Charity always creates such vicious circles. While donating for desaster relief is usually good and well, charity needs to be viewed with a lot more suspicion.
Teach a man to fish, he will build an economy. Give him his daily free fish, he will be your dependent forever.
This is a fallacy. Most people enjoy creating/building/earning if they are given a path to doing so. Helping unfortunate, poor, disabled, and even the occasional lazy person is no vice.
That's kind of the issue though. At a large enough scale, donations can undermine the value of creation / earning. A new show shop might not have much value in an economy that has a large enough supply of donated shoes constantly thrown into it. Since it's not valuable to build these shoe suppliers, they do not get built. The population becomes dependent on the donations, as existing infrastructure does not exist to support them if the donations suddenly stopped.
I believe this is why the original comment separated disaster relief from charity. Giving people their first pair of shoes for free from an external economy may not be necessarily bad, but subsequent pairs hinders growth of a local shoe economy.
DISCLAIMER: Shoes are pure example. If you disagree with the idea of this comment, please do not focus on the shoes.
I guess it's not quite obvious to me what is wrong with this. as long as people are giving stuff away, why not take it and focus on producing things you can't get for free? it's hard to imagine how the supply of second-hand shoes/tshirts/whatever could crash overnight. if people in rich countries stopped replacing perfectly serviceable goods, they would probably do it slowly enough for the former beneficiaries to start domestic production.
purely monetary aid seems like a substantially greater risk. politics could turn off that faucet in an instant.
So far, the countries with advanced manufacturing got there by learning the ropes on less sophisticated product. Before China, Hong Kong, Japan, and South Korea had large service sectors and advanced manufacturing, they had to develop a large working class of manufacturing workers to provide demand for goods, and develop the sophistication to at least make things like toys and clothes reliably first before they jumped into semiconductors and phones and LCDs.
When a country is dominated by donated or secondhand goods, the need to develop the knowhow and ability to manufacture anything reliably and cost-effectively isn't needed for entry-level goods (since those are all available secondhand for cheap) but you can't bootstrap any manufacturing as a result.
True. Giving for-profit organisations charitable donations however, is a bad idea, unless those organisations are the intended recipients of the charity.
It's not about "enjoyment", it's about charity undercutting local economies and preventing the development of local business and industry to service local needs. "Charity" can play a part in keeping communities in poverty because accepting the handouts kills the business opportunities which would allow for local economic development.
That can be just as bad, but for different reasons. It distorts the economy, in potentially very harmful ways, because it can induce some really perverse incentives. Real situation: in India, Western companies paid so much above the local rates that qualified doctors were working in call centres because it paid many times more than working in a hospital or clinic. When my friend visited, he was told not to tip anyone. Because what might be a casual £1 tip to you, might be a months wages to someone else. So to answer your question, giving people "free money" without any reciprocal commitments can be extraordinarily harmful.
> Real situation: in India, Western companies paid so much above the local rates that qualified doctors were working in call centres because it paid many times more than working in a hospital or clinic
I'm gonna call BS on this one. Do you have a source?
> Because what might be a casual £1 tip to you, might be a months wages to someone else.
I'm not seeing a problem with that. Why is it bad if someone gets a random bonus; an occasional lucky windfall? Where's the harm?
> Why is it bad if someone gets a random bonus; an occasional lucky windfall? Where's the harm?
Because soon everyone and their dog will be looking for jobs that provide the opportunity of such an occasional lucky windfall. They will be crowding around the rich westerners, neglecting all the jobs that would actually be important for the local community.
Gotcha. So your boss also shouldn't be giving out spot bonuses to employees, because "everyone and their dog" will start applying for your job. Do you not see the fallacy of your logic?
If the supply of labor into Western tourist-oriented industries increases, the odds of getting a big tip reduce, and average wages remain the same. This restores the equilibrium.
> neglecting all the jobs that would actually be important for the local community.
Waiting tables, cooking, cleaning, and driving taxis and buses aren't important jobs for the local community? How do you define "important"? If these people had skills that paid more and/or led to higher prestige opportunities, don't you think they would take those jobs instead?
And what do you think they do with the occasional big tip they earn? They spend it on local goods and services, stimulating the local economy and providing opportunities to local entrepreneurs. They spend it on educating their children so they have better opportunities than waiting on wealthy tourists. They pay direct and indirect taxes (even unreported cash tips are spent on taxed goods) that allow their governments to fund infrastructure improvements (more opportunities for local entrepreneurs) and social services.
If you're too stingy to tip 15-20% when you go to poorer countries, just say that. I hate tipping culture in the US. But don't say you're doing it for their good, because that's just not true.
