In a September 19 WSJ article, Geoffrey A. Fowler reported that more billionaires are signing on to the idea, promoted by Bill Gates and Warren Buffett, of giving away large portions, at least half, of their money. Well, it is certainly more blessed to give than to receive (Acts 20:35), but whether such largess is a better idea than investing the funds in new GDP-generating, job-creating, and government funding enterprises depends, in my opinion, on what they give it to, how well the recipients manage it, and what other options the donors have for investing the money.
The article included a puzzling and blog-post-inspiring quote from Gordon Moore, 83 year old founder of Intel and author of the famous Moore’s Law: "…it's a good idea and has shaken loose a lot of money that otherwise would have been tied up for a long time." Well, only if somebody had it stuffed in a mattress somewhere or in a safety deposit box would it have been “tied up,” because otherwise the money was supporting some endeavor or enterprise already.
I have no first-hand information about this, but it is very likely that donations of Messrs. Moore, Gates, Buffett, and other billionaires are in the form of shares of appreciated stock, donated unsold to avoid capital gains taxes and estate taxes, to a foundation, which might continue to hold the shares and use the dividends from them to support its work. So, the money would still be “tied up” in those shares of stock. Or the foundation might sell the stock and use the proceeds from the sale in some new or existing charitable effort which might even involve hiring a lot of people. In that case, somebody else will have to come up with money to buy the stock so that equivalent amount of money would still be “tied up,” having previously been “tied up” in something else. Only if the overall transaction were so large as to result in a decline in the value of the stock would less money end up being “tied up,” and that would be a bad thing.
Don’t get me wrong. I believe we are stewards and not owners of our financial assets and responsible for using them wisely, voluntarily and systematically giving to worthy causes and people in need throughout our lives and, when possible, being personally involved in the work of the organizations and persons we give to and through. These billionaires are generous to want to give the money away and spend time managing the gifts, and generosity always trumps stinginess.
But, stinginess isn't the only option. If a wealthy person has a good idea for a new product or service that will be of benefit to humankind, investing money and time, hiring people, and taking risks to make it a reality, earning more money in the process, would not be less moral than giving away the money and would be better than irresponsible giving. Such business development is no less important to the future than, and is a prerequisite for, philanthropy…and for tax revenues too, by the way.
As an example of the point I am trying to make, think of George Vanderbilt, wealthy grandson of Cornelius, whom I wrote about in a July14, 2012 posting on this blog. Here is what I said:
One bit of residue of the Vanderbilt fortune is Biltmore Estate in Asheville, NC, built in the late 1800’s, the “gilded age,” by grandson George. To many it seems to have been an extravagant indulgence (Check out this recent column by Mona Charen.), but he built a town to support the project, pushed the limits on technology, and employed thousands in the design and construction of it, artists and craftsmen and laborers, thereby revolutionizing the Western North Carolina economy. One hundred and forty years later, Biltmore Estate, a working farm and resort, employs 1700 people and hosts a million visitors annually from all over the world. Now that was a real jobs program!
I’m not arguing that George was virtuous for building Biltmore but just that, while he didn't live long enough to enjoy it, it was a worthwhile endeavor that paid off big for other people. Had he just freely distributed the money to the citizens of Western North Carolina, he would have been widely celebrated and admired at the time but any positive effect would probably have long since disappeared.
Summing up the life of the infamously ruthless Commodore who made his fortune personally networking the nation with railroads and connecting its ports with steamships while driving down the cost of freight, I said this: "The Commodore lived into his eighties, rare for the time, but it’s too bad he couldn't have had an additional productive hundred years. If he had, the United States rather than Japan would have been the leader in high speed trains and Amtrak would never have been created."
A modern day Vanderbilt, smaller scale of course, recently introduced to me by a David Brooks column, is Elon Musk, entrepreneur extraordinaire, founder of Zip2, SpaceX, Tesla Motors, and PayPal and a philanthropist who has signed on to the pledge to give away at least half his fortune. I just hope he doesn't give it all away before he runs out of ideas because he is a serious job creator and GDP generator.
Bill and Melinda Gates are apparently doing great work around the world in the fields of health and education. Mr. Buffett is apparently giving much of his money to the Gates foundation. If they all bring along their personal management skills with their money, I have no doubt that much good will be accomplished, many problems solved, and countless lives improved. I thank and congratulate them. But I would also be happy and offering congratulations if they had come up with another economy building, paradigm changing, job creating, idea such as MSDOS which launched the personal computer business and lifted far more people out of poverty than will ever be possible with charitable giving from their personal fortunes.
And here is another option to stinginess. One curmudgeon billionaire quoted in the Fowler article, German shipping magnate Peter Krämer, said that individuals should not have the right to determine use of such large sums of money, that it should instead be taxed away and its use determined by the government. I don’t like that idea either, nor apparently does Mr. Buffett since, although he has publicly announced support for a trivial increase in his income taxes, he is responsibly doing whatever he can to keep his vast personal fortune out of government hands which would disperse it completely in just a tad over one day.