Tag Archives: Charity

Why Economic Growth is More Important than Gender Equality

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Figure 1: Taking care of moral issues enhances the economy

I think most of would agree that issues such as gender equality, education and malnutrition are important matters. Not only morally, in the sense that anyone of us should have the right to be treated equally, to receive education or to have proper feeding, but also because of their economic consequences. Studies have shown that gender inequality, lack of education and malnutrition affect the economy of a country negatively (see Figure 1). But fewer studies, at least none I could find, look at the relation the other way: what are the effects of economic development on gender inequality, education and malnutrition? Or more broadly: what are the effects of economic development on moral issues, instead of the other way around?

Let’s take gender equality, for example. I think it is reasonable to assume that when a country develops economically, the role of women in society will improve – in the sense that they are treated more equally to men. For suppose people have more disposable income, as a result of economic development. Then this money might allow families a sense of freedom that partially breaks down the traditional role division between the working man and housewife. The money might for example allow women to pursue their interests, whether this be education, painting or something else, thereby enabling them to develop in a manner similar to men.

Furthermore, economic development might reduce the number of children per family, thereby putting less pressure on either the man or woman to stay at home to care for the children. This enables both parties to participate more equally in, for example, the workplace.

Economic development might also increase the level of education in a society. In case there is a system of private schooling in place, this is obvious. For if people have more income to spend, they can spend more on the education of their children, thereby increasing the level of education received in society. Also, more income means more taxes. In case a country has public schooling, more taxes allows for a more elaborate educational system, thereby enhancing education. Also, when families have more income, their children might not have to do labour to increase the family’s income. This provides them with the time required for education.

Malnutrition; another problem. It is obvious how malnutrition might be bad for a country’s economy. But it is just as obvious how economic development might reduce malnutrition. After all: if people have more income to spend, they can spend more money on food, thereby decreasing the level of malnutrition. Furthermore, if an economy develops, the supply of food might increase, since there might be more economic demand for food. The food might also be cheaper due to increased mass production, hence increasing the availability of food for the common people.

I am sure there are many other moral issues I didn’t deal with in this article (think about poverty, or child labour), but that affect both the economic development of a country and are affected by it. But what each of these matters appear to have in common is that they can be improved by improving the economic development of a society. Hence, in case you want to improve the well-being of a society, as many charities might want to do, you might be better of developing a society economically than to try and solve each moral issue one by one (see Figure 2). Because why choose the hard way when there might be a much simpler solution?

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Figure 2: Economic development might (partially) solve moral issues

What do you think?

The Difference between What You Get and What You Earn

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In economic theory, it is claimed that if a market would function perfectly, people would get for their products and services whatever it is they contribute in terms of value. And the same goes the other way: people would pay whatever they find a product or service worthy of. But when you take a look at the real world markets, and all the actors in these real world markets, this principle doesn’t seem to hold. Not at all.

I want to show this by giving one example. That of the banker, and the hacker.

A banker invents all kinds of ingenious derivative constructs, futures and other financial products in order to make money. The more complex the better. For if a product is complex, the layman doesn’t understand it. And if the layman doesn’t understand it, it is easy to lure him into what might seem to be an attractive deal, but which in fact is nothing but a ticking time bomb.

It is generally acknowledged that bankers, and especially the bankers referred to above, are at least partially responsible for the credit crisis we have experienced. It is safe to say that a lot of wealth has been lost during the crisis; people lost their homes, their jobs, and governments had to step in to save the day. In other words: these bankers have, at least over the last couple of years, made a negative contribution to the overall utility of society.

Why then do they get paid so much? Why then do they get a high positive utility for acting in a manner that ultimately decreases society’s utility? Although I am not interested in explaining this phenomenon in this post, one explanation could be that it seems like the bankers contribute a lot of happiness, because they (can) create a lot of money, and – in our capitalist society – money equals happiness. Hence the bankers create a lot of happiness.

Luckily, there are also people who do the exact opposite: they don’t get paid anything while making lots of people happy. They are the modern day equivalent of Robin Hood. An example would be the people contributing content to Wikipedia. But also the people behind Popcorn Time; a digital platform at which you can stream pretty much any movie, and all for free. These people make very many people happy – an exception would be the film distributors of course – but don’t get paid anything. Even though, in contract to the banker, their net contribution to society’s utility is positive.

Although we don’t pay the Wikipedia guys and Popcorn Time geeks in terms of money, we can pay them in terms of a currency that is even more valuable: gratefulness and respect. Something the bankers cannot count on. Because after all: there is a difference between what you get, and what you earn.

But what do you think?