"Do you forget to free the slaves?"

(c) May 20, 2009 - FV Hayek & Co. LLC

Reading the book "Dead Aid - Why Aid is Not Working and how there is a better way for Africa" by Dambisa Moyo; a very interesting and important work. The reader with insight will realize that there is more in what the author has written, than is found in words on the page. It may be that there are larger principles of philosophical economics here, than just the tragic circumstances the author documents in Africa, and the vitally important conclusions she draws from them. I have not finished reading the book yet, but am struck with some thoughts that I wanted to capture.

The epiphany for me as I read this fascinating work, is that many economic ills come from misunderstanding what money and wealth are. Wealth should properly be seen as an incidental by-product of the creative act. Money was created as a convenient exchange medium for wealth. If you begin looking at money and wealth as the purpose or object of the creative act, you begin to think that moving it around is "creative," that is to say that by moving it around, something has been created; that transfer payments are a reasonable facsimile or surrogate for the creative act. But it is not that humans need money, it is that they need to be engaged in creation. Wealth and money will surely be a result of such engagement, but giving someone money does not replace their human need to create. It would be as if I could bottle my sweat from a workout and give it to someone else, and in so doing I could satisfy their need for a workout, when all it would do is make them smell bad.

If you want to help someone, teach them how to work and create; giving them money enslaves them to your work and creativity. As the old addage says: "Better to teach one to fish than to give them a fish."

This is not to say that charitable giving can never be a good thing, but when giving charitably, it should be to invest in those who are doing important creative work, which might not initially - or ever - generate enough profit to be self-sustaining on its own. In essence you are then "purchasing" their creative output on your behalf. You are hiring them to do service for you. In this sense, it is not truly "charity" but a free market exchange of value just like any other. The best "giving" always makes one feel richer in the bargain, but the goal must not be merely to feel good.

Understand that to some degree you are enslaving that worker by purchasing their work, and that it is always better to find a way to help that indentured servant free himself from his servitude if possible. You will always get the greatest "return" when you can free that slave to create productivity on his own, independent of your largesse.

Too often, charitable givers are so busy "feeling good" that they forget to "free the slaves."