The Unintended Byproducts of Charity
An illustrative example of the unintended byproducts of charity follows, taken from The Poor Will Be Glad, by Peter Greer and Phil Smith:
After the genocide, Jean (a Rwandan) seized an opportunity to begin a small poultry business to provide his neighborhood with eggs. He managed to scrape together funds to purchase several fowl, and his business grew. Later, a church in America “adopted” the village where Jean lived and worked. The church decided to donate clothes and supplies. They also imported eggs from a neighboring community and gave them away. Suddenly, this one village was flooded with surplus eggs. It is not difficult to imagine what happened to Jean’s business: people went first to collect the free eggs and bought Jean’s eggs only when the supply of free eggs was depleted. The market price for eggs plummeted in Jean’s village and, as a result Jean was forced to sell his productive assets, his chickens.
The next year, after Jean had left the poultry business, the church that had supplied the free eggs turned its attention to another disaster in another part of the world. Jean’s community had no capacity to produce eggs locally and was forced to import eggs from a neighboring town. The cost of these eggs was higher than the eggs Jean had sold, so both Jean and his village were hurt economically by the good intentions of one American church.