That can be just as bad, but for different reasons. It distorts the economy, in potentially very harmful ways, because it can induce some really perverse incentives. Real situation: in India, Western companies paid so much above the local rates that qualified doctors were working in call centres because it paid many times more than working in a hospital or clinic. When my friend visited, he was told not to tip anyone. Because what might be a casual £1 tip to you, might be a months wages to someone else. So to answer your question, giving people "free money" without any reciprocal commitments can be extraordinarily harmful.
> Real situation: in India, Western companies paid so much above the local rates that qualified doctors were working in call centres because it paid many times more than working in a hospital or clinic
I'm gonna call BS on this one. Do you have a source?
> Because what might be a casual £1 tip to you, might be a months wages to someone else.
I'm not seeing a problem with that. Why is it bad if someone gets a random bonus; an occasional lucky windfall? Where's the harm?
> Why is it bad if someone gets a random bonus; an occasional lucky windfall? Where's the harm?
Because soon everyone and their dog will be looking for jobs that provide the opportunity of such an occasional lucky windfall. They will be crowding around the rich westerners, neglecting all the jobs that would actually be important for the local community.
Gotcha. So your boss also shouldn't be giving out spot bonuses to employees, because "everyone and their dog" will start applying for your job. Do you not see the fallacy of your logic?
If the supply of labor into Western tourist-oriented industries increases, the odds of getting a big tip reduce, and average wages remain the same. This restores the equilibrium.
> neglecting all the jobs that would actually be important for the local community.
Waiting tables, cooking, cleaning, and driving taxis and buses aren't important jobs for the local community? How do you define "important"? If these people had skills that paid more and/or led to higher prestige opportunities, don't you think they would take those jobs instead?
And what do you think they do with the occasional big tip they earn? They spend it on local goods and services, stimulating the local economy and providing opportunities to local entrepreneurs. They spend it on educating their children so they have better opportunities than waiting on wealthy tourists. They pay direct and indirect taxes (even unreported cash tips are spent on taxed goods) that allow their governments to fund infrastructure improvements (more opportunities for local entrepreneurs) and social services.
If you're too stingy to tip 15-20% when you go to poorer countries, just say that. I hate tipping culture in the US. But don't say you're doing it for their good, because that's just not true.
