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An Angle On Charity You’ve Never Heard

29 June 2010 One Comment

The following article entitled “Charity? Humbug!” was written by Doug Casey, a world-renowned investor and economist.  Casey is the founder of Casey Research.  The following article was originally published at libertyunbound.com.

I believe the following article is a great example of the type of article that challenges our thinking.  You may disagree with some or all of what is said in this article, but it will surely challenge some of the ideas in your head.  Casey is unafraid of political correctness and definitely offers some compelling insight.  The following should be read with an open mind:

If Warren Buffett really wanted to be charitable with his billions, he would have concentrated on making billions more.

Simply put, I don’t believe in philanthropy or charitable giving — at least not the ordinary kind.

Charitable giving and the concept of charity itself are among the stupidest and most destructive humbugs stalking Americans of good will today. Warren Buffett’s bequest of $31 billion to the Bill and Melinda Gates Foundation provides an excellent opportunity to discuss the harm done in the name of charity and the confusion that surrounds the topic.

If you have the money to invest, you’ll almost certainly die with some assets; maybe a lot. But how should you dispose of them? This is definitely a “hot button” subject, combining aberrations from the very topics that are most susceptible to irrational thought: money, family, politics, and religion.

I wasn’t surprised to hear of Buffett’s bequest. He’s said for years that he would only leave a comparatively token sum to his family. But in my view, this cements him in the “Idiot Savant” roll call of rich guys, although not as solidly as the intellectually brain-dead, ethically vacant, and unintentionally comical Ted Turner, he of the billion dollar bequest to the United Nations. And although I haven’t included Bill Gates on that list in the past, he definitely belongs there for his huge bequest to his own foundation. (And also for the spineless way he responded to the government’s antitrust suit against Microsoft back in 1998. If it had been my company, I would have transplanted it to a friendlier clime — and paid for the move with just a couple of years’ tax savings.)

My guess is that despite his intelligence, expertise, and generally affable, self-deprecating manner, Buffett is profoundly misanthropic. Like Gates, Buffett has a classic anticapitalistic, limousine-liberal mentality toward money. He says imbecilic things like, “The market system has not worked in terms of poor people” (on a recent “Charlie Rose” show). That matches Bill’s incredibly hackneyed and politically correct press conference statement: “We really owe it to society to give back.” No, you idiot savant, society — which is largely composed of nonentities who produce no more than they need to survive personally (if that) — owes you a huge debt for your work with computers. I’m just sorry you’re not actually worthy.

Many people of great wealth seem uncomfortable with money, a feeling which perhaps underlies their pathological urge to hand it over to the undeserving. Andrew Carnegie was another sufferer: “A man who dies wealthy, dies disgraced.” Discomfort with wealth is among the many reasons the Orient will overwhelm the West in the next few generations. Buffett’s and Gates’ grandchildren may be working as maids and houseboys for the Chinese. A rich Chinese wouldn’t dream of leaving his money to a charity, to be dissipated by the do-gooders, world-improvers, socialites, and socialists who almost invariably infest the board of charities.

A Chinese billionaire in Hong Kong will leave his entire fortune, tax free, to his kids. Unless he plans early and well, an American billionaire will leave his children only half, after taxes. Or much less after our sick ethos of giving draws off a large portion to politically correct charity. So the next generation of Chinese will start out with perhaps three or four times the capital of their American counterparts whose parents had the same assets. And unburdened by either income taxes or idiotic American attitudes towards money, they will make it grow much, much faster.

But it goes far beyond that. Accumulation itself is benefaction. The accumulation of capital, no matter who owns it, adds to the demand for everyone’s labor, and so enriches everyone who can get out of bed. Giving, on the other hand, is a tricky business. It can easily result in waste or in actual harm. From mankind’s point of view, if not from Tiny Tim’s, Scrooge was a more efficient benefactor before the ghostly visits than after.

Buffett says he doesn’t want to reinforce the power of those who are simply “members of the lucky sperm club.” But the solution is not to exclude people from the lucky sperm club by perversely disinheriting them, but to help enrich society by making ever more people members of it.

I deplore Buffett’s intellectual dishonesty. While tax avoidance is one reason he likes to hold investments “forever,” he’s philosophically a great believer in taxes. It’s hard to respect his hypocrisy. But I do respect his ability to recognize his own mortality. I also respect that he’s obviously not attached to his wealth, and that he’s actively chosen its recipient. He sees that Bill and Melinda will likely outlive him by 20 years or more, and knows that, at least while they’re alive, his money probably won’t be frittered on the embarrassing and dishonest hornswoggles initiated mainly for the aggrandizement of foundation trustees — the fate of almost all left-to-charity fortunes great and small. Instead, his money will be blown on nonproductive Band-Aids applied to people who will just get used to having Band-Aids provided for them.

That’s partly because the Gates Foundation seems to have a concentration in health programs for the Third World. On the face of it, who can argue with alleviating disability and disease? But building clinics, training doctors, and passing out antibiotics won’t alleviate disability and disease. Spending money that way treats the symptom and neglects the cause. It may relieve the pain of some people, but, laudable as that might be, it does nothing toward solving the problem. The reason these people and millions of others live in chronic misery is solely and exclusively political. In fact, the Band-Aid money — just like the rest of the trillions squandered in “aid” by the West over the last 60 years — serves mostly to sustain the criminal governments ruling the places where most people are poor. And despite whatever measures Gates may take, his Band-Aid gifts will hugely fatten the rulers’ offshore bank accounts and add to the army of impoverished mouths to feed. If he showed even a little imagination and economic sense, he’d invest the money as venture capital in the shares of biotech companies. Or, perhaps, follow the excellent example set by Grameen Bank, which provides micro loans to poor people. The bank gives borrowers the capital to earn a decent living and then gets the capital back, with interest, to repeat the process.

It may come as a surprise to these misanthropic philanthropists, but people actually don’t like being the object of someone else’s charity; it’s degrading, and they resent it. It’s much like the comments made by an Iraqi on seeing a GI (who undoubtedly thought he was being a good guy and making friends) passing out candy to the kids in the neighborhood: “These Americans treat our children, and us, like animals in a zoo, throwing sweets to us, to make themselves feel good.”

Confused Phonies Love Charity

Aspen, a town where I spend some time in the Northern Hemisphere’s summer, offers an excellent microcosm of what 99.44% of charity is really about: rich people feeling self-righteous and showing off their wealth with large donations. Almost all the “must go to and be seen at” parties in this town (as with those in New York, L.A., and every other center of wealth) are charity fundraisers. Does anybody care a whit about where their money is going? Not really. That’s got nothing to do with why they’re making the donation. Charity is done for the psychological and social benefit of the giver, far more than for the welfare of the recipient. Will I pony up a few grand for one of these things, feeling as I do? Sure. I view it as a ticket to a spectacle. But there’s a big difference between paying for a party and giving billions to create a bureaucracy that can corrupt society for generations. I really don’t care if it’s for an efficiently run good cause, either.

Why not? First, most charity injures both the donor and the recipient. The donor, who presumably had the ability to earn the capital, is poorer, and the recipient is degraded by the receipt of an unearned, and likely undeserved, good.

If you really want to make a kind gesture to someone, for some category of people or for mankind in general, charity, even under the best of circumstances, is the least effective approach. Under the worst circumstances, such as government welfare programs, it destroys both the giver (through taxation) and especially the recipient (by habituating him to receive stolen goods and lodging him psychologically and economically at the bottom of society). It’s perverse and shameful.

But what’s wrong with, say, giving a community a hospital? Plenty. If you want to see a hospital go up, then by all means build one — with the intention of making a profit. A hospital (or anything else) that is “nonprofit” is inevitably a boondoggle that soaks up capital. The project usually depends on further donations to stay above water, partly because the staff who run it have no direct interest in controlling costs, and partly because they have no honest way beyond their salaries to benefit from delivering a good product. Indeed, management usually welcomes ballooning expenses because the process builds satrapies that provide good cover for inflated salaries.

A for-profit hospital, on the other hand, breeds more capital — for expansion, improvement, and even dividends — because shareholders will get rid of any management that fails to do so. It’s self-sustaining and gives consumers what they want.

A hospital run like a charity should be closed and sold to the highest bidder. The same is true of nonprofit libraries, universities, and research centers: it would make as much sense to have homebuilders, auto dealers, and department stores run as charities. But if they were, there’d be no capital to give to charities in the first place.

The whole idea of helping the poor — supposedly a major focus of philanthropy — is a slippery slope, usually bottoming in a dismal ethical swamp.

In a rich country, why are poor people poor? Sometimes, it’s true, bad luck can strike, and a person may need help. But that’s what friends and neighbors are for. And if a person doesn’t have any friends, and his neighbors won’t help him, chances are he’s not worthy of help. Over a lifetime, most people get what they deserve. The fact is that most people who experience perennial bad luck simply have bad habits. They drink too much, they don’t care for themselves, they’re ignorant, they’re lazy, or they have other vices. In a free society, someone who’s poor almost certainly deserves his fate. To hell with him. And to hell with charities that encourage him to stay that way.

Sometimes, of course, a person may sincerely wish to improve the world because of a generous if unfocused impulse, rather than because it improves his standing with witless people who care about such things. My first suggestion for him would be to make sure he’s not just a busybody. Do the people of Iraq really need democracy? Do the folks in Afghanistan really need to learn about Jesus? Do the natives in the Brazilian jungle really need western medicine? I don’t know. Do Americans need an Iraqi to tell them why they need an authoritarian ruler to give U.S. citizens proper direction, purpose, and discipline — things many feel Americans lack? Do the folks in America really need to learn about Muhammad? Should Brazilian natives expel America’s pharmaceutical companies and substitute their herbal remedies, which many believe are sometimes safer and more efficacious? Frankly, sticking your nose into somebody else’s business, even if you think it’s for his own good — something charities and governments specialize in — is generally a very bad idea. And, I’d say, usually unethical.

What should you do with your money if you really want to improve the world? Earn more of it. Money (unless it’s gained through force or fraud) is evidence that its owner has created wealth — and that’s only done by providing other people with things they want. Making money and getting wealthy is therefore the greatest act of benevolence you can provide the world.

And there’s no altruism required. Altruism, viewed as a virtue by Boobus americanus, is actually a debilitating vice. The modern zeitgeist is perverted on the topic of altruism. It sees gifts to the natural objects of affection — family, friends, purposes that excite the giver — as hardly gifts at all. True gifts, in the modern view, are gifts to strangers. Make a gift to a family member and you are subject to gift tax. Make a gift to a 501(c)(3) organization that plans to feed Martians if any hungry ones show up and you get a tax deduction. It’s possible that someday Buffett’s and Gates’ children will face a life-or-death problem that could be managed — if they had a billion dollars. If that happens, will Dad look like a charity pervert?

In any event, altruism means sacrificing your own values and welfare for those of someone else, which is always a bad idea. A sacrifice means giving up a greater for a lesser good — otherwise it wouldn’t be a sacrifice but a price paid for a greater value. So making a sacrifice should be morally repugnant to any self-respecting individual. Don’t confuse concepts like economy, or trading the pleasure of the moment for something better later on, with a sacrifice.

One person with a sound view on this was the late Ayn Rand. I remember being in an audience in November 1981, when she gave what I believe was her last speech. A question came up from an unsympathetic audience member. “Miss Rand, what would you do about the poor?” Her answer was, in my view, about the best one-liner conceivable: “Make sure you’re not one of them.” What, you might ask, happened to Rand’s not inconsiderable estate when she shed this mortal coil? It appears she left it to one of her acolytes in the obvious hope that he’d continue her work. Regrettably, he seems to have been a better sycophant than philosopher, someone you might have thought Rand herself would have seen as a second-hander who’d only sink into deserved obscurity as the figurehead of a minor secular cult. Which proves that there’s risk no matter whom or what you leave your estate to.

What To Do?

This brings us to the problem of where, exactly, you should bequeath your money. And it should be a specific person, not a foundation, committee, or charity of any type. Most people think of their children as the first candidates, which is reasonable and proper. After all, since you brought them up and you’ve known them all their lives, you’d think they’d be ideal recipients. Certainly, we’re all genetically predisposed to see our children in the best possible light. Not leaving your money to your children is tantamount to admitting that you either brought them up badly, or that they were just bad raw material. Marcus Aurelius, the most philosophically inclined of the Roman emperors, left the empire to his son Commodus — a man who should make Americans see a distant mirror when they watch Baby Bush. Both Marcus and the elder Bush could have done much better had they adopted someone with character and intelligence.

The Romans had a big advantage, in that they typically didn’t put the kind of store we do in genetically related children. Caesar, for instance, adopted Augustus. Adoption for the purpose of inheritance was quite common, and it makes a lot of sense. Why not choose the best person to benefit from your wealth and power, to make them grow, instead of leaving your estate to someone who might have no merit except, as Buffett observed, membership in the lucky sperm club? Leaving a million (or ten, or a hundred) to the right young person might give him a huge head start on turning it into a billion. Which would benefit all mankind, because that billion represents real wealth that, unless it’s frittered away by a charity, a government, or a wastrel — the three enemies of prosperity — will continue to exist even after the heir dies.

That being the case, let me reemphasize that the good Buffett and Gates have done for humanity lies in creating the capital in question, not in giving it away. Of course, they have a perfect right to convert their assets into $100 bills, throw them in a huge pile, and put a match to their fortune. But that would be stupid: since the currency is a liability of the U.S. Government, the government would be the only beneficiary.

I’m sure you’re thinking of lots of objections to what I’ve been saying; philanthropy is accepted as automatically as . . . shudder . . . democracy for being an unalloyed good thing. The usual straw men beg to be set up: “What about the blind baby that’s thrown into a trash can?” and such. My answer is that most people would want to see the baby rescued. And the richer the world is, the more likely it is that people will try to do so. In poor countries babies in trash cans are hardly noted; here they make headlines simply because they’re so exceptional. Are we more moral than poor Third Worlders? No. We’re just richer.

So what would I do with Buffett’s billions? With that kind of money one could literally buy a country. The place could be made devoid of taxes, regulations, and legislatures. It could make the progress of places like Hong Kong and Dubai seem retarded by comparison. And it would actually and sustainably do what the lame-brained Gates Foundation says it hopes to do.

Do I give to charity now? Sure, but strictly on a person-to-person basis. Notwithstanding my reservations, it would seem that humans are almost programmed to do it. But I’m extremely discriminating, even if somewhat mercurial and eclectic.

What will I do with my money at some point in the future? I think I’ve spelled out the theory and the alternatives. One thing I can promise is that a charity won’t see any of it. Nor, hopefully, any wastrels. Nor, absolutely, any government.

One Comment »

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