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| A piggy bank and Christmas decorations. Image source. |
I want to address a particular line of reasoning I've heard charities use in their appeals for donations. I guess I should mention, as a disclaimer, that most charity advertising isn't like this. But this argument has always stuck out to me as being all wrong from a math/economics perspective, and now that we are actually experiencing the economic effects of COVID-19, we see real-world proof that yep, those charities were indeed wrong about the math. All right, here it is:
"Americans spend x millions of dollars on Christmas. It would cost y millions of dollars to provide clean water to everyone in the world. Let's stop focusing so much on consumerism, and help the world instead."
I've heard a lot of messages along these lines- mostly in church, but also from charities. (Here is one example.) How we spend so much money on all these things that aren't really important, but what if we redirected that money to poor people in other countries.
And I always thought, but, if people really did that- if Americans just cold-turkey stopped buying Christmas gifts and donated all the money to charities working in other countries, WOWWWW there would be huge effects on the US economy and it would NOT be good.
And then COVID happened. And we see the real-world effects of shutting down everything that's not "essential."
Isn't that what those charities were telling us to do- for years and years before COVID became a thing- with their "we spend x million dollars on Christmas" messages? They wanted us to stop spending money on things we don't really "need", and donate it instead. As if the math would work thusly: You get fewer Christmas presents, but nothing else is affected, and then a village in Africa gets clean water.
No- the COVID shutdowns show us that the math does NOT work like that. If people stop spending on "non-essential" things, that DOES NOT mean suddenly everyone has a ton of extra money to donate to charity. Instead, it means millions of people who work for "non-essential" businesses lose their jobs. It's really not good.
What if we phrased it not as "Americans spend $x billion on Christmas" but "$x billion of Americans' salaries comes from Christmas-related consumer spending"?
Maybe you'll say I'm being too literal. When a charity makes a video that says "we spend x billion dollars on this and that, imagine how much good we could do if we donated that money instead", they know that there is NO CHANCE that people are really going to go from "x billion" to zero and then donate "x billion" to their charity. They know that that will NEVER EVER HAPPEN, and that's not their goal- their goal is for people to donate a nice amount that's not too terribly different than the charity's normal budget. And indeed, if people donated "a nice amount" rather than "x billion", then there would not be much effect on the US economy. And the charity could do some good.
So all of this makes me wonder about systems and large-scale economies and how to really make a difference.
People throw around numbers like "it would cost $x million to end world hunger"- there's actually a twitter account called Has Jeff Bezos Decided To End World Hunger? which says "Jeff Bezos has a net worth of $200bn. The IFPRI says it would cost $11bn to end world hunger per year. So, has Jeff Bezos decided to end world hunger today?" I think this is ridiculous. It doesn't work that way. I don't know where this $11 billion estimate comes from, but it definitely does NOT mean there's a store with a product called "end world hunger" which has a price tag of $11 billion, and Jeff Bezos can walk in there, stick it in his shopping cart, and swipe his credit card, and problem solved. You need more than just money- you need political leaders to negotiate and agree on a plan, and you need time to hire people and put the plan into action. There are systemic issues that are extremely difficult to change- maybe even impossible.
And also, Bezos doesn't have billions of dollars in a regular old savings account- it's invested in stuff, and if he decided to just cash out those investments, it would have a huge negative effect on the businesses he invested in.
Maybe I'm being too literal. Maybe everyone knows it's not literally possible to end world hunger by just having $11 billion. Maybe the point is that Bezos should at least donate a bit more, not necessarily that he should donate billions RIGHT NOW.
So I have questions about systems and economies. But I VERY MUCH believe this is NOT a zero-sum game. It is definitely NOT TRUE that if I give money to charity, the employees of the "non-essential' company where I would have spent that money suffer an equal amount to the benefit that the charity's recipients gained. No, definitely definitely not a zero-sum game.
But it bothers me that charities talk about millions and billions of dollars- if we literally did donate that much, tons of retail workers would lose their jobs. These aren't just numbers not connected to anything- when you spend money on Christmas gifts, that's not "wasted"- it pays someone's salary.
It's NOT a zero-sum game. Don't take this to mean "well there's no point in donating money, because American businesses will then suffer." But if we're talking about the big picture, it's much more complicated than "let's stop spending billions on A and spend it on B instead."
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