Would you be shocked to hear that it might very well be the generosity and goodness of most Americans that could be keeping third world countries impoverished? I’m about to make that point, and how the old statement about all those good intentions being bricks on the road to hell just might be true. 

Here’s 3 scenarios. 
1. A bunch of students hear that slavery is still practiced in many third world countries. Because of this, they pool their money together and send it to africa to buy and free slaves.

2. Someone on TV stands there talking about how for only a buck a day you can feed a child in a third world country. Furthermore, the government then gets into the act sending loads free food into those same countries and distributing it freely to the public in those countries.

3. An activist discovers that clothes are made in a third world shop where long hours are common, and pay, by american standards, is rather low. Children work there those same hours. They take a stand and the company is forced to close down this “sweat shop.”

If you have studied economics, you can probably puzzle out why all three of these are a bad thing for those countries. If you don’t want to bother, check below the cut.

1. They just created a new market for the slaves. When the slave traders see that they can make money by selling them to Americans, they actually started taking MORE slaves in that country, even recapturing some of those who were freed by these payments. Essentially, it was free money for the slave traders. It rewarded bad behaviour.

2. A large supply of free, relatively high quality food to a country? Think about what that does to the farmers of that country. With primitive methods of extracting the food and primitive methods of growing the food, they had a relatively poor quality product for sale, and it takes quite a bit of money to produce what they are producing. They almost instantly fold against the competition. No farms ends up giving you the dust-bowl era localized depression all over again in those countries. What’s worse is that all of the workers at the farm lose their jobs as well, and anyone who serviced or sold what limited equipment they need also are seriously affected. It’s basically like grabbing a loose thread in the economy’s tapestry and pulling on it. 
What would be better is aiding the farmers in acquiring modern equipment and techniques that would let them more easily compete with foreign food already being sold at a relatively low price. Loans, etc would be good for this, as well as helping the locals build more modern farming equipment…

3. This one may be harder to grasp, but Sweatshops are kind of an essential step on the way to a modern, developed nation. The US had essentially the same thing in the early industrial revolution. Women, children, etc all worked in textile mills making cloth on large machines. Long hours were common, but the pay would allow them to survive easily if the wife and all of the children worked as well. 

It’s interesting how many people today see the past as some rosy state of being, with the wife staying at home and bearing children. There have been numerous instances through history where women have shared in the labor to make ends meet, at least in the lower classes. Children going to school and having leisure time is also a relatively modern invention that we have thanks to our time spent building up our economy.

Without that influx of money, people barely subsist, they have no money for any luxuries whatsover, so the supply of these modern essentials never materializes in that area. The market is created by the availability of resources flowing into the pockets of those who would buy things from that market. 

Japan, Taiwan, India, and China are all examples of this principle in action. Each of them started out by building tacky trinkets for other places in the world, cheap junk, shoes, clothes… As this happened their domestic economy started to rev up. Japan was the first, and such has an economy that is possibly even more advanced than that of the US. Taiwan isn’t far behind, and within 30 years India and China will be right along side them as equals. 

It’s not all bad news with charity to those countries though. While I was thinking of the above, I ran into a banner for a place called Kiva.org on Youtube. If these guys are on the up and up, it’s exactly one of the things that could help bootstrap these third world countries into prosperity. You lend $25 to an entrepeneur in the third world for a period of time, combined with the loans from others. They use it to start their business up and repay those loans once it is going. Small businesses like these are the engine of a growing economy.