I know we hear that it is. But what if someone volunteers to work under those conditions? Would that not suggest that their alternatives are all worse? The development of the Western economies from agrarian to industrial to service had periods of low wages as workers flocked to the cities. Over time, we decided that was "inhumane" and instituted minimum wages and the like. What if sweatshop / low-wage, high-labor conditions are a necessary step in the development of a modern economy? By demanding that countries skip this step, are we short-circuiting the growth of these countries? To say "you can grow, but it has to be on our terms?"
Consider this article, about everyone's favorite whipping-boy:
Other than economic growth, there is no way to double the salaries of a 100 million people (and growing). After the 2004 Asian Tsunami, more than one-third of Americans gave more than $400 million in charitable aid, an extraordinary outburst of giving by any standard. And yet there are more than 630 million rural Chinese remaining, many of whom are living on less than a dollar per day. While each would welcome a charitable dollar if we could get it to them, that charitable dollar, representing one good day's worth of income, would not do them nearly as much good as would a job in the city paying twice as much day in, day out. Charity cannot take place on an adequate scale to solve global poverty.Just food for thought. I'm not decided on the matter. But when people start piling on Wal-Mart, it makes me want all the more to come to their defense because I wonder if the source of their fustration is really that Wal-Mart is bad, or if the complainer is simply envious of its success.
Despite Jeff Sachs' enthusiasm for foreign aid, Bill Easterly makes a compelling case that government-to-government aid damages economies as often as it helps them. Does anyone think the World Bank raises more people out of poverty than does Wal-Mart?
7 comments:
If people are willing to work for a nickel an hour, then they should be allowed to do so. Willingness here of course means that they are not being coerced in some fashion.
Mostly you raise empirical questions, which I would accept any answer to that was persuasive.
However, I'm suspicious at an intuitive level of arguments which claim "Good news! You really don't have to give your money away. In fact, it's better for the poor if you don't give them any money" because they play to our greed, and there seems to be ample motivation to buy this argument.
Again, if it's really true that charity is bad for the poor, then I'm happy to keep my 20 bucks - but, again, I'm suspicious.
I think there are two key points in response to the "Good news, you don't have to give to the poor." The first is that the noted ineffectiveness is government-to-government aid, not from individual charities. As a matter of fact, charities which help people on an individual level are generally much more effective.
The second is that this is aimed at a comparison between Wal-Mart and said government-to-government aid. Many people who claim Wal-Mart as evil incarnate demand that the U.S. Government do more to solve the world's ills. This piece aregues that giving people a better (though not perfect) option for employment does more to solve poverty than government aid, therefore aid would be better served by reducing barriers to globalization (which harm much poorer third-world workers at the expense of relatively prosperous domestic counterparts), and allowing people to come out of poverty than by creating a permanent underclass of aid recipients.
Consider a final contrast - many government agencies exist first and foremost to self-perpetuate. Keep your budgetary allotment and protect your job. The same is true with NGOs. If a problem vanishes, where are they left? On the other hand, growing international prosperity is a boon to multinational corporations. More people with more money means more people can buy their products.
So a private company may have more indirect motivation to promote a rising tide than a NGO with the same stated objective.
It's a fascinating article, and makes a strong argument.
Some thoughts/questions:
Is there a 1 to 1 trade off between 'gov't to gov't aid' and 'reducing barriers to globalization'?
It makes sense to me that private charities do better than the government, but I also don't think private charities can raise anywhere near the funds that the government can. For example, World Vision runs on an annual budget of $500 million. It's the biggest Christian Charity in the world; however, with basically a word, President Bush was able to commit the US to a $15 billion effort to fight AIDS. The governtment, because of its coercive tax power, might be able to raise far more money for aid than would ever be donated to private charities.
With every exchange, though, there are tradeoffs. Should the US Government use its coercive power to enforce "charitable" giving? Would it be more effective to use it's coercive tax power to encourage charitable giving (perhaps by using a dollar-for-dollar tax credit - not an income deduction - for charitable giving, meaning that a dollar you give to a charity is a dollar you don't have to pay in taxes, as opposed to the current ~ $0.39 that someone in a 39% tax bracket saves by donating a dollar to charity)? This would increase charitable giving while leaving the effiecency of the donated dollars in the hands of more effective private charities.
Even with the vast power of the US government, its resources are limited. And there is the nasty problem that government-to-government aid, especially in a corrupt regime, has the tendency to prop up abusive dictators, rather than promote change.
China's remarkable emergence on the global scene is due to a loosening of central control on private industry, and letting individuals act and prosper. Regular annual growth of over 10% has brought millions out of poverty.
On the other hand, the Mugabe dictatorship, by seizing private property and centrally redistributing it to those who know not what to do with it has taken Zimbabwe from a growing economy to a rate of inflation over 1,000% - destroying the productvity of the seized farms. Under such circumstances, people leave work upon receiving pay to buy goods for barter, because the price has changed so much by the end of the day.
Government talk is cheap. Money is wasted as bureaucrats gather and pledge money, much of which never materializes. What money is spent is spent on diseases that gather the most attention, for whatever reason that is. Famine, poor water, malaria - these things claim many lives to. But AIDS is something more people back home can comprehend, and so it gathers more attention.
Given the option of paying a dollar to a charity of you choice, or paying the same dollar to the Federal Government, which would you choose? I think the credit would have to be capped to prevent bankrupting the Feds while giving charities the biggest windfall ever. But it won't happen because no President can claim credit for a dollar thus given to a charity. We give like the Pharisees - lots of show, for all the world to see.
If the government to government aid isn't that effective, but governments can raise more funds than NGOs, is it more effective for governments to give money to NGOs?
To comment on Kenny's comment, on some level I realize that giving the guy on the off ramp five bucks does nothing to help the city's homeless problem, but it's what I can do.
I'd rather do something than nothing.
You'd still have the problem (in my mind) of the political process determining who gets the money. For example, if the Feds give out the money, there's an immediate question of church and state if the money goes to a religious organization.
The fundamental concept for any type of central planning is that collectively, 350 million people know more than the (way, way rough guess) 2 million Federal employees, even if every Federal employee was working on who should get the money. Making the giving an individual actvity means that you harness the individual knowledge of everyone who gives, and you place the responsibility on them, not on the government.
The money given by the Federal government may not even be neutral. It may turn out to be harmful (eg, aid to a corrupt regime which uses the money to enhance its own power at the expense of the poeple). Getting the money straight to the people on the ground eliminates the middle man.
It also eliminates the "We pledge $15B to X problem" photo op. This could have multiple effects. It could decrease private giving, if people are not made aware of the problem. It could enhance giving, if people no longer imagine that because the government is giving piles of money, my $10 will do nothing (a crowding-out effect). I find the latter to be stronger, as I believe charities would have a much bigger incentive to get their message out to people who don't want to give their taxes to the Feds.
But it won't happen because the US likes to throw money at a problem to enhance its own image.
Another thought:
Why pay government employees to give money to charities when we can do it ourselves. If we assume that the cost of charitable donations managed by the government is 2% (in salaries, waste, etc), then the $15B to fight AIDS costs $15.3B. If that money had gone straight from the private taxpayers, then there's $300M to be given directly to charities. The question is whether the government's involvement is worth the cost of getting it. Do we get more resources? A better allocation of resources? I would argue maybe in the first, certainly not in the second.
And I doubt we could argue that government giving to charity through tax collections gives $0.98 of every dollar to charity. Very well-run charities seem to be about 95% efficient.
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