In the course of a recent post on Warren Buffett and the Efficient Market Hypothesis, Scott Sumner made the following aside:
Bill Gates essentially taxed middle class consumers all over the developed world, and is giving almost all of the money to the disadvantged in poor countries. That’s something governments don’t do, and yet for his “monopoly profits” he is despised by many on the left.
This prompted a hearty Amen from Arnold Kling, who added:
There is a huge contest going on between politicians and rich people over who should get to spend their money. Most of us have no direct stake in the outcome–as neither politicians nor rich people, we will not have the choice.
But I think we really ought to be rooting for the rich people. That is, we should root for lower taxes and less government spending. Government is one of the worst charities in the world. It advertises that it is going to give money to worthy causes, but very little money goes to programs that are aimed at people in need, and not many of those programs hit their targets. All of the bleeding hearts who are thrilled by the idea of government closing tax loopholes and taking more money from rich people should do an empirical analysis of who benefits from government spending and who benefits from the spending of rich people.
I’m not aware of any empirical analysis comparing the results of private charity versus government spending, but I suspect Kling is right that, dollar for dollar, you get more bang for your buck from private charitable spending than you do from government spending. If your average rich guy decides he wants to give away his money in the most beneficial way possible, he’s probably not going to just give it to the government, and I don’t think that’s just because he’s being foolish.
Of course, the counter-argument here is that the rich won’t give nearly as much away voluntarily as they now pay in taxes. Even if private charitable contributions are (say) twice as effective as government spending, if the government wasn’t taking the money from them they would only give away (say) 10%, which means tax and spend is still a better deal, all things considered, than is relying solely on private charity.
This argument, however, is made plausible only by a failure of imagination. If we really wanted, we could easily design a tax system that would get us the best of both worlds. For example, if the rich currently give 5% of their money to charity and pay 25% in taxes, one could raise the effective tax rates on the rich to 30% but allow taxpayers to subtract a dollars’ worth of tax for every dollar donated to charity.
That, of course, would be taking things a little too far. Presumably there are some areas (defense?) where a dollar of private spending is less beneficial than a dollars’ worth of government spending, and one would not want to apply this sort of credit system to taxes used to support that sort of spending. On the other hand, I would be surprised if most government spending turned out not to fall into this category.
While I think that this sort of idea has a lot of promise, I don’t expect anything like it to be adopted any time soon (indeed, the Obama administration seems to be moving in the opposite direction). The reason, I think, has to do with who gets the credit for private spending versus government spending. Politicians like to brag about how much they’ve spent on program X, Y, or Z. Saying that you made it easier for Mr. Moneybags to spend more on X, Y, or Z doesn’t sound nearly as impressive, and a good deal of the credit for whatever good this spending does will go to Moneybags rather than to the politicians. Likewise, the evidence suggests that among the general public advocating higher government spending is a substitute for actually giving to charity. Saying that you favor the above sorts of changes to the tax code just doesn’t have the same conspicuous compassion value as saying you favor higher levels of government social spending.
Why don’t we work on eliminating the need for this sort of top-down ‘charity’ to begin with?
Don’t get me wrong, I think it’s a fine thing when a rich man gives money to charity.
But I also think of what Jesus said about the old woman who gave her two sheckles at the temple after all of the rich men had left larger gifts. In his view, the old woman gave more, because it was all she had.
So, if someone with a billion dollars gives away a million, in a certain sense but not an absolute sense, it’s the same as if a man with a hundred dollars gives up one dollar, or man with one dollar, one penny.
This can’t be the answer. Catholic social teaching implores us to pursue all charitable avenues, of course – some state assistance is necessary, and donating money to ‘charities’ is also a good thing. But neither of these are sufficient. The main thrust is to approach individuals in need not as mere objects of assistance from public or private charity, but as dignified human beings who can and should be enabled to support themselves.
This is why I advocate distributist and communitarian principles and solutions, and why the Church has always supported them as well. Both welfare and private charity often just ‘give a man a fish’. But it isn’t enough to ‘teach a man to fish’ either, if he has no fishing rod.
Catholic social teaching says, give a man a fish, then teach him to fish, then give him a rod so he can fish. You do it all.
That’s why Russell Kirk said capitalism and socialism are two sides of the same coin.
And Gates is a great example of why “trickle down” doesn’t work, though I just thought of it.
Gates has not spent billions on helping the poor in foreign countries. He has spent billions on *killing* the poor in foreign countries, as has Warren Buffett, his mentor.
That’s a very interesting proposal. But I think government is more effective at poverty reduction than charities because it can engage in large-scale income redistribution. And I’m not sure charitable giving outside of poverty reduction should be given preferential treatment over for-profit investments.
All of this only means that government is in the wrong hands; if government were in the right hands not only would income redistribution be more “distributive,” but the educational institutions and bureaucracies would be TEACHING that charity benefits the donor as much or more than it does the recipient.
We Christians don’t give to the poor so that poverty should be finally eliminated–Our great Teacher has told us that this is impossible; we give to the poor so that WE (and the world around us) might be refashioned in His image. And anybody who uses the ideology of neo-liberal, “Free Market,” post-Enlightenment capitalism to argue the heretical notion of the “primacy of the individual” in economic decision-making is actually speaking the language of the Devil.
As I understand it, Catholic social teaching advocates a mixed system, whereby private property is a safeguard against government tyranny, and government action a remedy to the evils of the market.
What’s wrong with this commonsensical vision, which is “centrist” in today’s politcal terms? What’s wrong with some form of “social democracy” that good will and good management cannot correct? It seems to me the best we can shoot for in this vale of tears. Now there’s a rallying cry!
Gates has not spent billions on helping the poor in foreign countries. He has spent billions on *killing* the poor in foreign countries, as has Warren Buffett, his mentor.
What?
David,
I think JC is pointing to Gates monetary support for abortion. On the other hand, I think there is more than abortion involved in the abuse found in Gates’ “philanthropy,” for, as Zizek points out, he has this money because of his ruthlessness, and he is charitable only as a means by which he can sustain the system in which he is able to get out on top.
It’s true that some of the money from the Gates Foundation has gone to unworthy causes. However, the total amount of money that’s gone to groups that promote abortion pales in comparison to the amount of money Planned Parenthood receives from the U.S. government each year (and this is before counting any additional money coming from Obama’s changing the funding rules). So whether it’s through private charity or government spending, money is sometimes going to be spent badly. The question is who does a better job overall?
It’s true that some of the money from the Gates Foundation has gone to unworthy causes. However, the total amount of money that’s gone to groups that promote abortion pales in comparison to the amount of money Planned Parenthood receives from the U.S. government each year (and this is before counting any additional money coming from Obama’s changing the funding rules)
There is a failure of logic in the above. Both the Gates Foundation and Planned Parenthood fund abortion. Neither does so with federal tax dollars.
There is a huge contest going on between politicians and rich people over who should get to spend their money. Most of us have no direct stake in the outcome–as neither politicians nor rich people, we will not have the choice.
In a dicatorship, yes. In a representative democracy, we do have a choice.
But I think we really ought to be rooting for the rich people.
I don’t
Government is one of the worst charities in the world. It advertises that it is going to give money to worthy causes, but very little money goes to programs that are aimed at people in need, and not many of those programs hit their targets.
I would disagree. Private givers have the right to give to who they wish. And while their favorite charities do have social value — the Opera, the Symphony, Ivy League Schools, their own houses of worship — I don’t think the lopsided giving to these charities is of the level of social interest and need as many others. Public initiatives include the eradication of Polio, the Marshall Plan, the school lunch program, LIHEAP, social insurance, Section 202 Housing, Food Stamps and ‘Meals on Wheels.’
I’m not suggesting that private charity is not important and valuable. I support our American dual system of both public and private initiative (as well as public funding of private community based organizations). I just wouldn’t put all my faith in the charity of the rich.
No. The question is, rather, why do we have a system which allows and encourages the ridiculous amassing of wealth for the top %.5 percent of wage earners, which hypocritically holds out the “possible” amassing of wealth as the “American Dream”, and which simultaneously fails to provide a living wage to a large minority of workers, all while denying them even the rudiments of basic health care? An anecdote about Dorothy Day: the Catholic Worker, following the example of a late medieval/Renaissance monk (whose name a forget) who refused to accept donations from a wealthy usurer on the grounds that those monies were obtained evilly, struggled with the question of whether it is right to accept donations from philanthropists like Carnegie, etc., whose fortunes were amasses on the backs of the exploited.
It is telling that this response is so completely foreign to our sensibilities that no one even raises it as a possibility.
“Bill Gates … is giving almost all of the money to the disadvantged in poor countries.”
Can we please have a QUANTITATIVE definition of “almost all.”