverse the number of parties. In this sense, the closest thing a Democracy can bear to a dictatorship is a 2-party system, and a parliamentary system is expected to engage in predation a bit less.

It is worth noting the empirical fact that European countries are historically more often parliamentary and historically more often to pass welfare legislation. Such an empirical fact might present a problem for the proposed pattern that multi-party governments will tend to pass less predatory policy. A simple confounder would be culture, and it is also worth noting that in modern times the United States does not pass significantly less welfare legislation anyway. The pattern is one of a past era. So I don’t think the problem is there, but it is worth some further discussion.

In general, parties always engage in votes-for-policies schemes. This is the entire purpose of their constitution, and in some ways it is both legitimate and desired. However, the logic of predation permeates all such schemes to the effect that any party or state will have an incentive not only to fulfill the needs of voters, but indeed to create a state of need and dependence on the part of voters. Parties will specialize in such predation in a vote-maximizing way, so it is not as if all parties will cater to the poor, which in some ways might have been nice. Instead, some will cater to this or that group, but the catering is predatory and self-serving in nature rather than genuinely beneficent as we should expect from a true Samaritan.

 

Citations:

Namnyak, M., Tufton, N., Szekely, R., Toal, M., Worboys, S. and Sampson, E. L. (2008), ‘Stockholm syndrome’: psychiatric diagnosis or urban myth?. Acta Psychiatrica Scandinavica, 117: 4–11. doi:10.1111/j.1600-0447.2007.01112.x

Tuszynski, Meg Patrick and Wagner, Richard E., Samaritan's Dilemmas, Wealth Redistribution, and Polycentricity (February 19, 2016). GMU Working Paper in Economics No. 16-37. Available at SSRN: https://ssrn.com/abstract=2734725 or http://dx.doi.org/10.2139/ssrn.2734725