All actions of a just society should be principles-based. One of the primary guiding principles of a just society is that coercion is kept at a minimum. That is, people should be free of coercion from others, including the government. Certainly, a case can be made for why there will have to be some coercion — but that has to be reserved for matters that are essential for the functioning of society. For these matters, government coercion is justified for raising revenues required for funding certain activities. Examples of such matters are policing (to maintain law and order) and the provisioning of collective goods such as public access roads or sanitation, etc. Aside from those limited exemptions, coercion is not justified.
Coercion is absolutely verboten in the case of charity. Using force to extract revenues to fund charity leads to the absurd result of the means frustrating the end. What’s worse, it is immoral and unethical.
Of all the things that a bad government does is to coerce people into paying for charity that they would not support had they not been threatened with violence. It is not the job of the government to decide on behalf of the citizens who should pay how much for what charity. When the government arrogates to itself the right which properly belongs to the individual to decide how much to give to whom by way of charity, it robs the individual not just of the money but also of his dignity and freedom of choice.
I came to know that PM Shri Modi has awarded scholarships to some selected children. I am certain that it was very good of him to be generous with his money. It’s his money and he has a right to give it to whomever he wishes. But in case Shri Modi was handing out Indian taxpayers’ money, that is problematic. That decision is not his to make. There are alternate mechanisms. For instance, he could have appealed to Indians that they voluntarily support a fund for the said scholarships. That would not have involved coercion and the threat of violence (imprisonment for non-payment of taxes.)
Perhaps I am over-reaching here, though I don’t think so, but I feel that one of the reasons for India’s disastrous lack of prosperity is that Indian leaders are not all that concerned with principles-based actions. It is shameful.
I have argued the case for why the government should not be involved in charity of any sort in a piece “Whose money is it anyway?” Excerpt:
Of all the pernicious things that a government does, arguably the worst is when the government gets into the business of charity. That’s the kind that Mr Bunce took exception to. If politicians and bureaucrats want to support charity, they should do that with their own money, not the public’s money. They are free to contribute as much as they wish of their own money, and they should extend that freedom to everybody else. Let people decide how much they want to spend and on which charity.
I can honestly claim that I contribute to charity regularly. Why? Because I am moved by empathy and compassion towards my fellow beings. I not only receive the joy of giving without expectations of return, I also derive psychic satisfaction by exercising the freedom of deciding on whom or what I spend my money. I wish I had more money so that I could give more of it away. A favorite quote from Khalil Gibran’s The Prophet goes, “All you have shall some day be given; Therefore give now, that the season of giving may be yours and not your inheritors.”
When the government takes my tax money to spend on what it considers charity, it deprives me of my freedom to give freely, it deprives me of the joy of giving, and takes away a responsibility from me that I treasure. What is worse, when I forced to do something, I resent it even if that something is something that I would have otherwise voluntarily done.
When the government taxes me to do charity, it is to me morally and functionally equivalent to someone putting a gun to my head and robbing me to help a poor person. Regardless of what the money is going to be used for, robbery is immoral and unethical.
Enough said.
Atanu Dey : Life is a Random Draw 
what exactly do you mean by charity? Do you mean things like subsidies, social welfare programs and disaster relief by ‘government charity’? The purpose of a government/state is, almost by definition, to ensure the welfare of all its citizens in an organized fashion. Universal welfare of the highest standards is clearly not achievable, nevertheless it is a good ideal. In any case, it is a good idea to guarantee a certain minimum ‘well being’ to all its citizens, which is the aim of most social welfare programs.
Well crafted subsidies and social welfare also have positive country scale economic impact in the long run. Since, you have mentioned scholarships in your post, let me talk about subsidized education. Millions of Indians have received and continue to receive subsidized education (including higher education). Aren’t you also a beneficiary of the IIT system in India? Such an egalitarian education system only creates a large pool of well trained workforce, which in turn has positive impact on the economic development and the social well being of India.
Yes, in the short term subsidized education might seem like charity but if you take a longterm view, it is a wise investment. It is just like if you plant a seed and water it daily, for months it might seem like charity with no returns. But if you do it long enough those seeds and water and resources you have put in only bear the sweetest of fruits.
What India lacks is organized and well planned effort. Just to give you one example, think of the roads and city planning in India and the excellent road network and city planning in the US or in Europe. In India, roads are constructed in an ad hoc manner, there is no city planning – e.g. you’ll see a big mall or high rises with little road access. Just imagine the impact well planned cities have on the economy, health and general well being of the people and so on. And being an economist, you very well know that money is the biggest means of social organization. So, how does a govt get money? It has to get through taxes – income tax, wealth tax, sales tax, corporate tax etc.
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