Social Policy in Ontario

A couple of weeks ago, the world’s richest men, Bill Gates and Warren Buffett, launched a scheme to “invite” America’s billionaires to give away half or more of their wealth.

This move was widely interpreted as applying “pressure.” It thus left the impression that America’s Super Rich are a stingy bunch. Similarly, it tainted any signatory of the “Giving Pledge” with the suspicion that he or she might not have coughed up unless Bill and Warren — like the two portly gentlemen in the Scrooge story — had turned up on behalf of the poor.

The motivation behind the move is intriguing. Capitalism is perpetually under siege, and particularly so in the wake of the 2008 financial crisis and the BP blowout, the two latest alleged examples of the unbridled “greed.” But far from defending this remarkable wealth-generating system, which enables individuals to indulge their charitable urges on an unprecedented scale, the Giving Pledge seems to confirm that there is something wrong with it. More than that, it supports the subversive notion that private wealth is somehow really collective property, to be marshalled by the High Minded.

Capitalism and philanthropy have in fact always been closely allied since the days of John D. Rockefeller and Andrew Carnegie (whose reward was to be dubbed “Robber Barons”).

One problem is that what makes people exceptional businessmen also seems to make them regard themselves as exceptional Public Spirits. They not only vaunt their own good deeds, but seek to bully or cajole others to match their own level of conspicuous donation.

Messrs Gates and Buffett are clearly unsatisfied by the massive task of giving away their own money effectively, although Mr. Buffett has taken the easy way out by giving the bulk of his pledges over to the Bill and Melinda Gates Foundation. But Mr. Gates, far from being doubly occupied by this further responsibility, has sought to expand his Salvationist crusade to ever more impossible heights by “leveraging” his own funds with taxpayer money (which should be cause for taxpayer revolt). Indeed, it is not certain if Stephen Harper’s “maternal health initiative” amounts to the Gates Foundation partnering with Canada or Canada partnering with the Mr. Gates. Opposition snipers such as former Liberal Cabinet minister Ralph Goodale have been quick to declare how disgraceful it is that Mr. Gates is contributing more than Canada, even if Canada is contributing more than any other country. So much for lying down with billionaires.

Mr. Gates has also become an advocate for corporate arm twisting both to make more products for “the poor” (under pain of government sanction), as well as becoming directly involved in promoting such grand UN schemes as the Millennium Development Goals. He has called for a “Creative Capitalism,” which muddles bottom-line objectives with political ones. This potential morass is also called “Philanthrocapitalism,” which again implies that capitalism and philanthropy need to be negotiated together.

One of the more bizarre analogies for the Giving Pledge is that it is like the promise taken by alcoholics, as if a talent for wealth creation was some kind of disease. According to The Economist, no less, the Giving Pledge letters “are intended to create a moral obligation, which will be reinforced by peer pressure from others who take the pledge — a bit like members of Alcoholics Anonymous who promise to stay off the booze.” But then maybe that parallel is less surprising when you realize it was Economist New York bureau chief Matthew Bishop who co-wrote the book Philanthrocapitalism.

Unfortunately, universal support for the idea of “giving something back” implies that business fortunes were the result of “taking something away.” But people become rich under capitalism overwhelmingly in proportion to how many people they employ, how well they serve consumers and how much they support their local communities. Moreover, there seems to be an assumption that if  great fortunes are not “given away,” then they might be frittered away by feckless heirs or somehow sterilized. In fact, wealthy heirs are far more likely to sell out to support anti-capitalist causes (a classic example being the Pew Foundation). Meanwhile such fortunes are not hidden under the mattress. They take the form of investments.

There is also the thorny issue of the effectiveness of what amounts to “private foreign aid.” Certainly, the public version has been a resounding failure.

It has been estimated that if the nation’s 400 billionaires gave away half their fortunes, that would lead to a one-time hit of US$600-billion. The amazing thing is that Americans already contribute US$300-billion to charity annually, making them by far the most charitable people on Earth, at least in absolute terms (and twice as high per capita as Canadians).

While Messrs. Gates and Buffett should be free to give away as much as they like, and pressure their peers to their big hearts’ content (although I hope somebody has been bold enough to tell them to mind their own philanthropy), their activities become dangerous when they start directing public policy: Philanthrostatism. The best thing great capitalist entrepreneurs can do for society is to create jobs, serve consumers and make profits.