One of the desires for many of us is to help others in need. However, is it really that simple? After the many disasters that befall the world, people often times need help. Assistance can save lives in the hardest times. But the documentary "Poverty Inc" takes a deeper dive into what the real life implications of this foreign aid can have on the population.
The first problem
The first problem is that people want to help. This seems like a fallacy that should not exist. Helpfulness should be the solution to all of the worlds problems, not one of the causes. However, that seems to be the case according to Poverty Inc. During the many interviews they conducted with hundreds of individuals across the globe, one of the common themes is that the foreign aid and "helpfulness" that is given by wealthy countries actually causes more harm than good. This all stems from the problem that aid interferes with value creation and the natural process of entrepreneurs in the receiving countries.
The Importance of Value
Without value, not much else can be done. Value needs to exist before consumes will purchase something, and value needs to exist before an entrepreneur will decide to take on risk for a new venture. In either case, neither the economy or society moves forward without value. Foreign aid interrupts this cycle in several ways.
Market Saturation
An great example of this shown by Poverty Inc was the aftermath of the Haitian earthquake in 2012. The people were suffering, so wealthy countries sent in rice. After the initial damages caused by the earthquake was over, the overabundance of rice they were still receiving ended up destroying their own market for rice. Suddenly local rice farmers could not keep up with the free rice that everyone else was getting. They were forced to sell and stop production of their own businesses, causing a population that is entirely dependent on the continuation of rice from other countries. This is so fascinating because the help that foreign countries tried so hard to give ended up meddling so far in the affairs of Haiti that they caused way more damage than they anticipated.
Value Creation in Society
This aspect of society, that is, value creation in developing countries, effects society in huge ways. When Entrepreneurs are allowed to do their thing and create value, then they can make money, expand, hire others, create employment opportunities, and overall create a better society for those around them. This creates a huge boon and incentive to let local entrepreneurs work, and not destroy their businesses with aid and free things. In turn, society can support these entrepreneurs and allow them to thrive. Society supports the entrepreneur, and the entrepreneur supports society. This is the ideal system that allows for the greatest good to be made. This system also allows for continual growth. As long as opportunity exists and people can capitalize on it, society will progress.
They must do it together, however, and as soon as an outside force comes in and interferes with this natural cycle, it becomes a liability. This is the aspect that needs to stopped. Societies that are frequently coddled must be weaned. Instead of aid being constantly thrown at countries, we must allow them to execute their own processes, and create economic success from within.
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