Pulling the [free] wool over our eyes

Dave Killion — November 3, 2011

Over at Foreign Policy, Charles Kenny wants to tell you that Haiti Doesn’t Need Your Old T-Shirt

“Here’s the trouble with dumping stuff we don’t want on people in need: What they need is rarely the stuff we don’t want. And even when they do need that kind of stuff, there are much better ways for them to get it than for a Western NGO to gather donations at a suburban warehouse, ship everything off to Africa or South America, and then try to distribute it to remote areas.”

Kelly goes on to make the case that for various reasons it is better to send aid in the form of cash rather than goods, and in a limited way I think that that’s correct. What I suspect he overlooks is the impact such a policy has on donors. In an example from his article, the NFL annually donates thousands of NFL Superbowl T-shirts made in advance for the team that actually loses the bowl. The choice is not between sending the shirts or sending money, its between sending the shirts or sending nothing. And if that’s the choice, I think Kenny would prefer… nothing –

“Bringing in shirts from outside also hurts the local economy: Garth Frazer of the University of Toronto¬†estimatesthat increased used-clothing imports accounted for about half of the decline in apparel industry employment in Africa between 1981 and 2000.”

What Kenny is doing here is making a ‘buy local’ argument, which is wrong because it considers only the welfare of a limited number of producers while ignoring the benefit to consumers and the remaining producers. Imagine if the Chinese government subsidized its clothing manufacturers so that Canadians could buy imported Chinese clothing very inexpensively (Don’t laugh, it could happen). Although it would have an adverse effect on Canadian clothing manufacturers, consumers would come out ahead, and the money they save on clothing would be used to purchase other goods produced by other Canadian producers. Economists have shown the net effect of such a process to be overwhelmingly positive. Giving free t-shirts to Africans works the same way. There are some good reasons to be cautious about the type and degree of aid we give to others, but fear of damaging their economy is not one of them.

Comments

Ashley Johnston says

I’m not sure how these additional point may affect your analysis but consider: when you put out a business its goodwill vaporizes; with volatile businesses like farming, donating food can add lots of uncertainty; and if you do a good enough job suppressing an industry with free goods for long enough you can wipe out the know-how.

All of these are still likely out weighed by the opportunities created by getting free stuff.

— November 4, 2011

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