When I was at an Austrian economics conference in Rosario (Argentina) last week, they showed us a long segment from the Acton Institute’s film, “Poverty, Inc.” Here’s the trailer:
You can see some quick allusions to it in the trailer, but one of the themes is that sending free stuff actually makes the recipient countries poorer, because local entrepreneurs can’t develop. For example, they interviewed a guy trying to sell medical supplies, and he complained that every once in a while, in a completely unpredictable pattern, some international organization would dump months’ worth of free medical supplies onto the community, making him have to shut down for that period.
To be sure, there were plenty of other points the video brought up, but I’m guessing most of you can see why I want to focus on this particular point. It’s because it sounds eerily similar to standard arguments for protectionism.
(These points came up explicitly in my debate on free trade with Vox Day, hosted by Tom Woods.)
In other words, if a free market economist is going to say, “Of course we don’t need tariffs to keep out cheap goods, would we also keep out the sunlight to help our candle makers?” then don’t we similarly need to say, “Of course it helps an African country if an aid group gives them a bunch of medical supplies for free. If you doubt that, would we be helping the Africans by sending in Seal Team 6 to steal their syringes?”
And yet… It is also typical for a free market economist to say that the welfare state has hurt poor people, by trapping them in a cycle of poverty. But how do you reconcile that with a typical utility-maximizing agent? It can’t hurt to give someone options, right? So if the government says to women, “We will send you food stamps if you have kids and no husband,” how does that hurt them? Don’t the women rationally choose the option that is best?
Note, I’m being facetious here. I don’t think the welfare state helps poor people. But this Acton movie really got me thinking and I realized that several standard free market arguments on various issues are at best in tension, and at worst are contradictory.
Leaving the realm of secular economics models, it is certainly true that a Christian charity would not want an able-bodied person to be a recipient of assistance for years at a time. That would be considered harmful not just to the people paying for it, but to the recipient too. This is actually one of the reasons I personally think private, religious charities are better than secular State ones. I think the people running the private versions (in general) actually care more about the genuine welfare of the people they’re dealing with, and thus try to restore them to self-sufficiency rather than viewing them as clients.