"Unemployment and its treatment in the United States" (1937) by the American Association of Social workers.
Trying to understand unemployment, I had a look at some commentary from Great Depression-times. I came across some interesting numbers on differences between private and public contributions to relief funds during the early years of the Great Depression.
The picture to the right is the cover of a review of unemployment measures in the United States, a work compiled by the American Association of Social Workers. The publication states that there was, at the time, no comparable compilation on the issue. Throughout, the call is for increased government intervention.
The table below lists “Expenditures for relief from public and private funds in 118 urban areas, 1929 to 1935“. In blue, I’ve indicated some striking figures. Note the corresponding numbers:
- Private funds shows greater initial response to the need for relief than public funds.
- But in the latter half of the seven years tabled, private fund contributions are scaled back to starting levels.
- Initially public fund contribution increase slower than private funds, albeit still substantial. It continues to grow, however, so that by 1935 it had become $829,875,000 – more than 25 times the amount in 1929.
- By 1935, public funds stood at 98.6% of total contribution, with private contributions at 1.4%.
From "Unemployment and its treatment in the United States" (1937)
Of course, there are many things we do not know about how these numbers were compiled and I have no intention of claiming robust statistical backing for what I want to get at.
I’ll simply use the historical observations contained in the table to draw attention to the concept of scarcity. The data merely alerts us to the relevance of a trade-off between resources spent by the government and resources spent by private individuals and associations, to be understood by praxeological reasoning.
Our earthly condition of limited means is what economists have in mind when they speak of scarcity. Where did those public funds in the table come from? They represent real resources taken from the private sector – either directly, through forms of taxation, of indirectly, through government debt and inflation of the money supply. In the end it is always resources – means towards ends - that get diverted.
The 25 fold increase in public contributions between 1929 and 1935 constitutes an expropriation of the equivalent in economic goods and services from what would have been a combination of capital and consumption in the private sector. (Consumption here understood as including the resources the private sector could devote to relief assistance). What could one expect other than a dramatic reverse in private sector contributions to relief in the face of this boost to the scarcity it faces?
“Now come,” some might say, ignoring the unseen consequences of a 25 fold increase in government expenditure, “private funds to help the poor would never have come near the levels reached by public funds.”
To which the proper response is: Precisely. The relief delivered by private sector contributors would have been much more efficient, providing relief where it really mattered and facilitating a speedy return to financial independence through combinations of social pressure and caring assistance. And it wouldn’t have undermined the capital structure of the economy, which had to provide the means that people could divert to relief as necessary.
Private sector contributors could hardly have been as counter-productive as were the Rooseveldt administration, destroying crops and slaughtering pigs to correct “unbalanced production.”
And here we are in South Africa. Here, where government spending, including on welfare, is sky-high, and where the capital structure of the economy is being impaired in a way that undermines the very stream of goods and services that should have been available to caring people to assist the needy and get them back on their feet.
