This week, members of the largest Christian denomination in Northern Ireland are disagreeing about the role of capitalism in their lives as they debate the collapse of their Presbyterian Mutual Society (PMS). The PMS was set up to help churches borrow and to help members save, by offering a higher rate of return than normal banks. The society collapsed last year when a UK Government announcement guaranteeing the savings in mainstream bank accounts prompted a run on the PMS, with everyone wanting their money back at the same time.
Now, Presbyterians like Peter Morrow are questioning the idea that the Church should be running investments for its members, and arguing that church members should just be generous with their money, not try to invest it to help.
“In order to help other churches we didn’t need a PMS, just generosity.”
I replied.
Peter Morrow, I’m sure you know by now that I disagree with you (though I respect your position immensely). I think it displays a counterproductive approach to economics. It’s counterproductive because you will generate more money for ‘the poor’ (eg.) if the method by which you get it includes a kickback, a reward, for the people giving it. People in business know this, and in Wall Street, and in many secular charities. Why do you think the raffle works so well? Because people are playing with the dual purposes of helping a charity while hoping to win whatever is being raffled.
A local charity for the poor in the city I live in runs a ‘Harley Dinner’. They sell 100 tickets to the dinner for $275 each. They buy a Harley Davidson motorcycle at a charity discount of about $7500. Then they draw losing tickets all through the dinner until there is only one ticket – the winner – at the end of the night, who rides home on the Harley. They make a little less than $20,000 for a single night’s work. How long do you think it would take them to raise that amount by rattling a can or accepting a ‘freewill offering’? They understand that the most productive charity derives from programs which offer an incentive.
[Another contributor to the debate] says that many of his clients invested in the PMS for the dual reasons of wanting to help the church while standing to earn interest (a better return than the bank) for the money. I say that is – in principle – the RIGHT way to give, that that is being a GOOD steward of your money.
You may say that it’s a shame people can’t just give to give, and that they need an incentive based upon greed is a real pity. I couldn’t disagree more. What you know as ‘greed’ I know as a very beneficial self interest. Let’s not forget: the more people who are sufficiently self interested to motivate themselves to provide for themselves and their families, the less charity is needed in the first place. Bill Gates gives more than me, because he created more wealth for himself than I did. That’s a damned important lesson for those who care about poverty.
Christians who care about poverty should be thanking God for their minds, maximizing the ability he’s given them to create wealth for themselves and have enough to give away in the first place.