 As as good hosts, we've saved the best for last So it's it's my really my great pleasure to introduce my great friend Your Gido Hulsman who it will be our Lou Church Morial Lecturer Professor Giga Hulsman Even though I I gave him advice that he did not take has decided to speak to us on the Topic which is a great topic the political economy of gratuitousness this lecture is sponsored by the Lou Church Foundation So help me welcome. Dr. Hulsman. Thank you ladies and gentlemen for this warm welcome Thank you Joe very much. It's very very sweet to have said that this is the best. I hope I will not deceive you Sometimes that that's that's a tramp right you get such praise at the beginning and it can only become worse thereafter So my thanks go to the Ludwig von Mises Institute to Lou Rockwell to Jeff Deist to Joseph Salerno to this for this invitation, which I am very happy about I'm very honored I'm very happy and grateful also for the Lou Church Foundation to have sponsored my my trip to Auburn and this this lecture that they have given me an opportunity to well Get a sidetrack Another sidetrack for my for my main research, which is focused on on other topics But so they invited me to give a Lou Church lecture on economics and religion. So I got sidetracked again, but being a Person who tries to be a good faithful Catholic. So I always take these things as a Sign of God's is a finger of God pointing there and directing me in ways that I did maybe not quite anticipate and Bringing me on to things that might be useful also for my other research And I think I thought one or two things that might be useful indeed for the other things that I'm doing So thanks be to God praise be to God in his encyclical letter Caritas in veritate published in 2009 so after the economic crisis of 2008 Paul Benedict the 16th draws attention to what he calls the principle of gratuitousness He argues that this principle manifests itself in the divine gifts of love and truth without which human life is strictly impossible But the holy father suggests that the principle of gratuitousness Also determines economic life if only it is allowed to develop unhampered The economic analysis underpinning Caritas in veritate is rather rudimentary and its discussion of the nature and scope of gratuitousness in economic life is therefore sketchy and vague in the present contribution. I will Try to fill in some of the gaps by outlining a more systematic approach to the political economy of gratuitousness My paper my talk is organized as follows and I cannot present everything that is in the paper So the paper is really double of what I'm I will be presenting here, but it will be eventually available on the internet I will start off by providing some background on my study by a brief discussion of Caritas in veritate Then I will discuss the definition of gratuitousness before analyzing its causes I'm starting from the distinction between intentional and unintentional gratuitousness I will first make some short observations on the economics of gifts Before dealing in more detail with spontaneous gratuitousness. I Will complement this analysis by discussion of the possible transformation of gratuitous goods into paid goods and then finished by examining the impact of government interventions The principle of gratuitousness does not only concern eternal and supreme goods such as love hope and faith and truth But also economic goods economic life, too is in many respects based on gratuitous services and In economies only then truly flourishing and truly human if it does not hamper this gratuitousness and allows it to fully unfold This is something that we will understand in more detail as I go along with my talk Caritas in veritate unfolds this theme in some detail The message is strong and clear as far as the spiritual dimension of the principle of gratuitousness is concerned It sees us to be quite convincing, but still remains intriguing and suggestive As soon as the holy father turns to its application in the material world and especially in the economic world Infused by scarcity. I shall resist the temptation to discuss and refute the Pope as far as purely economic questions are concerned While such an attempt might be entertaining to some people in the audience It would lead us to miss the basic point of Caritas in veritate The basic point is to call is a call for reflection and for action in regard to the principle of gratuitousness There are many open questions around the manifestations of this principle in the material world What is the precise nature of it? What are its forms? What are its causes and consequences? What is its scope today? What should it be? Etc. On these questions the Pope has weighed in with the authority of his office. He has opened a debate But he has not closed it. He has called for action yet Without providing a blueprint. He has posed a challenge to the scientific community and to practical people Now it is a fact that the analysis of gratuitousness has almost completely been neglected in contemporary economic science Caritas in veritate provides a welcome opportunity to close this analytical gap Rather than explaining or criticizing the encyclical I will therefore build on some of its statements that are particularly intriguing in which promise to enrich Economic analysis because they can be fruitfully become a combined with certain elements of economic analysis That are already proven their fruitfulness in other areas in particular. I intend to expand on three important questions First the definition of gratuitousness Second the spontaneous production of gratuitous economic goods and third the role of government interventions So these are three questions that in my eyes have been most neglected in the current literature In all Jay at the University of Angers. I had a doctoral student working on these questions So his sister Catherine Bidolo and she graduated last year with a very nice Dissertation on the economics of great gratuitousness. So what I'm doing today is a little bit in compliment to what she did in her dissertation Which unfortunately was written in French those words for the French speakers here French readers Would be certainly possible to get your copy So to start off let me revisit the definition of our subject the adjective gratuitous as two related meanings in the English language One being wider in the other more narrow According to the wider meaning gratuitous means uncalled for it denotes something that somebody does or obtains or otherwise Experiences without any good reason The second meaning concerns the more narrow case of gratuitous goods These goods are not a compensation or payment price reward, etc For something that the beneficiary is or has done they come Without any apparent good reason they come for free. They are gratis The gratuitousness that Benedict the 16th discusses in characters in fairy-tale Concerns exclusively the second narrow meaning it concerns the gratuitousness of goods and as Such as the non-economic spiritual goods of truth and love and also the gratuitousness of economic goods Economists who are usually absorbed by the analysis of economic goods However, it is important to keep in mind the wider meaning of gratuitousness There are not only gratuitous goods, but also gratuitous bats or gratuitous evils Such as in gratuitous violence or gratuitous insults or gratuitous suffering In my paper, I developed this dark side of gratuitousness, but in my talk. I need to focus on the good side of gratuitousness Because I don't have enough time Before I enter the economic analysis, there is another general consideration that marries our attention We have noticed that according to the dictionary definitions of the word being gratuitous means having no good reason So let us highlight the word good in this sentence It is not the case that the the gratuitous act has no reason or not no cause at all. It has no good reason Indeed, there's nothing in heaven and on earth without a cause All things and all living creatures have causes All choices in all human actions have causes Nothing is or could be gratuitous in the sense that it is without cause Refer you here to the opening Sentences in Mengar's principles of economics where he highlights precisely this point So then what do we make of the expression good reason? What does it mean that we do a receive or experience something without a good reason? We propose the following answer which we believe to be an in conformity with the received meaning of the word gratuitous There is a good reason to do or to receive something Whenever we are morally obliged to or receive to do or to receive this something Similarly, there is a good reason to do or to receive something When we are morally entitled to do or to receive this something Accordingly, then a gratuitous economic good Or gratuitous economic good deed would be an action that is carried out without obligation or entitlement A gratuitous benefit would be one that we receive without entitlement respectively without obligation for the benefactors etc gratuitousness in this sense is not removed from inexorable causal nexus all things and All acts have causes, but they do not always have good reasons and in this sense may not be gratuitous Love and truth are gratuitous for us human beings indeed God The source of love and truth is not obliged to provide them and we the beneficiaries are not entitled to receive them A birthday present from a distant acquaintance is a gratuitous economic good The receiver is not entitled and the giver is not obliged The victim of a mugger is subject to gratuitous violence He is not obliged to suffer this violence nor is the perpetrator entitled to inflict it Building on this definition. Let us now turn to analyze how gratuitous economic goods come into being At the very onset of our analysis, we need to introduce a distinction of fundamental importance namely the distinction between intentional and unintentional effects of human action It is part of everyday experience that economic goods can be gratuitously provided through deliberate or intentional acts such goods are known as gifts The intentional form of gratuitousness is widely practiced And there is actually an entire industry of charitable organizations be their private or public that produce gifts systematically However, economic goods may also be put gratuitous Gratuitously received even though nobody has intended to provide them They can be the result of human action, but not of human design in Ferguson's felicitous phrase The second form of gratuitousness may be called spontaneous gratuitousness as far as we can see it has been neglected in the economic literature and also in the theological literature of course and thus it is this form that merits the special attention of today's economists In what follows we shall make only a few remarks on the economics of gifts These remarks will serve us mainly as a starting point to analyze spontaneous gratuitousness a gift is an unconditional transfer of an economic good from one person the donor to another person the beneficiary in The case of a service the donor agrees to provide the service to the beneficiary and the letter accepts to receive it as a gift in The case of commodity the donor agrees to abandon his property rights to it in favor of the beneficiary and the letter accepts to receive it as a gift Notice that a gift is not a one-sided affair. It is necessary that both sides agree to it If both sides agree then the beneficiary benefits But the donor benefits too This seems to be a matter of cause as far as the beneficiary is concerned after all he receives an economic good without payment However, it is important not to fall in what we might call the materialistic trap in interpreting the gift The beneficiary benefits not because someone else is willing to gratuitously provide an economic good to him He benefits because he prefers to receive this good rather than to forego it It is well known that gifts can be rejected and that some gifts should be rejected It is not because the Greeks offered their wooden horse on the beach to the Trojans that the letter was somehow Impaled or obliged to accept it the Trojans took it because they believed to be better off Owing owning the horse wrongly as it turned out If Smith gives a five dollar bill to a beggar Then he thereby demonstrates that he is Smith prefers that the beggar rather than Smith himself own the bank note Now this sounds as though Smith were somehow interested in making the gift Which in turn would insinuate that the gift is not really gratuitous because Smith himself stands to benefit from it Well in a wider sense Smith is interested But that does not perceive make the gift any less gratuitous Smith does benefit from the gift making. This is why he agrees to make the gift To non-economists this assertion might sound shocking, but it should not There is no human action that does not employ some means to attain some higher valued end The reason why man acts is always the desire to improve some state of affairs That is to bring about a state of affairs that he prefers to the state of affairs that would have existed without his action There is no exception to this rule However, this does not imply a contradiction with Smith's act He was not obliged to give the bill and the beggar was not entitled Therefore his act was gratuitous in the full sense of the world of the word Let us now turn to the spontaneous production of gratuitous goods in a market economy By definition, we have here an anti-poor to the gift economy as far as the intentions of human action are concerned A market economy is an economy based on exchange In an exchange per se, there is no intention to gratuitously provide economic goods to other people The intention is to make other people pay An exchange is a contractual conditional abandonment of an economic good Such a contract obliges the buyer and the seller and this mutual obligation is not a mere by-product But the very purpose of the contract By definition, therefore the parties to an exchange do not intend to provide any economic good gratuitously Now from the fact that the market participants in a pure exchange do not intend to provide any economic good Gratuitously gratuitously to other people. It does not follow that no such provision occurs without being intended or even that When the market participants intend not to provide any goods gratuitously Economists are very familiar with this phenomenon and they stress its importance for public policy discussions In microeconomic textbooks such unintended consequences of human action are called external positive effects However, the standard view of these effects is deficient in two respects First it underestimates their pervasiveness and second It considers their presence to be some sort of market failure We will address these shortcomings If I have some time In what follows I shall argue that a market economy is infused with various forms of spontaneous production of gratuitous goods Production that is not always being intended Often ignored and sometimes not desired Let us walk through a few examples to illustrate our point Exhibit a of our argument our chief witness so to say is the most basic element of The market economy it is exchange itself Economists explain to their first-year students that on each consumer goods market there tends to be a consumer surplus and a producer surplus Many if not most consumers do not pay quite as much for the good in question as they would be ready to pay if they had to and Many if not most producers obtain a higher payment for the goods they sell than the payment for which they would sell them if they had to Economists of the Austrian school go even one step further They stress that this phenomenon is not just a tendency and that it does not only concern consumer goods It is a universal feature of all and any exchange if Smith exchanges his apple for Brown's pair, then this means that Smith Prefers the pair to the apple whereas Brown refers the apple to the pair Both sides gain in this deal the apple pair exchange does not manifest that the apple has the same personal value as the pair It manifests a double personal value difference The price that the buyer pays is for him less valuable than the good that he receives First difference and the two goods have different personal values for each of the two partners to the exchange second difference The economic points point of view nicely complements the moral and juridical points of view in the study of gratuitousness The eyes of the lawyer allow us to see the bonds of rights and obligations between the buyer and a seller The eyes of the economist allow us to see the gratuitous value that both the buyer in the seller Receive in excess of what is due to them by virtue of rights and obligations Each one receives value in excess of the value he gives and the price he pays is the sufficient and just to quit him of his obligation The inner logic of the market exchange is not as we can read in Caritas in paritate the mere logic of the exchange of equivalence But the logic of double gratuitousness Both sides win in each exchange. There is an element of gratuitousness benefiting both partners Another important example of spontaneous gratuitousness are the consequences that follow from an increase of the demand for money Or as it is known in familiar language from an increase in money hoarding Such an increase entails a tendency for the price level to sink or what is the same thing? A tendency for the purchasing power of all money units to rise Hence thanks to the behavior of the money hoarders all other market participants who do not hoard but spend their money Can buy more goods than they could otherwise have bought Let us illustrate this point with an analogy Suppose Smith stands in a long line at a theater ticket box now some people standing before him stepped out of the line They just changed their minds and no longer wish to see the show Smith then gets to buy his tickets faster It is also possible that he gets some tickets at all whereas the show might otherwise have been sold out before even made it to the box office Clearly Smith receives a benefit through the abstention of these other people. It is a gratuitous benefit because these others were not obliged to step out of the line and He had no right to ask them for the service It is a spontaneous gratuitousness because the benefit obtains Independent of whether these others or Smith himself realized the implications of their actions In just the same way the additional economic goods that some market participants can buy Thanks to the increased money hoarding of other market participants are being gratuitously provided to these beneficiaries For the hoarders there was no obligation to hoard more than before and the beneficiaries had no right to ask the hoarders to hoard more These benefits were obtained spontaneously because they did not depend on the intentions of the money hoarders Whether they knew it or not and whether they liked it or not. They are hoarding entailed gratuitous benefits for the other market participants Those others in their turn are not likely to notice the fact that they are the beneficiaries of such gratuitousness After all they pay for the goods that they buy they might even ask they might never ask themselves Why they had to pay higher prices before they might never ask themselves why they pay lower prices now If they raised such questions if they had looked at the world with the eyes of an economist They would understand that they received a gratuitous service from the money hoarders in the same way as Smith Benefitted from those who stepped out of the line in front of him The foregoing consideration can be expanded and generalized by focusing on the nature of competition In a famous essay on the meaning of competition Friedrich August von Hayek argued that competition should not be defined as a state of affairs Much less than as a state of perfection, but as a process of piecemeal improvements Hayek criticized the standard neoclassical model of pure and perfect competition The model depicts a situation of general equilibrium a situation in which no human error occurs And where all prices are equal to their costs of production because all goods are perfectly divisible and all market Participants are infinitely small as compared to the overall market It is obvious that this model does not depict any real-world economy But it has been widely assumed that it represents an idealized image of competition Hayek disagreed He argued that the model misses the very nature of what it seeks to explain Competition is not a state of affairs or not a state of optimal affairs. It is a process of improvements Firms in a market economy try to provide economic goods at better terms than their competitors They try to sell at lower prices. They try to provide goods of better quality They try to provide faster service better customer service faster delivery, etc This perspective on the nature of competition is also relevant for the economics of gratuitousness by definition competitive behavior in Hayek sense entails additional benefits For other market participants just as in the case of money hoarding that we discussed before These benefits are gratuitous because in the case envisioned by Hayek There is no obligation for individuals or firms to improve anything whatsoever and Their customers do not have any right to claim such improvements Moreover, these benefits are provided spontaneously because they do not strictly speaking depend on the intentions of the firms to benefit their customers Maybe this last assertion calls for a clarification Is it not rather obvious that today virtually all firms are acutely aware of the fact that their revenue depends on customer satisfaction in Response to this objection we should stress the distinction between ultimate and instrumental goals The fact that firms are conscious of the importance of customer satisfaction Does not mean that their ultimate objective is to benefit the customer The ultimate objective as rule is to increase the firm's bottom line Customer satisfaction enters the picture from an instrumentalist perspective. It is a means or a side constraint to obtain profits Thus we can maintain our conclusion the competitive market process provides spontaneous gratuitous benefits to the market participants It is true that the letter pay for all the goods that the firm sell to them The point is that the relation between what they have to pay and what they receive Changes in their favor Thanks to competition they may buy ever more and ever better products at ever lower prices Their real income and their real wealth increase Even though their monetary income and their monetary wealth may remain unchanged These improvements are obtained through the activities of people who are not necessarily driven by the ultimate desire to improve the lot of their fellow human beings So in conclusion of this discussion of spontaneous production, let me emphasize the pervasiveness of this phenomenon Even though we did not try to be comprehensive the examples given show that gratuitous goods are sort of say Built into the DNA of a market economy Their appearance is not limited to a few cases in which market activity creates positive external effects by deviating from the model of pure and perfect competition They are an essential feature of all exchanges and they are at the heart of economic growth In fact, the market economy can be understood as one great organism geared toward the production of gratuitous services and ever more gratuitous services Thus we come to a deeper understanding of the intuition of Benedict the 16th who contended now a quote that in commercial relationships the principle of gratuitousness and the logic of gift as an expression of fraternity Can and must find their place within normal economic activity As we have seen the spontaneous production of economic goods is a principle of the economic of the market economy It does not need to find its place. It has already got its place It is there for everybody with eyes to see but sometimes you need to put on The good glasses of the economies So admittedly it is helpful to have some understanding to see this right to some understanding of economics to see this spontaneous gratuitousness comes as a surplus that is included as a component in exchange relations Because it is not intended. It cannot be grasped by the categories of means and ends It falls outside of the intentional structure of human action This consideration to resonates with Caritas in veritate where we read quote Gratuitousness is present in our lives in many different forms which often go unrecognized Because of a purely consumerist and utilitarian view of life unquote That's exactly right, but you can fully understand this statement only if you put on the economics classes now We need to bring into our purview one complication Namely the fact that not all gifts are genuine not all gratuitous list is genuine gratuitousness There are all kinds of false gifts that have just the outer appearance of genuine ones In fact a genuine gift has three essential characteristics First the donor is the legitimate owner of the gift Second the donor intends to make a gift. That is he does not intend Intended to be a compensation for a good he has received or hopes to receive from the beneficiary Third the beneficiary must agree to receive the gift As soon as one of these conditions is not met the gift in question is a pseudo gift Three types of such pseudo gifts may be distinguished according to the condition that is violated If the donor is not the legitimate owner, then the good in question is loot and Rather than of gift-making one should speak here of loot sharing If the donor is not does not intend to make a gift but rather expects his action to be compensated by a reciprocal service of the beneficiary Then the good in question is an ordinary payment that is merely disguised That's one might speak of a hidden price in this case Finally if the beneficiary does not desire to receive the gift then the good in question is for him no good at all but rather a nuisance Hidden prices are fairly widespread in commerce. One example is the sales price after Christmas The seller gives the impression that he reduces the price in order to make a particularly interesting offer Whereas in his inner for he might just try to sell the good at the highest prices That are realizable under the new conditions that is being out of the Christmas season In this and in all similar cases the purported gift is part and parcel of ordinary competitive market behavior It is competitive pricing designed to increase the entrepreneurs bottom line Now this does not mean that in such commercial offers. There is no gratuitous component at all As we have pointed out the competitive process invariably involves gratuitous benefits The customer benefiting from a sales price is not just benefiting in his imagination He might be credulous in thinking that the seller wishes to hand out gifts, but he is not hallucinating The price reduction is a real benefit Not just a figment of his imagination and as we have explained it is for him a gratuitous benefit even though not a gift How about spontaneous gratuitousness is it possible to have this in the unintended gratuitousness be rewarded to Clearly this case is more complicated than the one of gifts that are being morphed into hidden prices In the case of spontaneous gratuitousness the central question revolves around the costs of concentrating the benefits spontaneous gratuitousness can be transformed into a paid economic good If it is possible for its producer to select the beneficiaries at a reasonable cost Respectively to exclude the non beneficiaries at a reasonable cost While the internalization of spontaneous gratuitousness is relatively easy in the case of personal services In most other cases it is not The reason is that the costs of concentrating the benefits often turn out to be prohibitively high For example in the case of technological progress without patent laws Technological knowledge once acquired can be applied gratuitously and without limitation because knowledge as such is not scarce That's the whole IP law debate Where there are no patent laws therefore technological breakthroughs tend to be quickly emulated at virtually no cost The producers using the new technology cannot charge their clients for the benefits resulting from the technology because there are other competitors who have access to the same technology and Who do not have to pay for it either? It is therefore impossible to concentrate the benefits of the technological advance on just some market participants Who would then be enticed to remunerate this advantage? In still other cases it seems to be completely out of the question to internalize spontaneous gratuitousness because it would be impossible to select the beneficiaries at reasonable cost One example is again the case of the benefits springing from money hoarding Even if every half of the population Horts more money than before right so we know that all prices will tend to decline But how much prices would tend to decline depend on the particular circumstances of time a place each price is confronted to a different Demand and supply schedules to different elasticities and so on so some prices will decline more and others others less We cannot know in advance nobody can know in advance who will benefit to which extent and Therefore, it's impossible to make the beneficiaries pay however If the gratuitous benefits are very substantial as in the case of money hoarding then there are of course very strong incentives to internalize them at least in indirect ways The spontaneous gratuitousness resulting from money hoarding is a case on point While it would be impossible for a saver to find a way to have other people remunerate him for his money hoarding He can be rewarded if he chooses for his savings a financial form Indeed the financial industry can be understood as a systematic and organized effort To internalize the gratuitousness that spontaneously results from monetary savings Banks insurance companies and investment funds use the cash savings of customer a to finance the ventures of customer b That's the infinitely many but infinitely small spontaneous benefits which would have resulted from cash hoarding for a great number of market participants can be Concentrated on a few beneficiaries and are therefore liable to be rewarded Another example for the indirect internalization of spontaneous gratuitousness is the institution of patent laws Which prevent the technological progress be emulated immediately the patent holder has a temporary Monopoly on the new knowledge which allows him to have his customers remunerate that technology Hence what would have been gratuitous without a patent law is Internalized into the revenue of the patent holder to complete this analysis in a final step We now need to take account of the impact of government interventions Again, we should begin with a definition a Government intervention is a partial violation of private property rights The government applies such violence or threatens to apply it in order to induce its subjects to use their property differently and they would have otherwise used it Interventions of this sort allow the government to finance its own spending and to channel the spending of the subjects The government can tax the subjects and then spend the tax receipts on the welfare state or on the welfare state Or it can order the subjects to spend their money in a certain way For example on what the government believes to be healthy food on health insurance on car insurance, etc, etc To which extent do government interventions produce gratuitous economic goods to which extent do they produce gratuitous evil What is their impact on the production of gratuitous economic goods by the members of society? These are the questions that we shall now address in turn The first observation that economists typically make about government spending is that it does not add to the resources available in society All the money that the government spends has been taken directly or indirectly from the citizens The government is not some sort of center clause Now as far as gratuitousness is concerned the crucial fact is that the government obtains all these resources without consent To be sure we might say that the population tolerates being robbed and There might be more or less good reasons for such toleration, but the plain fact is that the government takes without consent This implies that whatever the government gives or spends cannot be regarded as a genuine gift This is obvious as far as the remuneration of the so-called civil service is concerned But it also holds true for spending related to the so-called welfare state Welfare checks are at best a share of the loot But there are good reasons to doubt that they are handed out without any thought of compensation in fact welfare checks are most likely hidden prices designed to bribe the population into complacency and apathy face-to-face with an ever-growing state so hidden prices and shared loot Not gifts Let us generalize this consideration and see how government interventions by their very nature destroy gratuitous economic goods From the anarcho-capitalistic point of view Government intervention is a gratuitous evil the government violates property rights Even though it is obliged as all other human beings to respect such rights By contrast Ludwig van Mises and many other scholars hold that an apparatus of compulsion and repression Is the foundation of society they argue that the state is a minor evil even In particular as compared to anarchy in other words. It is a necessary evil Now if for the sake of argument we adopt this point of view We cannot fail to notice that these writers agree that government action is intrinsically bad and is justified by extrinsic results They admit that government intervention per se is evil And so they justified only by the greater good that comes out of this From Mises point of view governments act under the moral obligations to preserve civilization Therefore their intervention is not a gratuitous evil And moreover it is not in fact evil at all if you consideration is given to its intrinsic and extrinsic features But notice too that from this very perspective government activities could by definition never produce gratuitous goods Because all government actions take place would take place in this case in fulfillment of the moral obligation to preserve Societies if you just honor your moral obligation, you are not providing anything in excess of the moral obligation. So it is not gratuitous Could one not argue that the government is bound to the other citizens by a social contract a la Russo In this case the government could conceivably at least provide services in excess of its contractual obligations And thus become a producer of gratuitous goods But this arguments fails because Russo's social contract is a pseudo contract It fails to meet the essential requirements of a genuine contract specification of the goods that are exchanged and voluntary consent and Indeed governments all over the world Refuse to be bound by any genuine contractual agreement with their citizens you can read this in all tax codes They insist that the payment of taxes Does not create any specific claims on the state nor any specific obligations on his part and Any refusal to make such payments is evidently answered by compulsion and repression In short, there is no genuine contract between the government and the population and as a consequence The government does not provide any gratuitous services either How does the presence of government interventions affect the intentional and unintentional production of gratuitous economic goods by the other members of society? The first thing to notice in regard to this question is that government interventions are destructive of wealth By their very nature they have either repressive or licentious consequences taxation and regulation Repress the free initiative of individuals and as a consequence the production of wealth is hampered government subsidies and guarantees encourage Irresponsible attitudes and behavior present the economists call these dispositions moral hazard and Thereby promote malinvestments and other wasteful users of available resources So therefore wealth is always destroyed as a consequence of government interventionism as wealth is destroyed The need for gratuitous assistance increases But the ability to provide such gratuitous services is diminished Less donations are made less private charities are founded and operated by contrast Politicians sees the opportunity to create more welfare programs to assist the needy with the public purse Hence as far as the economics of gratuitousness is concerned government interventions create a vicious circle They hamper the private the private provision of genuine gifts and Replace them with the public provision of false gifts the mixed bag of loot sharing and hidden prices that we discussed before One particular implication needs to be underlined as government hands-outs are institutionalized Whereas genuine gifts can never be institutionalized because of the implied obligation for the donor. It would no longer be a gift So government and also institutionalize these subsidies create a massive moral hazard on the side of the beneficiaries Because welfare recipients know that the government state is there to assist them But only if they remain poor and unable to help themselves They have a perverse incentive to remain poor incompetent and without initiative Because commercial banks and other financial market players Know that the government and the central bank are there to bail them out They suffer from a perverse incentive to remain as insolvent as illiquid as possible Because becoming more solvent and more liquid would only diminish their bottom line finally government interventions often facilitate the transformation of economic or is extremely of spontaneous gratuitousness into paid services We've already mentioned one important example the patent laws such laws are not an outgrowth of the free market But an instance of government interventionism as we have seen They allow the patent holders to concentrate the benefits of any technological progress on themselves and on their clients Which in turn allows them to exact payments in compensation for these benefits Another important example is our inflationary monetary system fiat money and Central banks are not institutions of the market. They are imposed by government interventions Now the presence of fiat money and central banks provides a formidable boon for the development of financial financial markets Indeed permanent price inflation entails incentives to give up savings in the form of cash hoarding and to turn to financial saving and Thus as we have seen the spontaneous gratuitous goods resulting from money hoarding tend to be internalized tend to be paid Moreover thanks to the state commercial banks and other financial firms can Externalize part of their costs on the other members of society That's on the one hand. They are able to inflict gratuitous evil on those others and on the other hand They can extend their operations beyond their natural limits That's reinforcing the internalization of spontaneous gratuitousness that we have discussed in conclusion starting from Benedict The 16th and Ciclica Caritas in Baritate. I've tried to outline a political economy of gratuitousness That is an economic analysis of the causes and consequences of gratuitous goods and gratuitous evils The main results of our inquiry can be summarized as follows a Free economy is infused by the way free economy is not the same thing as a market economy This is an error frequently made especially among the advisors The economic advisors in the Vatican as they opposed the market economy to the state But we should oppose the state to the free economy the free economy involves everything that is based on the respect of property rights, whether there be a profit motive or no profit motive This was secondary this distinction between the state and the in the market A free economy is infused with various forms of intentional and unintentional or spontaneous production of gratuitous economic goods In particular the competitive market process is itself an important source of such gratuitous goods This gratuitous production of economic goods is liable to be limited by a number of factors Gifts can be perverted into compensation for services rendered Spontaneous gratuity can be internalized and benefit just a few for payment But the greatest threat to the economy of gratuitousness Is to be seen in government interventions By their very nature the latter cannot provide genuinely gratuitous services They hamper the production of gifts in the private sector encourage the abuse of gifts And facilitate the internalization of gratuitous benefits thereby destroying their gratuitous nature Thank you for your attention