The flaw in this is right here, "There is this very, very old puzzle/observation in economics about the lawyer who spends an hour volunteering at the soup kitchen, instead of working an extra hour and donating the money to hire someone to work for five hours at the soup kitchen."

The lawyer does not truly spend the hour in the soup kitchen for the purpose of feeding people. But rather for what the lawyer gets out of spending that hour. Things like motivation and understanding the problem better.

Here is a concrete illustration of the principle. Back in the 1960s, Robert Townsend made it a requirement at Avis that everyone had to work a certain amount of time each year behind the service desk. Having vice presidents do that work was certainly not cheaper than hiring a random person to do it. But having vice presidents be directly aware of where the problems were in that job was in the long run far cheaper than letting them remain unaware and therefore not fixing the problems.

This is not what Robert Townsend is best known for though. He's known for having come in to a failing company, and turning it around. In particular he is the CEO under whom the slogan "We try harder" was begun. A slogan that, incidentally, was produced by his inspiring the ad people to try harder themselves!

He tells the story in his book Up The Organization! He didn't have a big ad budget. So he asked how he could best motivate the ad people to work on his account. A friend advised him that what they really most wanted was creative freedom. So he told them that he'd accept whatever they said was their best idea, sight unseen. This is why they dared come up with a slogan that undermined standard assumptions about how to do business - and it worked!