It is only necessary to give up to the point where the problem is fixed. If everyone giving all their surplus would be non-optimal, there is some amount less than “all” for each person to give that would be optimal. However, most people are not giving anywhere near this amount, so in the here and now the world will be better if you give all your surplus. If the world were different, the principles that led to this advice would lead to different advice that would be optimal in that situation.
My entire point was that the problem cannot be fixed in this way. Pouring money into a region that doesn’t have a functioning economy doesn’t create an economy, in fact it may even make a self-sustainable economy impossible. Meanwhile, it takes money out of an economy that is functioning which amounts to a net loss to world productivity.
This is a fairly common and important criticism of aid; it is part of the hypothesis of Dambisa Moyo. Whilst a valid criticism against certain types of aid, it certainly does not apply to all of them. For example, public health interventions such as increased vaccinations, or combating infectious diseases, require little in the way of a local functioning economy. Furthermore, such items are generally considered to be both quasi-public goods (due to herd immunity) and merit goods—so, there is a strong economic argument that they will be under provisioned, especially in a country lacking an effective government.
But, yes, development aid has a very checquered record.
It is only necessary to give up to the point where the problem is fixed. If everyone giving all their surplus would be non-optimal, there is some amount less than “all” for each person to give that would be optimal. However, most people are not giving anywhere near this amount, so in the here and now the world will be better if you give all your surplus. If the world were different, the principles that led to this advice would lead to different advice that would be optimal in that situation.
My entire point was that the problem cannot be fixed in this way. Pouring money into a region that doesn’t have a functioning economy doesn’t create an economy, in fact it may even make a self-sustainable economy impossible. Meanwhile, it takes money out of an economy that is functioning which amounts to a net loss to world productivity.
This is a fairly common and important criticism of aid; it is part of the hypothesis of Dambisa Moyo. Whilst a valid criticism against certain types of aid, it certainly does not apply to all of them. For example, public health interventions such as increased vaccinations, or combating infectious diseases, require little in the way of a local functioning economy. Furthermore, such items are generally considered to be both quasi-public goods (due to herd immunity) and merit goods—so, there is a strong economic argument that they will be under provisioned, especially in a country lacking an effective government.
But, yes, development aid has a very checquered record.
That makes more sense. I don’t have the economics knowledge to answer it either way.