Why the Third World Needs Capital Not Charity

Not that central banks would want that to happen, because that's deflation. They'd rather have higher prices and higher unemployment. And there's nothing wrong with falling wages providing production costs and consumer prices fall too.

But anyway, back to the point, you never hear the unions mention the fact that without the capital from the capitalists their members couldn't be employed. I mean, if it was just all about the workers being exploited, what's stopping the workers from resigning en masse and setting up their own collective business?

I'll tell you what's stopping them and that's the lack of capital. But even if they did happen to have the capital to start a rival business then guess what, that would make them capitalists too!

Yet the likes of Gates and Buffett seem to have forgotten about that. They amazingly seem to have forgotten what it was that brought them untold wealth - capital. They've forgotten what it was that brought wealth to their shareholders and their employees - capital.

Instead Gates and Buffett seem to believe that the way to solve poverty and create wealth in the third world needs a different approach. Rather than providing the third world with what they really need to lift them out of poverty - capital - they seem to think what is needed is to spend nearly USD$14 billion on health programmes since 1994.

Which again doesn't seem to have helped much. According to our pals at Wikipedia:

“Since then [the 1970s], African famines have become more frequent, more widespread and more severe. Many African countries are not self-sufficient in food production, relying on income from cash crops to import food. Agriculture in Africa is susceptible to climactic fluctuations, especially droughts which can reduce the amount of food produced locally.”

Many countries aren't self-sufficient for food, not just African nations. But most nations have the ability to trade for food. If they can't grow crops then they rely on their comparative advantage to produce something else - shoes or pillows, perhaps - which they then export. This gives them the means to import goods they can't produce, say wheat or corn.

The trouble is, if you don't have access to capital then you can't produce goods or services to be exported. And if you can't export goods then the country isn't producing an income. And if it's not producing an income then it can't afford to feed itself.

And if it can't afford to feed itself then it starves or relies on charitable donations.

While many view Gates and Buffetts as a wonderful example of corporate and individual philanthropy, we see it differently. Sure, advances in healthcare are wonderful, but are the health needs of developing nations really that much different from those in the West?

Again, perhaps to some degree. But largely they're the same.