Saturday, August 07, 2010
Billionaire Giveaways Also Serves Self Interest
Warren Buffet and Bill Gates have persuaded 40 billionaires to sign a 'giving pledge' to donate half their fortunes to charity. So much better to save millions of childrens' lives through their Foundation than for Bill and Miranda Gates(pictured) to squander it on yachts, private jets or even private submarines (for more on this see Robert Frank's Richistan). But before we swoon with gratitude, Wilby asks us to consider:
1. Billionaires would contribute more to the social good if they did not pay top accountants to minimise their tax bills. As he points out:
two-thirds of US corporations contrive to pay no federal income tax at all and that transfer pricing alone – a legal device, used, for instance, by Ellison's Oracle Corp, that converts sales in one country to profits in another where tax liabilities are low – deprives the US treasury of $60bn annually. Such sums, which pile more taxes on the poor and reduce funds for government projects that advance the public good, dwarf what the 40 billionaires propose to give away.
2. By giving away so much of their wealth the rich divert attention from the scandalous inequality produced by free enterprise economies. Consequently the dynamic of such unequal societies is left unaltered and relatively unnoticed.
3. I'm delighted thre Gates and Buffets of the world are signing this pedge but Wilby has reminda us of an inmportant caveat. I'm no Marxist but old Karl did claim that the capitalist ruling elite would go to extreme lengths to preserve its wealth and power- even, it could be argued, to the extent of giving away much of their fortunes.
1. That pre-supposes that Government spending would enhance social good. Given the daily flow of stories of welfare dependency, that is doubtful.
2. The only unfair inequality I can see is that 100,000 families a year get more on benefit than the average salary. These things need to be put right. Any other inequality is due to a difference in talents or application. Such inequalities are to be applauded as incentives to hard work.
3. I doubt such magnanimous gestures do anything to preserve capitalism. It is a natural state, and will exist in all societies, even if they outwardly claim otherwise. In any case, the power of global capitalism and the flow of money would prevent any serious challenge.
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