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A Walmart In The Neighborhood Does More For Affordable Food Distribution Than Food Baskets From Charity.

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Among economists’ insights over the last almost 250 years, one of the keenest is that one can do good while doing well. The idea traces to Adam Smith. It means capitalists’/entrepreneurs’ pursuit of profit can have favorable consequences for the community at large—and not just for capitalists and entrepreneurs. It applies equally to landowners and workers pursuing their own interests.

The following are two of Smith’s statements of the “doing good while doing well” proposition. The first is from The Wealth of Nations and the latter from Smith’s 1759 Theory of Moral Sentiments.

“It is not from the benevolence of the Butcher, the Brewer or the Baker that we expect our dinner, but from their regard to their own interest.”

“Every individual… neither intends to promote the public interest, nor knows how much he is promoting it… he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”

One frequently hears about capitalists/entrepreneurs making substantial gifts either before or after their deaths to colleges/universities and other non-profit organizations. Many say it is an opportunity for them to “give back,” which suggests, at least to me, that the wealth making the gifts possible was obtained in less than noble ways. Regardless, the benefits the community at large reaps from these gifts are not what the doing good while doing well proposition is about.

The doing good while doing well proposition does not describe government officials’ actions.

Rather, the proposition refers to the process by which the capitalists/entrepreneurs earn their wealth. It’s not what they do with their accrued wealth. It’s the benefit the community realizes as this wealth is accrued. To paraphrase Smith, people enjoy the benefits of meat, beer, and bread as a result of their respective producers’ efforts to earn a profit. What these producers do with their wealth is a different question.

It should also be noted that the doing good while doing well proposition does not describe government officials’ actions. For these officials, making personal monetary profits from their jobs is illegal. The result when government officials pursue their own interests, given this illegality, is the topic of the public choice economics. The results do not parallel those of Adam Smith.

The coming of Thanksgiving and Christmas each year brings with it churches and benevolent groups organizing distributions of food baskets. I have participated in these efforts, though probably with less enthusiasm than others.

Americans are surrounded 24/7 by a process (Smith’s invisible hand) that is wealth-producing for all, thereby making these charitable acts possible.

Always in the back of my mind was the doing good while doing well proposition. That is, how do the effects of the proposition compare with the distributions by churches and benevolent groups? To repeat a previous cautioning, how does the process by which capitalists/entrepreneurs pursue profit affect the community at large?

My mind went to the case of Wal-Mart. No one would deny that Wal-Mart is a profit-pursuing entity. At the same time, there is credible evidence that Wal-Mart’s presence in a community reduces food prices between 10 and 15 percent. Put on an annual basis, this is equivalent to food shoppers receiving 5.2 to 7.8 weeks of additional food shopping per year. It follows that Wal-Mart spreads far more holiday food cheer than churches and public service groups do.

Food basket distributions presumably trace to noble intentions, while pursuit of profit is widely held to be ignoble. Noble trumps ignoble. That’s why the doing good while doing well proposition has always been a tough sell for economists. For many, good things only happen when people intend to do good things.

None of the above is meant to trivialize church food baskets during the Thanksgiving and Christmas holidays. Nor is it meant to disparage those making end-of-life or after-life contributions to colleges/universities or not-for-profit institutions. These acts of charity have long played a vital role in American life. Moreover, they are voluntary, and I would be the last to put them down.

Instead, my purpose is to point out that Americans are surrounded 24/7 by a process (Smith’s invisible hand) that is wealth-producing for all, thereby making these charitable acts possible.

T. Norman Van Cott, is a professor of economics at Ball State. This article first appeared at FEE.org

The 3 Ways Capital Investment Beats Charity When It Comes To Improving People’s Lives.

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In our time of rising socialist rhetoric and indignation against those who have great levels of wealth, we also encounter the idea that the use of wealth for charitable purposes is better for society, perhaps even more moral, than the use of wealth for business development and capital investment.

Few interpretations of social affairs are as unpopular as defenses of the existence of billionaires and wealthy capitalists. But it is the employment of capital into the production structure that reaps great benefit to the world.

In his essay “The Greatest Economic Charity,” F. A. Harper challenges the prevailing notions regarding the relationship between wealth redistribution and charity. We can, as Harper does, refer to economic charity in a standard dictionary sense wherein the purpose of charity is to initiate material benevolence, to improve the material well being of someone else, most often someone who has a particularly obvious set of needs to be met.

But in terms of material benevolence, we can reasonably see a difference between an effort of charity which improves the immediate conditions of a man, and an effort of charity which improves the long-term conditions of not only a specific person, but an entire society of them.

It is this latter charity, which actually works to prevent men from facing constant need of charity in the future, that Harper refers to as the greatest economic charity. He writes,

The greatest charity of all… would be to assist a person toward becoming wholly self-reliant within nature’s limits, and therefore totally free.

Here, we can turn our focus to Harper’s separation between what we might call consumptive charity and productive charity.

By consumptive charity, I refer to what most naturally comes to mind when we think of the nature of charity. Harper describes this concept as follows:

Of the various forms of economic charity in which we commonly indulge, the simplest would seem to be something such as buying a vagrant a cup of coffee or giving him a dime for the purpose.

Most of the colossal amount of activity which today goes by the name of charity is of this type, where the intent of the giver is to provide something for direct consumption or relief of a destitute recipient.
Unfortunately, too many people focus their understanding of charity on those acts which only has the effect of consumption based needs-resolution in the immediate term.

While there is a role for this type of charity in society, it can also be counter-productive, can actually subsidize current conditions, and can even be leveraged by politicians and other power-seekers to effectually enslave men. For example, writes Harper in 1956,

National socialism is a common form, where the state becomes the dispenser of loot collected by force. The recipients lose their self-reliance in the process and come to feel indebted forever to the collective for their very lives. They have by then become enslaved.

In our time, the ever-popular democratic socialism could just as easily be used as the example.

Thus, we turn to productive charity; or charity that comes about as a result of “savings invested in privately owned economic tools of production.” Harper argues the investment into the “tools of production” not only has a longer and more sustainable effect on the livelihood of people, but it actually meets the conditions of charity in a much more profound way.

By economic tools of production, Harper means capital goods; goods, as Murray Rothbard, explains, “which aid in the process of production eventually to produce consumers’ goods.“ They are the factories, the equipment, the manufactured machinery that are arranged together to increase the output of goods that individuals consider as serviceable to satisfy their ultimate material ends.

Now, Harper describes three ways in which capital investment in the immediate terms satisfies the characteristics of economic charity in the longer term. First, the investment in capital goods today eventually produces new goods that otherwise would not have been created; the tools make possible extra goods which are, by definition, passed on to others who see value in them.

Second, the transfer of economic benefits is voluntary—for stolen property passed from one party to the other does not meet the conditions for true charity; charity precludes theft as a means of wealth transfer. Charity requires the benefactor to act freely and of his own will in passing on material benefits to another.

Third, and perhaps most insightfully, Harper mentions the clear anonymous nature of this economic charity. Rather than charity done with trumpets and lavishing media attention, investment into the capital structure has a benefit for thousands, perhaps millions of future people, many of whom are not born yet and certainly are unaware of the identification of this benefactor. Appealing to self-reflection, Harper writes:

One can easily test from his own experience the anonymity of the charity that flows from savings and investment in tools. If one will list all the economic items he consumes or enjoys in a day, the test is to try in each instance to name specifically all the persons whose savings and investment made the item possible. Most of us, I dare say, could not name even one person responsible for an item we use and enjoy.

The material well-being that was passed on to present day hundreds of millions of beneficiaries of the yesterday’s investment, Harper observed at the time, was vastly greater than the funds collected on an annual basis for consumptive charity. In fact, consumptive charity was “less than 1 percent of the amount of charity which users of tools receive” in the same length of time. This is because the capital tools bolster the quantity and quality of goods and therefore make workers more productive; it extends and expands the fruit of their labor.

The reason that the west faced greater levels of wealth than other parts of the globe over the last 300 years has little to do with things like disparities in intelligence, a spirit of innovation, and hard work. How much harder to so many people around the world work merely to survive another day? What really matters is the accumulation of savings and the investment of that savings into capital goods. At any time, mankind has within its reach the ability to pass on a greater amount of wealth to people it has never met; it does not require brilliant planners, democratically based political angst, or a soaking of the rich.

Harper therefore encourages his reader to have a wider perspective on the ramifications of the contemporary spirit of emphasizing consumptive charity over productive charity. It’s possible, he states, that

the giving of the grain to a starving person… could better serve as seed for a harvest that would keep twenty persons from starving later. […]

Savings, when used wisely by private enterprise to produce capital tools of venture, serve as economic seed in a like manner. The use of it as seed becomes an act of charity with a high leverage. But its creation requires enough patience and restraint from demands for immediate consumption so that the tools will be created. One must have foresight and economic insight enough to see beyond the exceedingly conspicuous and tempting need for present consumption.

Capitalism provides a better and longer-lasting charitable effect than any other socio-economic arrangement conceivable. The savers and investors of today, those who contribute to the buildup of capital goods and factors of production, are benefactors of persons yet unborn. If economic charity is at its greatest when it enables men to overcome the conditions of poverty and hand-to-mouth existences, the social criticism of capitalists and those that invest into the capital structure must be swiftly brought to an end.

C.Jay Engel is the creator and editor of AustroLibertarian.com.

In This City, Blockchain is Now Helping to Alleviate Hunger and Reduce Waste

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Consumers throw away about 133 billion pounds of food every single year. And while it is up to each consumer to decide what to do with their food after it is purchased, how many of us would be willing to donate it if there was a simple way of doing so? Luckily, the Goodr is revolutionizing the way we approach food waste.

Years ago, Jasmine Crowe began hosting pop-up dinners for the homeless in Atlanta, Georgia. As someone who experienced food insecurity firsthand, Crowe wanted to do what she could to make sure this didn’t happen to others. And she is doing this entirely on her own without the government’s help.

Crowe said:

“Having experienced that first hand really shifted perspective for me, because for years I was feeding members of our homeless community. I didn’t understand that the face of hunger was readily changing.”

But in addition to feeding the hungry, the app also helps address the fact that food waste accounts for 27 percent of our landfills. People were so touched by her story and her mission that a video about Crowe’s work went viral in 2016.

Many viewers wanted to know how Crowe was able to provide enough food to feed all her guests. Individuals wrote to her asking which restaurants she had partnered with but in reality, Crowe was supplying most of the food by simply asking for donations from others. She commented on this saying, “And the reality was that no restaurants donated the food. I literally was just taking volunteer donations and spending sometimes my last money to make these things happen.”

But Crowe knew there must be an easier way to do this. In 2017, she developed an app called Goodr that helps connect businesses with extra food to local nonprofits who specialize in feeding the homeless or others who are struggling to afford sustenance. But the app’s functions do not simply end there.

Everybody Wins

Whether it be a restaurant or catering company, businesses that routinely find themselves with extra food are also wasting money, and this is a problem that needs to be solved in order to run as efficiently as possible. And by using Goodr, companies are also getting a consultation on how they can reduce waste.

As reported by CNBC:

“The company uses blockchain to keep a data ledger for their clients of how much food businesses waste, and where they might be losing money. Data collected by the company includes information on what food gets wasted the most, community connections and environmental impacts.”

Goodr is able to earn money and sustain its model by charging the restaurants to use its service. Since the restaurants are also able to potentially save by estimating their waste, everyone wins, including those who are the recipients of the free food.

“Our hope is definitely like most social good companies, is that we’re able to work ourselves out of business,” Crowe said. Additionally, Crowe has garnered additional funding by participating in local and national business accelerators competitions. According to Fast Company:

“So far, she’s used local and national business accelerators and incubation competitions to bootstrap capital. That includes winning the United Way Spark Prize for $15,000 in funding, and Miller Lite Tap the Future contest for another $21,000, among other top finishes. In February 2018, Goodr was accepted into the virtual accelerator Techstars Anywhere and continues to work on how to expand and grow revenue.”

Crowe once commented that “hunger is not a scarcity issue. There’s more than enough food. It’s actually a logistics issue.” Luckily, Crowe has found a way to solve this problem while helping to reduce waste at the same time.

Jasmine Crowe is showing all of us that one individual is capable of making a huge impact. And by utilizing blockchain technology, Crowe’s fight to end hunger has become an unstoppable force. Since Crowe launched the app, 900,000 pounds of food have been diverted from landfills and have instead provided about 850,000 meals to those in need. While Goodr is currently restricted to the Atlanta area, Crowe hopes to branch out and expand her services Seattle, Chicago, Los Angeles, Washington D.C., Miami, Dallas, Houston and San Francisco by the end of 2019.

“Greedy” Capitalists Are Often the First to Lend a Helping Hand

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Private corporations have become the punching bags of many, who are under the belief that socialism is needed to create a charitable society. In their minds, without government, human beings are not likely to give back. But by casting capitalists as the villain in every story, these critics neglect, or purposefully ignore, the many instances when private companies have given back to their communities. In fact, when national disasters strike, for example, it is often private organizations that arrive first on the scene.

Wild Fires

Of all the “greedy” capitalist entities, there is perhaps no one judged more harshly than oil companies.  Yet, when a large forest fire consumed more than one million acres of land in the province of Alberta, Canada, the oil companies, along with other private entities, pulled together to lend a hand.

As it continued to burn for the better part of a month, the fire caused more than 60,000 residents to flee their homes. Many homes were destroyed and the city of Fort McMurray was left in ruins.

Commenting on the fire, Tristin Hopper of the National Post highlights specific relief efforts sponsored by local oil companies in Alberta. Hopper mentions how local oil companies provided free food and shelter to over 25,000 community members affected by the fires. Likewise, as the fires continued to spread and began cutting off easy access to the roads, Brion Energy arranged to have perishable foods delivered each day via truck shipments.

But the acts of charity were not limited to these oil companies alone. Shell Albian Aerodrome actually helped many residents escape the scene by providing buses for their evacuation. Suncor’s Firebag Aerodrome, also helped with the evacuation efforts by using its own company-chartered commercial jets to help over 7,000 residents escape the fire. But this is far from the only instance of private entities giving back.

Walmart Gives Back

Touching on the charitable acts of private entities in the Wall Street Journal, economics professor Steve Horwitz writes:

“That shouldn’t surprise anyone who knows what Walmart did after Hurricane Katrina hit the Gulf Coast in 2005. The company shipped thousands of trucks of water and other supplies into the area, well ahead of the lethargic Federal Emergency Management Agency. It even beat the Red Cross in many areas.”

In addition to the Walmart’s charitable acts, McDonald’s also handed out free food to first responders and Marriott offered up free rooms for those who had been displaced.

Though these private corporations are so often thought to be cold, unsympathetic, and disconnected from the experience of the typical American, they are, in fact, still members of their respective communities who rely on the patronage of the locals.

In return, these private entities are there to meet the needs of the consumer, which, under these circumstances, has meant giving the community what it needed most, acts of charity. In addition to serving their communities when it is most needed, the private sector offers something that the government has never been able to master; efficiency.

Driving this point home, Horwitz writes:

“These firms have experience that makes them distinctly effective during and after disasters. Walmart constantly responds to changing market conditions, moving people and resources where they are needed. FEMA and other agencies don’t regularly engage in this sort of behavior.”

Before casting stones at private corporations based solely on their desire to make a profit, it would be wise to first look at what these companies have done for their surrounding communities. Additionally, before praising the government for simply creating agencies meant to aid those in need, it would be wise to take a close look at how these agencies are run and ask ourselves if what is being done by government cannot be performed more adequately by the free market.

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