This is a very simplistic view of macroeconomics, and like most simple things it wrong when applied to a complex system. Wealth is a comparative value within one’s sphere of influence. When expanding our view outside that sphere we can be tricked into making invalid assumptions, such as we can make someone on the other side of the globe equally as rich as we are by simply sharing whatever dollars would elevate them to equality in relation to the exchange rate of the currencies involved.
If we aren’t willing to transfer that value in real resources, not just the money representing those resources, all we do is inflate both currencies when the attempt is anything larger than spotty “feel good” efforts of charity. This disparity of money to resource value isn’t just a global issue, it also is very obvious between regions of our own country, mostly driven by land value.
A fairly large bank transferred its central office from California to S. Dakota some years back and offered employees the option of moving with the company, which many did. Those people, largely lowly clerks, and mid-level managers sold their modest homes in California and found that the taxman would take a huge bite of the sale if it wasn’t reinvested in residential real estate that was their primary residence.
Even having a small bungalow half paid for in California allowed them to purchase a home so opulent, fully paid for, in S. Dakota that the city had to open a new development for the newcomers that was up to the standards so much money represented there. Their incomes were, of course, adjusted down to the local standards, so many found their new McMansions a huge burden that they couldn’t afford, especially as the economic activity from building so many large luxury homes created localized inflation and increased land/property values.
Many of the developing nations such studies make comparisons to are largely agrarian/barter economies once one gets beyond their larger cities. Land values are relatively cheap, or zero, and their need for money to fund survival isn’t as dominating of their lifestyles as it is here. They are naturally envious of the luxuries that we take for granted but are also aghast at the thought of children being homeless or hungry which we have become adjusted to.
They probably have a better sense of value, denominated in real resources, than we do. Wealth, to them, is only as durable as the resources, making hoarding a useless effort. They are not forced into labor to create more than they consume to gain “money” to trade for the things they need and they won’t die in debt. Isn’t that the motivation behind the survivalist movement here?
The best thing we could do for those who are truly poor in terms of resources is to bring some of their brightest kids here to teach them engineering and then send them home with solar panels, computers, and some servo motors.
