4. COLLECTIVE GIFTS AND PUBLIC REDISTRIBUTION AND TRANSFERS. A liberty-based social ethic implies that legitimately held rights and property can be legitimately transferred by gift. The most common character of benevolence is that a single person is ready to pay something in order for someone in need to receive one dollar more, but farless than one dollar.
However, it is commonly the case that several persons, often many, have a disposition of this type towards the needy individual. If the sum of what people are ready to pay for this specific person to receive one dollar more exceeds one dollar, a set of such transfers will be made by free agreement. The welfare of the person helped is a public good for the givers, and thissituation is a special case of the public good questions. However, this category of public good is bound to be in a particularly unfavorable situation for spontaneous realization. Firstly, it is a case where exclusion is impossible for a purely logical reason since consuming the public good is knowing the needy person’s situation, so that exclusion is hiding it or keeping another in ignorance ofit, and then the potential giver is no longer ready to give (he does not give to know but to improve, if he does not know he does not give to improve, but if he knows he is not excluded). Secondly, the number and dispersion of co-givers and potential receivers creates information and transaction difficulties which impair direct agreements (this aspect, though, contrary to the ‘free rider’ aspect,could partially be met by private charitable institutions, which would however lend to be in undersupply because they cannot be profit-seeking). These transfers are thus an essential task of the public sector. As in the general public good case, each payer must be forced to pay the corresponding optimal taxes although he prefers the whole system of these redistributive transfers to its absence.
Thedetermination of these transfers uses the whole gamut of means described in the general public good case. In addition, an important source of global information about them consists of analysing the reasons which motivate the co-givers, since these are often cultural and held in common. Beyond the basic relief of wretchedness, some of these reasons are more subtle, yet very important andwidespread.
One of them is ‘fundamental insurance’. Social insurance against basic life contingences (disease old age, cost of children, unemployment, etc) presently often use as much or more money than public budgets not counting them. They are mutual insurance schemes which a priori can be private and frequently are. The basic reason why they are often public involves the idea of ‘fundamentalinsurance’. This is a putative mutual insurance against causes of hardship which happened before an effective insurance could be taken out by the person, such as proneness to disease, genetic disposition, or poor education or motivation resulting in low income in the labour market, etc. the idea is that people who happen to have such ‘bad look’ or ‘misfortunes’ must be helped by the more ‘lucky’ or‘fortunate’ ones – in addition to the insurance consequences of occurrences which happen later. Since insurance against these previous events (allocation of natural abilities, genes or education) cannot be effectively taken out by the existing adults, this market is missing and the public sector must supplement it.
A number of insurance markets for future contingencies are also missing for the more standarddifficulties of envisioning and defining the risk (this often happens, for instance, for economic downturns and unemployment or for mayor natural catastrophies). This provides a reason for a second category of ‘implicit insurances’ achieved by public transfers to people incurring the specific misfortune.
More generally, transfers to people in need, for reasons of helping, solidarity or...