The Economics of Giving
The economics book lying in front of me has inspired me to do one of my first economically related posts ever, I warn you I may get very confused so please be forgiving.
It’s about one of the small issues that has silently bugged be for a while. Many people righteously say "how can people spend some much money on product 'x' when there are starving children in the world?" and "why do we produce so many different flavours of washing up liquid when there are people who don’t have any water to wash with to begin with?". Now it’s not that I don’t think its good to give to charity and it’s not that I don’t think that the situation in third world counties is terrible and we have to do something to sort it, but I think people who make such statements should think first.
Just imagine if suddenly everyone stopped buying the rainbow coloured washing up liquid and other non-essential products and gave all the money from it to charities. Just think about it, our major world economies would all crash simultaneously, millions upon millions of people would lose their jobs, this means that they would have no money to buy even essentials and the companies that sold essential goods would be laying off huge numbers of employees. I’m sure at this point the government would step in to subsidise us but wait! The government gets money from taxes but everyone is out of jobs so no one can afford to pay taxes!
After the initial truckload of money, funds to the third world would stop completely. It’s likely that the initial burst of money flooding into Africa would do very little good anyway, they need infrastructure to get going, the problem in the third world is too complex to simply be solved by hurling money at it.
In other words, in order to support charities we need to look after own economy so, it’s not a bad thing to spend on what we want.