Markets, Charity, and African T-Shirts

Recently, I was interviewed for an article from the United Church of Christ’s Tri-Conference Ministries. During that interview, I mentioned that I had recently read about the idea of doing good recklessly (I didn’t originally read it on Cheezburger, but you can read the same thread that I did there). The interviewer pushed back a little, pointing out that doing good recklessly can cause real harm. And she gave the example of companies and organizations dumping t-shirts into African markets, damaging local clothing industries.

At the time, I said that there are large-scale policy issues (like market regulation in African nations) and there are small-scale examples of generosity (like paying for someone’s groceries). But African t-shirts are a common example of charity gone wrong. So I want to take some time to look the African T-Shirt Problem and what it really tells us about markets and charity.

Let’s dig in.

Background

There are at least two ways that the troubling, cheap, Western-branded clothing ends up in Africa.

First, some manufacturers, retailers, and other players in the clothing industry dump clothes that they cannot sell in Western countries, in Africa. For example, in 2019, some manufacturer undoubtably made commemorative L.A. Rams Super Bowl champion jerseys, ready to be sold right after they won. Of course, they lost to the New England Patriots, so the L.A. Rams jerseys couldn’t be sold in the United States. But they could be sold—or given away—to people living in poverty, victims of natural disasters, and so on.

Second, some nonprofit organizations like Oxfam and the Salvation Army send secondhand clothing overseas. Again, sometimes these secondhand items are sold (to traders, who then sell them in what are, for all practical purposes, retail shops) and sometimes they are given away to people who need them.

The African T-Shirt Problem argues that making cheap clothing available hurts the local economy. After all, if someone can get a t-shirt or pair of jeans or whatever for less than retailers can sell locally-made goods for, customers have an incentive to by the cheap items instead of the locally-made items. As demand for the locally-made items falls, retailers stop selling them, wholesalers stop selling them, and, eventually, manufacturers go out of business.

There are obvious economic concerns here. It makes intuitive sense that flooding the market with cheap secondhand or discarded clothing would damage the local clothing industry. That, in turn, would destroy jobs in that industry, damage the ability of people in that industry, and so on. On this view, sending cheap secondhand or discarded clothing to impoverished communities in Africa—or any other continent—is obviously bad. It would be better to leave people in those communities to support and build up their local industries.

Markets and Charity

Imagine two shops.

Shop A sells t-shirts for $10. Therefore, its potential customer base is composed of people who want to buy the t-shirts that are there and who can afford to pay $10 for one of those t-shirts. It does fine business.

Shop B opens later. It sells t-shirts for $5. Therefore, its potential customer based is composed of people who want to by the t-shirts that are there and who can afford to pay $5 for one of those t-shirts.

Does any of Shop B’s customer base come from Shop A’s customer base? Almost certainly. There are probably some people who normally shop at Shop A who will like Shop B’s t-shirts well enough and appreciate the cheaper price. Those people will leave Shop A for Shop B. But it’s also true that some of Shop B’s customer base will be made up of people who couldn’t afford a $10 t-shirt.

So, on the one hand, Shop B almost certainly does some damage to Shop A. But, on the other hand, Shop B provides services to people who Shop A was not serving. Whether we think of this as a good thing or a bad thing is a pretty good example of the Gatekeeper’s Dilemma: do we care more about not harming existing businesses or about providing services to unnerved or underserved populations. And, in the end, that probably has to do with how badly the existing business is harmed vs. how many unserved or underserved people are helped.

But the really important thing here is that this is not about charity, it is about market performance.

Charity, in a narrow sense, has three defining traits: (1) it is rooted in a connection to the divine, (2) it is specifically directed towards people living in poverty, and (3) it is about the reformation of the donor. I realize that this kind fo definition might be much too narrow for a lot of people. But even if we use the word ‘charity’ in a broader sense, surely the core of charity is that it is directed towards people who are living in poverty or otherwise unable to meet their basic needs. In other words, people who are not being served by existing markets.

So, let’s add Shop C to the mix. Shop C does not sell t-shirts. It gives them away for free. And while it is not an ogre about it, it does a reasonable job of ensuring that it is giving those t-shirts only to people who cannot afford to shop at Shop A or Shop B. There may be some people who try to take advantage of Shop C, so it may cut into the customer bases of Shop A and/or Shop B. But, in general, Shop C should have a minimal impact on the existing businesses.

Now, we would need to know more in order to characterize Shop C as charitable, but it is certainly closer to the world of charity than it is to the world of markets. That matters. There are businesses and nonprofit organizations that enter the market spaces of impoverished communities, and we can certainly critique the effects of those businesses and nonprofit organizations entering those spaces. But we should also recognize that entering market spaces is categorically different than doing charitable—or even quasi-charitable—work.

Discarding the African T-Shirt Problem

There is a real African T-Shirt Problem. When businesses, whether they’re for-profit or nonprofit, enter the clothing market—or any other market—with relatively cheap goods, that really does cut into the customer bases and profits of local businesses. But I rarely see the African T-Shirt Problem used to argue for giving impoverished communities tighter market controls.

(In fact, when people argue about what impoverished communities need in order to develop their economies, the loudest and most powerful voices are usually found arguing for less market regulation. Rarely mentioned is the fact that it was removing restrictions on foreign trade that opened the floodgates for the secondhand and discarded clothing sector in the first place.)

Instead, the African T-Shirt Problem is usually deployed in order to argue that even the most well-meaning charitable operations really hurt the people that they are intending to help by damaging the existing businesses that need to thrive in order to pull communities out of poverty. But, as we saw above, this just isn’t true. Directing goods and services to people who would otherwise be unable to access them simply does not harm existing businesses. In fact, by putting goods, services, and money in the hands of people who otherwise would not have them—by increasing the wealth of people who are excluded from markets—we help those people join those markets (and, therefore, the businesses that are part of those markets).

So when it comes to critiquing charity, let’s discard the African T-Shirt Problem.

Right now, there is a movement in churches and nonprofits arguing that charity is toxic, that helping hurts, and that the entire nonprofit sector needs to be reformed to truly lift people out of poverty. These charity skeptics are telling Christians that traditional charity deepens dependency, fosters a sense of entitlement, and erodes the work ethic of people who receive it. Charity skepticism is increasingly popular; and it is almost certainly wrong.

Now available from Wipf and Stock’s Cascade Books imprint, Radical Charity: How Generosity Can Save the World (And the Church) weaves together research and scholarship on topics as diverse as biblical scholarship, Christian history, economics, and behavioral psychology to tell a different story. In this story, charity is the heart of Christianity and one of the most effective ways that we can help people who are living in poverty. Charity—giving to people experiencing poverty without any expectation of return or reformation—can save the world and help make God’s vision for the church a reality.

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