A great mistake everywhere in political science literature is the vast overestimation of the actual contribution that government makes to building good societies. To be sure, good government is better than bad, but overall, government has no resources of its own. Everything it has, it must extract from the public in one form or another.
It could be taxation. It could be inflation. It could be through the cartelization of industry and the creation of monopolies that pay for the privilege. One way or another, government gets its resources at public expense. It lives in a parasitic relationship to society. That’s true for all governments in all times.
In addition, there is the reality that governments in the course of history have been the source of astonishing evil, even much more than private criminals. The reason is that governments carry with them a legitimacy that the typical criminal gang doesn’t, which means that they get away with greater evil for a longer period of time. Also, power corrupts.
This is why so many huge efforts in the second millennium have been spent on figuring out how to limit government’s powers over the population. The monarchs were trained not to go too far, lest they risk the future of the family. Even Machiavelli counseled the prince not to antagonize the public by, for example, taking property. A prince with longevity must give the people freedom.
So too, the purpose of democracy was to make sure the people had control over the government. The idea of the Constitution, too, was to build in limits on government with the hope that emblazoning them on parchment would accomplish the great task.
What is the purpose of limited government? To protect the rights of the people from a main and primary threat. It is also to unleash the creativity and enterprise of the people. This is what builds a thriving economy that serves everyone with higher living standards and longer lives and builds resources for fuller life experiences. Typically, political scientists underestimate the role of private economies, whereas economists themselves are more likely to understand it.
This great struggle between government and the private sector has defined the intellectual debate for centuries. It’s a worthy and important debate, but it tends to overlook a whole sector that has added immense value for centuries. I’m speaking of the nonprofit sector, or the philanthropic sector. It is supported by private donations and has been responsible for enormous achievements throughout modern history.
Frances Xavier Cabrini was born in 1850 in Northern Italy (the youngest of 13 children) and died in 1917. After her parents died, she entered a convent and sought approval to go to China for missionary work. The pope at the time knew of a growing disaster in the United States with the rush of immigration from Italy, so he sent her to the United States with sisters from a new order, the Missionary Sisters of the Sacred Heart of Jesus.
Arriving in 1887 in New York, they found disaster, with widows and orphans in desperate need of shelter, medical care, and education. They stepped up and got to work. Over the decades, they built an incredible string of institutions that brought true social services to millions, and they became beloved figures on the American scene. Wealthy entrepreneurs supported her work, and her order grew and grew. At some point, she and the sisters ranked among the largest and well-endowed of U.S. enterprises—except that they didn’t make any money. They had taken a vow of poverty and kept to it.
Now, in typical economic theory, in which people are driven by the incentive of wealth-building, this doesn’t make much sense. In truth, to be driven in life by vision, ideals, moral systems, and personal passion to do good does in fact play a much larger role in human affairs than is usually understood.
In those days, the American charitable sector was a massive part of national life, and this was because, in the U.S. system, government had no serious role to play in this realm. By staying out of the business of education, health care, and charitable services, institutions such as that of Mother Cabrini thrived and did miraculous work.
A great evil befell the country with the advent of “Progressivism” at the turn of the 20th century, which gradually built government institutions of schools and orphanages, and did it with money extracted from new inheritance taxes and income taxes. This new trend eventually crowded out the private institutions. In the literature of the time, the progressives were always putting down the private charitable work of Cabrini and so many others, promising instead to bring a more “scientific” approach to replace private charity.
It didn’t work out so well, did it? No, it didn’t. Today, we cannot even fathom that private philanthropy could replace government services, but that is because too many generations have gone by without the lived experience of a really robust and genuinely charitable sector. For my part, I’m absolutely convinced that we could abolish the whole of the welfare state and eliminate taxes and see the immediate flourishing of all these institutions again—no doubt in my mind.
In total, the United States is responsible today for a charitable sector that is nearly half a trillion dollars in size. No other country has such a robust sector of this scale. Charitable dollars in the United States go to religion (27 percent), education (14 percent), human services (13 percent), grantmaking foundations (13 percent), public-society benefit (11 percent), health (8 percent), international affairs (5 percent), and arts/culture (5 percent).
In recent years, owing to the contributions of people such as Bill Gates and Jeff Bezos, the charitable sector has suffered a serious dent in its reputation. Rightly so. These people, by giving to institutions such as the World Health Organization, and so many overtly political organizations, have innovated what might be called malanthropy rather than philanthropy. And yet, goodness is still out there. Your local churches, soup kitchens, arts institutions, and other educational institutions are evidence of this.
To be sure, I write as the head of a nonprofit, though unpaid. Speaking personally, I’m deeply touched by every donation, small or large, because every dollar represents time, idealism, and trust, which is why I write every single donor a personal thank you. It means the world. There are simply many essential things that nonprofits do that governments and large corporations cannot do, namely keeping high ideals alive and building aspirations for a better society.
It’s the season not just for buying and selling but also for giving so that we can continue to be a high civilization of ideals. This isn’t something that comes from Washington, D.C., or can be bought on Amazon with a click; it has to come from hard work and genuine commitment.