There are many reasons why foreign aid and handouts do not succeed in lifting anybody out of poverty, but one of the main reasons is that progress requires effort. Sadly, there is no effort involved in being the recipient of a handout.
In The Great Escape Angus Deaton argues that the way to help people who have been 'left behind' by progress is not by throwing money at them. Of course, if you are feeling guilty about being far too rich for the redemption of your mortal soul (remember, blessed are the poor) you might succeed in feeling a bit better about yourself if you throw money at the problem of inequality because at least then you've done your bit and you can sleep easier at night. Ah, redistribution. So foreign aid does at least achieve the benefit of soothing the conscience of those who give. Other than that, it helps nobody. Deaton calls this the 'aid illusion'.
As every banker knows (yes, I know we hate bankers because they're rich, but bear with me) if you pour money into a good project you're probably going to get a good return on your investment, and also help the person who had a great project and just needed money to fund it. If you pour money into the pockets of a wastrel you're going to get nothing back and also the wastrel will most likely find a way to dig himself deeper into his ongoing difficulties. All this is common sense.
This is where the idea of effort comes in. Pouring foreign aid into a space where the right effort to achieve the right sorts of things is absent will never produce anything. Development artists like Oxfam know this, so they go out there and say to poor folk in the Third World 'what do YOU want to do, what are YOUR priorities' before pouring in the money. This is a way of checking that they are not 'imposing' their own values on other people because that would be almost like colonialism and colonialism is passé. Too bad that the projects being funded do not have a snowball's chance in hell of ever working out. Never mind those ridiculous 'before' and 'after' photographs they send in glossy brochures when they're trying to shake you down and guilt you into donating your hard-earned pennies. The truth is that if those poor folk really had a good workable project in mind, they would have found funding for it long before the development artists showed up.
The most harmful and most poisonous effect of foreign aid is in giving recipients the illusion that no effort is required to achieve a situation where money comes pouring in, kindly donated by the taxpayers of rich countries. And no, 'if you give me lots of money I will dig a well' is not effort because nobody should need millions of dollars in foreign aid to figure out how to extract clean drinking water from the river flowing past their hut. Especially in the age of internet, when there's a free clip on youtube that will show you how to do anything in easy steps (with pictures and diagrams). People are not stupid. They will figure out a way to fix their own problems if they are left to get on with it.
These things take a huge amount of effort to figure out, with lots of trial and error and pain along the way, but there are no shortcuts. Handouts only make things worse and prolong the agony. You could argue that nobody is forced to accept a handout and they could simply say 'no, thank you, that's very kind but I prefer to make my own way', and there is much to be said in favour of having a bit of pride and saying no to charity. It's just that it can be hard to say no when a development artist is waving free money in your face, especially if you're a greedy and corrupt government official in a rickety African country and you know that nobody will follow up with you to check how you spent the money so you can quickly deposit it in your offshore bank accounts and leave your people to starve. After all, if they starve, Oxfam will just come back and drop food parcels on them so it's fine. The temptations are real, but saying no is within anybody's power.
When you think of the blood, sweat and tears that went into the fight for every human being to be free, it's a tragedy to choose to spend that freedom by living off the largesse of others.
Capitalist free markets do not create a situation where everyone has the same amount of stuff. Sadly, progress yields unequal outcomes. Enter the welfare state, a creature of most modern capitalist economies. The idea is that taxes will be collected to create a repository of public funds to provide a safety-net for the poorest and most vulnerable in society. Thus the welfare state would be expected to meet the costs of unemployment insurance and pensions for those who found themselves cast on the heap when the company they worked for goes bust.
In Capitalism and Freedom Friedman tries, although without much success judging by the state of things today, to challenge us to think about the meaning of 'equality' in the context of work and pay. Something a bit more sophisticated than 'having the same amount of stuff' or 'paying everyone the same wage'.
Within the framework of private law, where individuals are largely self-governing subject to the basic principles of the law of obligations (contract, property, and tort) the law has nothing to say about whether everyone should have the same amount of stuff or even the same amount of social standing or economic power.
This is the time of year when everybody resolves to be good, to be a better person than they were last year, and to generally be nice to everyone. Most people are good people, or at least they want to be thought of as good people who do what they can to help others out of the kindness of their own heart.
As Christmas approaches, 'tis the season to reflect on Mr Scrooge and his infamous modern-day successors. Many greedy capitalists have achieved notoriety in our time but as we enter the season of goodwill to all men our focus turns to other greedy capitalists who, like Mr Scrooge, turn themselves around and do the right thing in the end by giving lots of money to help the less fortunate.
It's official. The Economist reports that America is the country where people care the least about inequality. Many Americans care about inequality, sure, just not as high a proportion as, say, the number of people in Sweden or just about any other rich country where people care very much about inequality and have the high taxes to prove it.
The real meaning of poverty is not having enough money to allow you to participate in the social life of your community. These days poverty does not mean having no food to eat; it's more about having no money to keep up with the Joneses. The idea of social inclusion as a fundamental human right introduces a whole new meaning of Deprivation and Want.
Self-employed workers are arguably the hardest working folks out there. The UK House of Commons Select Committee Report on self-employment and the gig economy, published in April 2017 and chaired by Frank Field MP, begins by observing that ‘the self-employed are a large and growing part of the UK labour force’ constituting some 5 million workers amounting to 15% of the total labour force.
The terms 'poverty' and 'inequality' are often used interchangeably. As long as there are some people with lots of stuff, and other people who have less stuff, there will always be inequality. The only way to eradicate inequality is to ensure that everybody has exactly the same amount of stuff.