Government can’t solve this problem because it removes both charity and responsibility from the transaction. There is no charity when the government is involved. For many reasons. One is that we aren’t giving any longer, the government is taking. Another one is it totally removes the personal, individual connection that is so important to charity. Another is that once the government gets involved, we no longer feel the responsibility to help, because government is supposed to be taking care of it. And because the recipients also loses connection with the need to be responsible.
At my previous job, we tended to have lots of discussions about public policy. As part of that dialogue, an intern once asked:
Is government regulation never a good thing? Even if regulations are designed to reduce pollution or cut down on secondhand smoke in restaurants (nominally good goals, although the regulations may be flawed/designed incorrectly), is it always better to allow individuals/corporations to make their own decisions and enjoy or suffer the consequences? Or in the case of unemployment insurance or a more-limited form of welfare, is it better to make individuals responsible for themselves rather than helping them get back up on their feet? My principal exposure to these types of discussions comes from my microeconomics and public finance classes from this past year. The classes emphasized using taxes and subsidies in the case of externalities and other market failures (information asymmetry, natural monopolies, etc.), but I would like to have further discussion on these topics from other perspectives.
These questions are all very good. And all very challenging. In fact, they are at the very heart of what a conservative involved in public policy must come to grips with.
I believe that government was given to us by God for a reason, mainly to protect us by punishing wrongdoers so we live in liberty.
Libertarians tend to think that just the existence of government threatens our liberty. On the surface, that seems to makes sense. By definition, government has the authority to deprive us of life, liberty, and property. That’s what a government is, it taxes and wields the power of the sword over its citizens. Yet what it is really doing it protecting us from evil doers who are the real threat to our liberty. And sometimes, we are those evil doers, or at least potential evil doers.
To use an analogy from the Bible, we are saved from violence not so we can commit violence, but so we can be free to do what is right. Living a life of wrongdoing or violence is not being free, it is being a slave to sin. We are freed by government to live freely, i.e., to live righteously. That is good.
As long as the government stays within its sphere of authority and does not unlawfully–from a biblical perspective–interfere with the spheres of church, families, and individuals, this enhances freedom and all is good and well. But given that government is filled with fallen men–many of whom hate God, there are very few things that the government does today that enhance freedom. Most government initiatives today restrict our freedoms instead. Not everything, but most.
Regarding externalities or other types of “market failures,” the short answer is that there are very few market failures or externalities. Externalities or market failures are simply events or consequences that suit most people just fine, but a few don’t like the outcomes. So they call them externalities, and say the market has failed. If there are in fact cases where the general welfare is lessened by something that came to pass in the marketplace, I’d say it is most likely because the government hasn’t done its job of setting up the proper framework, such as protecting property rights, etc.