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Friday, September 30, 2005


Government Subsidizing Faith.

I came across this article and couldn’t believe what I was reading; it seemed that government wants to subsidize religious organizations.

This is what I read:
President George W. Bush's Faith-Based and Community Initiative represents a fresh start and bold new approach to government's role in helping those in need. Too often the government has ignored or impeded the efforts of faith-based and community organizations. Their compassionate efforts to improve their communities have been needlessly and improperly inhibited by bureaucratic red tape and restrictions placed on funding.
The White House Office and the Centers for the Faith-Based and Community Initiative -- located in ten Federal agencies -- are working to support the essential work of these important organizations. Their goal is to make sure that grassroots leaders can compete on an equal footing for federal dollars, receive greater private support, and face fewer bureaucratic barriers.
The Office focuses its efforts on the following populations:
At-risk youth Ex-offenders Homeless Hungry Substance abusers Those with HIV/AIDS Welfare-to-work families

I saw that the article had the words "government role" in it and I became skeptical. I had to ask myself what the article meant by faith based. I am assuming it means religious based. The first thing that came to my mind was the question; are religious organizations a public good of some sort? The answer wasn’t hard to find. Most religions have a gathering place that has doors, one can not be part of the faith if the person doesn’t believe in the religion, and most religious organizations are advertising themselves. This proves to me that the religions are both excludable and rival, which means faith, churches, and religions can not be public goods. Therefor, there must be some sort of positive externality the government is trying to fix with a subsidy. I can see how people could believe that the positive externality is the services the religious organizations provide to the at risk youth, ex- offenders, homeless, hungry, substance abusers, people with HIV/AIDS, and welfare-to-work families. These services could be construed as positive externality because the organization provides religious services to the community and the community gives donations to the religious organizations. The church then takes part of that money to help the people in need; then the people in need get their life back together and make a positive contribution to the community. I think this would be a case of externality abuse because the people donating the money know that the money is going to be used for helping the needy. Furthermore, the religious organizations makes a conscious decision to help the people in need in hopes that the people will turn their lives around and become productive members who will donate more money to the them to continue the trend. This leads me to believe that there is no positive externality because it seems that the marginal social benefit is equal to the marginal personal benefit.
I can’t help but wonder what will happen if the government subsidizes the religious organizations. In retrospect, if the government subsidizes religious organizations then the people will move from a weak free rider model to a strong free rider model. Churches and religious organizations are helping the needy, but if more money is being provided to those same people, what is the incentive for them to turn there lives around? There is none. The people receiving the help will continue to take money, food, and whatever they can get.
In conclusion, the government should not subsidize the churches and religious organizations. The churches/religious organizations do not provide a public good, there are no positive externalities associated with the good, and the subsidy may encourage free riders.

I think your post is premised on an inaccurate understanding of the government's program. The program is not intended to be a subsidy to a church.

Rather, government already has programs that give grants to nonprofit organizations to be the means of getting government's help to people in communities who are in need. The "faith based initiative" is really proposing to consider a church like any other nonprofit organization that might be ameans of getting government's help to people in need in our communities.

I think that your analysis of market failure is in the ballpark. But, note that the same analysis would apply to any nonprofit organization, whether religious or secular. The program at issue is really simply suggesting that using churches to distribute government help is just like any other nonprofit organization being used by government to distribute help. Your analysis would apply to any type of nonprofit organization and would suggest there is no efficiency or market failure basis for grants to any nonprofit that helps those in need.
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