When one of the most popular economic blogs writes a post like this (title: "Should We Be Leery of the Generosity of the Uber Rich?" - no - seriously - that is the title!), and the overwhelming majority of the commenters agree with the author, it makes me weep for the future of America.
Run for the hills! The uber-rich are trying to turn us into slaves by generously donating vast amounts of money to causes which they believe in! (SARCASM ALERT!)
Run for the hills! The uber-rich are trying to turn us into slaves by generously donating vast amounts of money to causes which they believe in! (SARCASM ALERT!)
Now you're actually complaining about the way in which the wealthy GIVE their money to charity? Wow. Amazing. I'm quite literally almost speechless.
It takes a seriously warped, entitled mind to twist The Giving Pledge into a Tool of the Oligarchs by which they deviously gain even more control and impose their social world views with evil intentions.
And what alternative would those who are objecting propose? Do the objectors think we'd all be better off if the government confiscated Bill Gates' wealth via taxation instead? Is anyone going to seriously attempt to argue that they'd rather have the government spending the money than Bill Gates' targeted charitable endeavors?
Do people really believe that George Lucas took The Giving Pledge so that Star Wars Nineteen, "Revenge of the Keynesians" gets special treatment and prime screen placements? Do people really believe that Warren Buffett has ulterior motives in giving his money away - like favorable freight tariffs for his newly acquired Burlington Northern railroad?
Do objectors really believe that charitable givers shouldn't have a right to direct the uses of the money they are donating? Do protesters think that there should be one big "charity" pool that all donations must go into, and that the government then decides how to spend? (hint: that's kinda like what we have already - TAXATION - except taxes aren't optional).
Like the title of the post says: the era of populist entitlement attitudes has jumped the shark.
EDIT: 8pm: The comments on the original post over at NC (linked above) have gotten even more preposterous. I tried to get involved a little bit there, and I encourage readers to see the nonsense responses my simple, direct question elicited)
-KD
40 comments:
Exactly KD. The question I ask (as you mention) is what is the alternative? I for one have full faith in the generosity of the "uber-rich" I think these guys are more effectively going to give their money away than the government would anyway (sorry if you were trying to avoid the political comments)...
J Johnson - i always try to avoid PARTISAN comments - but i agree completely that Bill Gates is better at giving his money away than the government. I don't even think it's debatable.
It makes me despondent reading the comments on the NakedCapitalism article that prompted this post. downright despondent. I'd love for one person to make the case that the world would be a better place if one of those Uber Rich philanthropists didn't make his charitable donations.
i think that people have a problem with uber-rich in the first place, and confound the issue...
When I think of all the good the billions Gates has given away has done, it's probably 100X more effective than any government plan. Not sure what the point of that NC post was, was there one?
You don't understand, Bill Gates supports poisonous vaccines!!
I would ask why Bill Gates has so much money to give away in the first place. It ain't skill, foresight and industry, the usual efficiency justification for permitting vast wealth accumulation. When Gates dies, he should be forced to leave all his money to a foundation that helps families set up wireless home networks, a futile activity that has destroyed the leisure hours of millions of hapless people around the world. Then, he should go to hell.
Wow this has already gone to dumb level.
So... let's go back to the days of charity coming from churches and private institutions like the Salvation Army? Dismantle the Welfare State? Eliminate unemployment insurance, medicare/medicaid, social security (and SSDI), TANF -- but VA disability benefits okay? Is government "giving money away" and "personal responsibility" code phrases for classism, racism or just a deeply held belief that every red-blooded American stands on his own two feet, knows his own mind, keeps his promises... and isn't a "useless eater"?
Whatever.
The difference between private charity and public "giving money away" is that the latter cannot be conditioned on religion, color, ethnicity, or gender. In practical terms, the latter represents a societal commitment that requires congressional action to undo and a right to receive. Private giving is usually a gratuitous promise, a gift with strings, that normally isn't an enforceable contract by the donee.
Whatever you may think of the adult recipients of "given away money," their kids don't deserve your judgment or indifference to their fate.
wow Transor - YOU have jumped the shark... is that REALLY how you read my post? that i'm in favor of church charity and the salvation army? come on. it seems that you completely missed the point, which is that if you're complaining that the uber-rich are giving money to charity, you're batshit crazy.
it sounds like you're arguing that you believe that the government's charitable endeavors are as effective as the uber-rich's private charities. as i said, i'd argue vehemently against that, although IT"S NOT EVEN THE POINT - the rich ALREADY HAVE THIS MONEY. I'm going to yell some more now.. DO YOU WANT THEM TO KEEP IT? OR DO YOU WANT THEM TO GIVE IT AWAY?!?!?!? Changing the tax code is a separate issue, although certainly related, and I think you'd have a hard time arguing that the government could do more good with this money than these charities can.
(by the way, nice that you threw the kids in there at the end - you forgot the puppies and kittens! do you think that the uber-rich are only setting up charities to help rich white families? really?)
but please, do feel free to illustrate all these classist racist charities that you'd rather have shut down.
Time to read, or re-read, "Atlas Shrugged" by Ayn Rand.
It saddens me to see this evolving. Our ADHD culture, without any kind of "walk a mile in my shoes" consideration. The lack of deep, quiet, contemplative, insightful THINKING.
Reading too, a lost art. The book I mention is long, packed with long passages that are not easy to digest, but worthwhile to finally comprehend. I hope that some might read it, and begin to think.
Good Morning Kid,
Thanks for, as usual, trying to inject some modicum of rationality into an otherwise absolutely nutty debate. Reading your post here and over on Yves site I was reminded of a couple of Karl Popper quotes:
“No rational argument will have a rational effect on a man who does not want to adopt a rational attitude.”
“It is impossible to speak in such a way that you cannot be misunderstood.”
Please keep writing.
Cheers, Anon
@KD:
Nah. I didn't bash private charity if you read what I wrote. I just called out some possible underlying attitudes/assumptions and delineated important distinctions between the two types of "giving money away."
Federal agencies are much better able to ensure accountability through audit and the occasional DoJ refferal.
Please give me one concrete example/case study demonstrating why the Gates Foundation "gives money away" better than NSF, NIH or CDC for medical research.
And asserting that philanthropy isn't significantly influenced by criteria that would be illegal for public entities merits a "wow. Just wow."
Note that nowhere have I bashed private giving or indulged in conspiracy theories.
-TZ
the case that the world would be a better place if one of those Uber Rich philanthropists didn't make his charitable donations
Resolved: the world would be a better place if philanthropists could not make charitable donations
Definitions: philanthropist == one who makes large charitable donations
charitable donation == gift to 501c3 tax-exempt organization
I. The charitable donation subsidy is deadweight loss
The government subsidizes charitable donation. Every charitable dollar given by a philanthropist costs society substantially more than a dollar to make. This is deadweight loss. Ending deadweight loss makes the world a better place.
II. Charitable donations encourage bad fiscal policy
501c3 deductions cost the government $50 billion a year. Needlessly lower government revenue encourages shortsighted decisions. The recent refusal to extend unemployment at lower cost than this subsidy is a case in point. Avoiding shortsighted spending decisions makes the world a better place.
III. Charitable donations encourage bad tax policy
501c3 contributions seem on the surface to be purely individual donations. This risks voter misapprehension of the government subsidy to funding. Avoiding voter misapprehension encourages better tax law and makes the world a better place.
IV. Charitable donations break meritocracy
501c3 contributions to meritocratic institutions encourage unequal treatment for thos associated with the donors. Unequal treatment breaks meritocracy. Not breaking meritocracy makes the world a better place.
transor, you're losing me. you are the one who sarcastically sniped: "let's go back to the days of charity coming from churches and private institutions like the Salvation Army?"
to equate the targeted giving of the uber rich to the charities of churches and the Salvation Army is embarrassing. In fact, it's the Salvation Army who engages in EXACTLY the type of social value instilling that the NC readers were complaining about. You can read their moral views yourself:
(http://www.salvationarmyusa.org/usn/www_usn_2.nsf/vw-dynamic-arrays/B6F3F4DF3150F5B585257434004C177D?openDocument&charset=utf-8)
and you're missing the point, see, I don't have to prove that the Gates Foundation does a better job than the government - the people complaining that the Gates Foundation is Evil need to prove the alternative. Cute tangent though - implying that if this wealth were confiscated via taxation that it would go to the NSF, CDC etc (complete with their ACCOUNTABILITY! wink wink.. I'll take capitalist intelligence and business sense over government "Accountability" every day of the week).
In reality, it (the tax revenues) would go toward another 99 weeks of unemployment insurance - not perfectly efficient government accountable research (you did actually sound SERIOUS when you wrote that, though, oddly. perhaps you forgot your sarcasm font?). do you really want me to waste my time proving to you that the Gates foundation is working on more productive endeavors than the government's typical political band aids and stopgaps? REALLY Transor?
please - i'm more than willing to listen - show me an example of how the "Generosity of the Uber Rich" is making the world a worse place. PLEASE. good luck... (note: you'll have to do a lot better than the nonsense 30,000 word article Yves Smith linked in the comments trying to portray Gates' food initiatives as a net negative - epic fail there)
wcw, please...
1) fallacy of composition - good effort, but what you're saying is that a dollar in Bill Gates' pocket resulted from a lot of dollars spent by society. Totally irrelevant, unless of course you want to outlaw profit.
2) poor political leadership encourages/results in shortsighted spending decisions - philanthropy does not cause poor spending decisions.
3) i honestly have no idea what you're stretching for here
4) philanthropy by these Kings of Capitalism is the very DEFINITION of meritocracy, contrary to your claim. of course, many of these items are related right back to the idea that these Kings of Capitalism can allocate capital more efficiently than the government can.
to those who would rather have the government take the money (ie, TAX it) than to have the Uber-rich use their money and expertise/experience to get more productive results: ponder this:
we've learned from the Chartalists (MMT practitioners) that the government need not actually collect tax revenues in order to spend money. The government can just SPEND. Thus, would you be happier if Gates et all took all their charitable donations and just put them in a big pile, in cash, and lit them on fire instead of trying to put them to good use?
that way, the money would be removed from the system, and the government could just create more and do whatever it wanted with it.
sounds absurd, in my opinion, but it's functionally equivalent to what you're saying.
@KD:
I guess I don't understand what your views are on entitlements. What are they?
Also, please don't lump me in with Yves' faithful regulars. Those people are VERY serious about their liberal arts degrees.
I don't give a shit how the uber rich spend their money when they're dead. As long as they're paying taxes while they're alive.
TZ
TZ -i don't even know what we're arguing about anymore. My post was an assault on the idiots complaining about rich people giving to charity. I think they are absolute morons, and their complete inability to answer simple questions, relying instead on their blind faith in their fearless leader (YS) did nothing to alter my views.
There was never any insinuation that rich people did or did not pay their taxes - that's an entirely separate issue.
Is your beef that charitable contributions are tax deductable?
i don't want to get into entitlements here - i would think that i've made myself clear on that in past blog posts (and i have another one coming later this evening) - suffice it to say that we, as a nation, are a bunch of spoiled entitled babies who take things for granted.
the reason i put "entitlements" in the title here was because somehow these fucktards (sorry, i really don't think i can use strong enough words) think they are entitled to decide how Gates will spend not only his own money, but also his CHARITY's money. That infuriates me.
I wanted to include the "Code Red speech" from A few Good Men, but a friend told me it was slightly off topic... "I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the very blanket of the freedom that I provide and then questions the manner in which i provide it... either way, i don't give a DAMN what you think you are entitled to!" (change FREEDOM to CHARITY)
Damn, we're starting to sound like we're married.
TZ
Re: The Atlas Shrugged comment--some of us think that Bill Gates and Warren Buffett "are" the looters! Both of them are rentiers and are simply giving back the rents they extracted. Perhaps it's better that they do it through a charity than the government, but far better if they had never extracted the rents to begin with.
BDWIK - ah hah... that's a different argument, and one i have no interest in. I will say, though, that I HATE the term rent-seeker and all that nonsense about "extracting rents," etc, but that's probably because i like capitalism... No one is forced to pay MSFT's economic rents if they don't want to... CHOICES...
Not for nothing, but I'm pretty sure the neo-lib-faux-populo-fasco-entitlism (that's the type of words one can learn/create at NakedCap), hasn't jumped the shark just yet.. More still to come.
Interesting post and comments...
the origins of the term jumped the shark are kinda funny - I had to look it up
jumped the shark
"It takes a seriously warped, entitled mind to twist ... "
Not a terribly nice thing to say about Yves.
Not for nothing, but I'm pretty sure the neo-lib-faux-populo-fasco-entitlism (that's the type of words one can learn/create at NakedCap), hasn't jumped the shark just yet.. More still to come.
Interesting post and comments...
the origins of the term jumped the shark are kinda funny - I had to look it up
jumped the shark
scharfy - your comment will show up eventually - i see it in my inbox twice already. don't post it again. I don't know why it's delayed
What this points out is that when you have a small number of people doing a large fraction of charitable giving, their choices will reflect their preferences. Translated into the retail world, you get the eiderdown comforter ($9000+) for your bed at a boutique instead of the options at Target. If the point of charity is somehow to make the world more humane, just, or democratic then the more people involved in making giving decisions, the better. Basically, we'd be better off having 1 million families, with their knowledge of their communities and their needs, choose a charity for a $1000 donation than 1 person giving away $1 billion.
you know what, anon - i could probably be persuaded to agree with you that it's better to have 1mm donations of $1000 each than a single donation of $1B. but it's pretty much irrelevant to the point.
would you prefer if the billionaire did NOT give away that billion? if he spent it on hookers and blow instead? or lit it on fire?
KD, I wasn't answering you, but your commenter. In my thesis, charity is defined by its tax exemption, which might explain 1-3. As for 4, your argument not only requires you to have skimmed past my definition, but also to have turned a lifelong blind eye to underperforming friends and family of large donors. I can't compete with that sort of skill.
The comparison of 1m x $1e3 vs 1 x $1e9 much more neatly than my quick outline gets at the heart of the point. There is no such thing as private charity, any more than there is such a thing as a solitary Randian superman. In the US we nonwealthy taxpayers subsidize charitable donations by the wealthy.
WCW - i knew my number 4 would be potentially controversial.
so I realize that for you it was about tax deductability..."In the US we nonwealthy taxpayers subsidize charitable donations by the wealthy." That's kinda a twisted way of looking at it, especially since the wealthy pay most of the taxes, and the nonwealthy often times pay none, but...
don't you think charity is about more than a tax deduction? you sound like you would quite literally be happier if Rich Guy Joe (random hypothetical) didn't make his $1B charitable donation, and instead paid taxes on $1B more. That gets right back to the heart of who does more good with the money... and right back to my point number 4 above, but i'm not sure I follow your complaint... are you saying that Gates' (for example) offspring and friends benefit greater than the average citizen from his charities? or that they are the ones in charge of the charities and do a lousy job?
This is an important discussion that provokes strong partisan sentiment. It's important because it involves first principles: what is the proper role of government in promoting the general welfare and prosperity?
The charity-or-government choice is fallacy of false alternatives. It's also anti-intellectual. The roles of government and private charity are very different and their strengths lie in what each can do well that the other cannot. Charitable giving can help refurbish or build a house of worship and support missionary activities. But it is exceptionally awful at coordinating with other donors and establishing the long-term commitmentsnecessary to pilot, stabilize, and continue to follow through in delivering a program. This is fact, not opinion. But, among other strengths, charity can be more nimble. But in truth, the two kinds of social support are very different.
If the uber-rich and the uber-corporations that made them so spent less time subverting government to their own ends through regulatory capture, corruption, plum positions after leaving public office and any resources at all improving inefficiency and quality in government service... But I'm tilting at windmills even going there. The fact is our system of government and economic system are hopelessly out of balance.
The liberals attack the economics and the conservatives attack government. The elected representatives just try to "get theirs" for the most part with very cynical attitudes about ideals and principles.
So discussions about charitable giving devolve into partisan food fights along the rather absurd lines of Bill Gates' effective tax rate because his admirers have more faith in his ability to spend his own money than the welfare or Medicaid office. Holding private charity up in competition with proper government function saddens me. Because I know it's a product of frustration but there's a certain amount of taking my toys and going home about it, turning our country into an opt-in system of government.
TZ
but TZ - that's exactly why I'm so angry about this - partisan views should have nothing to do with it. Is it or is it not good that rich people give their money away? Is that a debatable question? (i didn't think it was - I thought this post was another one that's impossible to disagree with)
I guess it's debatable if Gates is using his money to charitably engineer a master race and wipe out all "inferior" people on Earth - yes - but he's not. And no matter how much people want to find ills in the charities of the uber-rich, I'm quite confident in one claim: they do more good than harm. Simple.
we're talking about charitable giving - we're NOT talking about Bill Gates' tax rate. It becomes partisan because liberals chime in with the hatred of the rich, how all their gains are immorally gotten, etc etc etc... although i strenuously disagree with that view, I think it's a SEPARATE issue.
this issue is that Bill Gates has this money and he's giving it away! and people (on the NC thread) are COMPLAINING ABOUT THAT! just think about that. it's flat out ludicrous. i really don't know what else to say. Some complain that they're doing it too loudly - and one complainer cited Ted Turner's Giving Pledge letter - I read it - you can too - Turner LOUDLY gave a lot of money with the goal of getting others to also give a lot of money - the best kind of peer pressure! I'm not asking anyone to give any of these Uber-rich philanthropists medals for their charity - but jeezus - don't COMPLAIN about the charitable giving - to answer the initial question, a resounding NO - we don't need to be "leery" of it.
you're absolutely right about the partisan sideshow - but it's a distraction from the real issue - it's not the real issue itself. That's how I ended up in a "I don't even know what we're arguing about" spot earlier.
KD, I don't think anything you're saying is controversial. Luck swamps skill, as we know, but your assertion that wealth is the result of meritocratic process is uncontroversial. Skill in one area does not imply skill in any other, yet your assertion that amassing capital is associated with skill in donating to good causes is equally uncontroversial. My indictment is of very conventional error. Your repetition of it arouses at most a shrug.
As for we nonwealthy taxpayers subsidize charitable donations by the wealthy, how that is twisted eludes me. The Joint Committee on Taxation prepares a report on the cost of tax subsidizes annually, in which the subsidy to charitable donations properly is treated as a simple fact on the ground. I suppose if your null hypothesis is zero taxes, your position might make sense, but that counterfactual isn't very useful. In a world with zero taxes, I posit that wealth as we know it is impossible. Might as well bring up a world without gravity in a discussion of downhill skiing.
WCW - bring it back to your MMT (Chartalism) - gov't need not tax to spend, which is why i brought up the choice of having the uber-wealthy burn their money in a big pile instead.
would you prefer that? then they wouldn't get the tax break, which you're "subsidizing."
ps, i take meritocracy to mean that those who are good at what they do do well. ie, success isn't based on skin color, height, origin - but rather, competence. (side note: at the first firm i worked at out of school, which is now a Wall Street powerhouse, this wasn't the case - so i quickly quit and went to another firm where it was the case)
I understand it's not perfect, but it's not nearly as bad as Haters of Capitalism would have you believe. And I don't really want to get into it, but what I mean is that if Gates' product sucked and there was something better, we'd buy the something better and MSFT wouldn't one of the country's largest companies.
WCW's arguments are actually anti-taxation arguments. Taxes also create deadweight loss and break meritocracy.
As to his statements 2 and 3, one wonders how an entity that acts imprudently with restrictions upon its resources will act more prudently as those restrictions ease. Since when does more money induce wiser allocations?
The government regards charitable deductions as subsidies because it presumes a right to such money. If you view taxes as a charge against personal discretionary money, then reserves spending without a personal benefit should not carry the presumption of a tax obligation.
Of course, people have differing views about the underlying right of a government to tax.
related, from The Onion:
http://www.theonion.com/video/christian-charity-raising-money-to-feed-nongay-fam,14180/
KD:
You wrote:
"we've learned from the Chartalists (MMT practitioners) that the government need not actually collect tax revenues in order to spend money
"
The government(US) actually *does* need to collect money, through taxation or borrowing, before spending. Some/all? MMT'ers describe a hypothetical world, not the one we live in, when they state that the government does not need to collect before spending. I am not entirely sure why *some* of MT'ers claim that they describe the real world monetary operations wrt to funding gov. spending.
VJK
KD:
gov't need not tax to spend
Government spending is taxation. Revenue policy, including formal tax law, distributes the burden.
would you prefer [having the uber-wealthy burn their money in a big pile instead]
No, because modern economies do not handle deflation gracefully.
those who are good at what they do do well
Yes, that's meritocracy. If you believe all those who are good at what they do, do well, I have a very pretty bridge to sell you. Of course, you fled a Wall Street powerhouse where this wasn't the case. You know from bitter experience.
rabbit:
Taxes also create deadweight loss
Certainly. Taxes, however, fund government, which is the way modern society solves collective action problems. When the government breaks down so much that those solutions no longer outweigh the deadweight loss from taxation, my arguments imply an end to taxation makes the world a better place. Pace military spending, this does not yet reflect modern democratic society.
VJK - what do you mean the government needs to collect money before spending? they can just create it... I agree that some MMT'ers live in a hypothetical world - but I don't think that point is hypothetical.
WCW - what do you mean that government spending IS taxation? and by the way - there would be no deflation if Gates burned his money in a pile - because my base assumption was that the government would just spend the amount he burned - I was using it as an example to show an equivalence to him paying taxes... Instead of paying taxes (in general, deflationary) and letting the gov't spend the money (in general inflationary) he could burn it and the gov't could still spend it... right? get it?
KD:
'...they can just create it"
By the current law, the Fed does not let the government run overdrafts. Therefore, in the current reality, until the law is changed, the government must issue bonds before spending, it cannot just 'print' money that is not backed up by bond issuance first.
KD:
"if Gates burned his money in a pile"
Burning money is as deflationary as taxing or issuing bonds -- fewer IOUs compete for the same amount of goods.
Today, the Feds can use only one knob, the FFR, to impact the amount of money in the system (the MMT'ers are right about that one).
vjk: "Burning money is as deflationary as taxing or issuing bonds" yes - that was my point...
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