Obama's Volunteer Initiative Is Economically Bankrupt

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Responding to the almost monolithically positive coverage of the Obama administration by the national press, Phil Bronstein, editor-at-large for the Hearst Newspapers, observed recently that the Administration and the reporters covering it should "get a room." And while USA Today's account of Barack and Michelle Obama's "United We Serve" initiative appeared after Bronstein's quip, its coverage of same serves as yet another example of a media apparently unwilling to show even the remotest amount of skepticism about an Administration and program that deserve a great deal of it.

As USA Today's Andrea Stone wrote, "First Lady Michelle Obama will launch a summer of service" that the "White House hopes will help the economy recover through the work of individuals." This is not a joke, and this is also not a parody of slavish White House reportage from the Onion. Stone was serious.

But back to reality, and taking nothing away from either charitable work or volunteerism, neither has anything to do with economic growth. If anything, for drawing potential workers away from the wage economy, volunteerism detracts from economic activity.

In truth, volunteerism is the often happy result of an otherwise strong economy. If this is doubted, readers should simply check with the Junior League to find out how many chapters it has in Bangladesh, or on the continent of Africa. It's only in rich countries that individuals even have time to consider doing any kind of substantial work not meant to clothe and feed them. Ladies Who Lunch (LWLs) get to engage in often fulfilling charitable pursuits, but due to staggering levels of poverty, there aren't many LWLs in Kinshasa (Zaire), Freetown (Sierra Leone) or Dhaka (Bangladesh).

According to USA Today, the Obama administration's United We Serve "comes as new graduates face an unwelcoming economy" and it "emphasizes working in areas that Obama sees as keys to economic recovery: energy, education, health care and places hit hardest by the economy." Claire Gaudiani, philanthropy historian at NYU, chimed in that United We Serve is "a brilliant stroke" for recruiting all of us "to be a part of the economic recovery."

What neither the Administration nor Gaudiani acknowledge is that United We Serve will constitute yet another substantial weight pushing down on our economic health. That's firstly the case because it will cost money to implement. And when governments spend money, they are drawing on capital from the private sector that would otherwise be accessed by existing and future businesses looking to grow. As Schumpeter once observed, without capital entrepreneurs cannot be entrepreneurs.

Secondly, even if we assume a modest stipend for the many compassionate college grads that choose volunteerism over the private sector, it's a fair guess that their parents will have to draw on their own savings so that their children can go off and save the world. In that case, more capital will be consumed rather than be provided to businesses eager to produce real wealth.

Thirdly, and most crushing for the economy is that workers, and in particular those with degrees much coveted by private employers, will detract from economic growth due to their lack of participation. That is so because as human beings we are capital. And when we're not producing thanks to subsidies that allow us not to, we're also not contributing to economic growth.

Absent governmental and parental subsidies that enable the youth of this country to avoid the private sector, businesses looking to expand on the relative cheap would have access to a great deal of skilled labor that would be dynamite for their health. Instead, we're told by a fawning press that initiatives meant to draw individuals away from economy-enhancing opportunities will somehow stimulate that same economy.

As for the notion that Barack Obama himself sees specific forms of volunteerism as economically stimulative, he may well be right, but the only way to confirm his assumptions would be for his administration to get out of the way so that the energy, education and health care industries can employ college graduates at a prevailing wage not distorted by government subsidy. Absent the application of profit and loss to any concept, there's really no way of knowing if it facilitates growth or is merely another sink of wealth.

More broadly, let's assume a scenario whereby Steve Jobs, Bill Gates and Jeff Bezos had chosen volunteerism over industry. No doubt Jobs' charisma would have been a huge recruiting tool alongside Gates's technical skills and Bezos's organizational brilliance. But had they chosen the allegedly compassionate route of volunteerism, not only would Apple, Microsoft and Amazon likely not exist, it's also true that many lacking the skills of all three would never have achieved the personal and professional satisfaction that has come from working for them.

And lest we forget, Gates is at least for now the world's greatest philanthropist, while Jobs and Bezos if they haven't done so already, will likely both leave a substantial portion of their wealth to charitable concepts. Productive activity that boosts economic growth is what fosters charity and volunteerism, not the opposite.

So when the Obama administration's volunteer initiative is considered, it should be hoped that college graduates and a prostrate press greet this latest idea with a healthy bit of skepticism. Charity and volunteer work are wonderful things, but to assume that they drive economic growth is to put the proverbial cart before the horse.

Instead, it should be hoped that the suitably fearful college graduates of 2009 steer their skills away from volunteerism in favor of the kind of work which might one day enable them to be charitable benefactors. Indeed, capitalistic endeavors are what allow us to be compassionate, and absent industry, we'll soon find there's very little charity.

John Tamny is editor of RealClearMarkets, Political Economy editor at Forbes, a Senior Fellow in Economics at Reason Foundation, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). He's the author of Who Needs the Fed?: What Taylor Swift, Uber and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central Bank (Encounter Books, 2016), along with Popular Economics: What the Rolling Stones, Downton Abbey, and LeBron James Can Teach You About Economics (Regnery, 2015). 

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