An eye-opening discussion at language class I’m taking prompted this post. The teacher had assigned an article about the Artemis II mission and asked the students for their thoughts. (This was a very small class and cannot be considered representative of any population, but all students are university-educated professionals and most lean left politically)
I said that the mission was a tremendous feat of human ingenuity and in my notes praised the companies involved.
The other students remained silent, saying only that they hadn’t followed the moon mission much, until one offered that spending millions of dollars on space exploration was wrong because there are still poor and hungry people in the world. They argued that the money would have been better spent on eradicating poverty and thereby hunger.
The discussion continued chastising wealthy space tourists and space entrepreneurs such as Elon Musk and Jeff Bezos for spending their money on selfish goals, exploring and exploiting the space, that doesn’t benefit the poor. The wealthy were labeled egoists who don’t care about anybody but themselves and accumulating money beyond what they really need (which was defined as sufficient food, shelter, and clothing).
Reflecting on the discussion afterwards, I identified questions that could have made it more productive:
- Why is there poverty in the world?
- Is charity an effective, sustainable solution? If yes, why hasn’t it eradicated poverty yet?
- If not, what could be an alternative sustainable solution?
Instead of the “selfishness and greed” of wealthy producers, evidence shows that the fundamental cause of poverty is lack of freedom. Confirming other research, The Fraser Institute’s study found that the least-economically free countries had much higher rate of extreme poverty (52%) compared to those most economically free (2%).
Economic freedom and political freedom tend to go hand in hand. Lack of political freedom means that individual rights are suppressed and violated, typically by authoritarian governments that are also the most corrupt – and the most prevalent in poor countries. In such conditions, people’s ability to take initiative, to produce and trade prosper, is severely restricted. Under political freedom, in contrast, individual rights to life, liberty and property are protected by the government, which motivates personal initiative and productive work and increases prosperity.
Charity, whether voluntary or forced through taxation, is not an effective or sustainable solution to eradicating poverty. Proposing it as a solution evades the obvious question: What makes charity possible? Nothing can be given away unless something is produced first, and production and trade require relative freedom. Companies, of space entrepreneurs and others, can create wealth for their owners only if they produce products and services that customers are willing and able to pay for, whether rockets, space flights, or anything else. Only when wealth is created is charitable giving possible.
The more wealth is created, the better off all parties (customers, owners, employees, suppliers, and others) are. People who are well off can afford charity – but it should be voluntary. Those who are able to create most wealth through production should focus on doing so, because that would be a win-win for all. Bill Gates, for instance, is often lauded for his charitable giving but not praised for the material values and wealth that Microsoft creates which have a much greater positive impact on human prosperity and well-being than his charitable foundation.
Voluntary charity could help eradicate poverty when it is well organized and reaches the intended recipients as opposed to funding the large administrative bureaucracy of many charitable organizations. Charity focused on teaching knowledge and skills to improve the recipients’ productivity is more effective than distributing handouts. Voluntary charity could flourish in a free society where only a small minority of the truly destitute would need it and whom others would be willing to help in the absence of progressive income taxation.
Forced charity through taxation has a negative net impact on poverty. Taking from the more productive and giving it to the less productive or the non-productive not only allows the latter remain non-productive and avoid personal responsibility. It also disincentivizes the former from producing or make them move to less tax-punitive jurisdictions, as has happened in Sweden and France. The consequence will be less wealth created and available for “redistribution.”
As the statistics on freedom and poverty indicate, increasing freedom is more effective and sustainable in eradicating poverty than charity. Increasing freedom is effective because it encourages people to engage in productive work and allows them to keep the proceeds of their production. Freedom means minimal government involvement in their lives and spurs them to take responsibility for themselves.
Both historical and contemporary evidence shows this. The freest countries were magnets for immigrants in the past, such as America in the 19th century or Hong Kong before China’s crackdown, because they allowed people to prosper through their own work. Today, the freest countries, such as Switzerland, Denmark, New Zealand, Ireland – are the most prosperous.
Eradicating poverty by increasing freedom is also more challenging because it requires reversing the current trend of increasing statism, concentration of power to the state. To increase freedom requires the government to shift from coordinating and regulating the economy and citizens’ lives to protecting their individual rights against those who initiate physical force, whether criminals, foreign invaders, or contract violators.
That is a big challenge, but if we grasp the importance freedom to prosperity and well-being, as voters in non-authoritarian countries, we can affect change. As for increasing freedom and eradicating poverty elsewhere, voluntary charity to independent schools that would educate students and thus help them to stand up to their governments would be a start.
