> Agreed, we've done a pretty amazing job to become so productive. But we've done a terrible job of distributing this among the world's population.
The problem isn't distribution - it's a couple of different things.
Forgive me if this seems obvious, but the biggest reason some people are poor is lack of production - by and large, the poorest people aren't producing very many things that their fellow man wants to trade them things for. Even looking at charity as a short term bridge, to be independent and emancipated person you need to produce as much or more than you consume. So, why aren't they producing? That's a heck of a complicated question. I'd say the number one most common reason is bad government, and the number two is time.
Bad government - well, you know how that works. I was just in Cambodia last month - no matter how much you'd like to produce, you're not going to be able to to under Khmer Rogue Agrarian Communism. You need basic free action, liberty, human rights to produce.
Most people agree with that well enough. But they don't necessarily like the second answer - time. It takes time for people to grow into producing and succeeding. The fastest it happens is 1-2 generations, but those are people coming from cultures with high priority on education, industry, and family ties (I'm thinking of Ashkenazi Jewish and Han Chinese as my first examples - people from those cultures regularly go from nothing to fairly wealthy in 1-2 generations). Most more normal cultures, it seems to take 3-5 generations of incremental lessons and improvements to get out of poverty. My great-grandparents were dirt poor - literally had nothing, my grandparents were quite poor, my parents came up poor and moved into middle class, and I've got a shot to break upwards from there.
I think you can help people out with that cycle, but only so much. I mean, the track record of foreign aid is really, really bad. (I can dig up some citations and studies if you don't know about it - but foreign aid has basically failed to end poverty in the countries it was sent to; poverty actually increased in a number of places that got large amounts of aid) I think it really does take 3-5 generations under normal circumstances for people to get into the right mentalities of produce things, consume and save wisely with the money, educate your children, delay gratification, etc, etc. Much of this happens in the home. These lessons take a while to learn.
It's not a consumption problem first - it's a production problem. It's not that there's not enough food to eat - it's that people aren't growing and cooking enough food. If they were, they'd have enough to eat. When we keep giving people food, that doesn't seem to get them into learning how to grow and cook, which is what they need to be emancipated and independent, living, producing, and getting wealthy on their own.
> It's pretty appalling that with our current levels of productivity there are still so many people whose basic needs are not being met.
First and foremost, I think you've got to be an optimist at how great things are. Flush toilets are a luxury in Cambodia, man. I think it's marvelous that we have so many flush toilets in the world. Seriously, I'm in Hong Kong now, and I'm walking into nice hotels and using the men's room there and just really enjoying the experience. After Cambodia, using a nice bathroom feels like incredible luxury to me.
But I digress - first and foremost, there's the problem of bad government. Bad/corrupt/stifling rule = no progress. So the people of Burma, North Korea, Venezuela, Cuba are in trouble until then. You need protections of human rights and liberty, and some sort of sanity about allowing people to produce and keep what they produce. No mass murdering, arrests and tortures, confiscation of property at the whim of some bureaucrat.
And then you need time. Cambodia's rapidly improving since the Vietnamese government overthrew the Khmer Rouge in the early 90's. It was an utter wasteland under the Communists, now it's poor but improving every year. In two more generations (40-50 years, they have kids young there), it'll be fairly prosperous. They'll have flush toilets, they won't have the same traffic accident rate, there'll be more hospitals and infrastructure and clean food and water and medicine. Things will improve. It does take time, though.
Actually, of all the things that improve nations, ironically, it seems like foreign investment into industry does the best. But maybe this is selection bias - industry is only built in stable places, and we already know stability is important. Still, I see a lot of the wealth in Cambodia coming from foreign investment in hotels, hospitals, and other infrastructure that was designed for Western visitors, but is also immense help to the Khmer people. (The hospital is half-price for Khmer, for instance, and those hotel jobs are highly sought after)
> I guess it depends what you mean by efficiently allocating capital. What's the end goal? Just to produce as much as we can?
Well, it doesn't hurt. Things we produce start out as luxuries and eventually become commodities. There's (slow) internet in Cambodia, which is a result of the people who made hardware and software and networking originally. There's cars in Cambodia. They'll import flush toilets eventually. (You can find them already at luxury places) Medicine that gets invented in the West gets genericized 15 years later, and is available for very little money in developing places at that point. All the knowledge we invent and innovate makes it's way over there. They can and do use modern agricultural techniques. New designs on cars and clothing and manufacturing make the way over to developing places.
Yes, actually, producing as much as we can is a pretty good plan for improving the world. That, and overthrowing bad governments I suppose. Then it just takes time - people need to learn little lessons about producing, saving, delaying gratification, and so on. It takes a little while - we're all of us still just overgrown apes and all - but we're moving forwards at a pretty remarkable pace.