CHARITY: The difference between Socialism and Capitalism

Occasionally, we hear about an altruistic person who goes to a third world
country to help build houses for the poor, donating his or her labor. The media
and the socialist-minded among us applaud.

But how much help did that person provide? If the standard labor rate in that
poor country is $2.00 per day, they only gave $2.00. That person might earn
$200.00 per day in the US, but it doesn’t matter what that person is worth here
at home. There, they are only worth $2.00 per day.

A capitalist thinks differently. If the charitable person had stayed home,
earning $200.00 per day, and sent all of his wages to the poor country – still
essentially working for free – they could have hired 100 local people. That
would give 100 people the chance to earn a living, supporting themselves and
their families.

And those newly employed people could have built 100 times as many houses.

Another feel-good charitable act goes something like this: People are starving
in Asia and Africa, so let’s buy a bunch of bread and send it to them! That
sounds like a generous gesture, but…

The do-gooders are buying bread made at first-world prices. The same amount
of money could produce much more wheat and therefore more bread if it were
produced in the third-world nation, and doing that would allow starving people
to become self-sufficient.

But even that isn’t a great idea, because these are people who have always
relied on rice, not wheat. You may be making a lot of people sick! You are also
putting local rice farmers out of business. Who will buy their rice when free
food is available?

Trying to help others without understanding the culture, customs and
economics of the region inevitably causes more harm than good. Call it
unintended consequences. But those consequences are avoidable if the
charitable person would spend more time thinking like a capitalist and less time
feeling like a socialist.

Capitalism is the allocation of resources in a way that produces the greater
good. Successful capitalists are usually people who think. People who feel are
likely to become successful in other fields, like acting or singing or teaching.

And, since such people feel they are right, they teach others to feel the way
they do.

So much more could be accomplished if our academics taught people to think.