Warren Buffett's 'Giving Pledge' Might Be the World's Greatest Contradiction

Story Stream
recent articles

Austrian School eminence Ludwig von Mises long ago made the rather vanilla point that “capitalism makes the world ripe for socialism.” It was vanilla because Mises was merely stating the obvious.  Absent the immense wealth wrought by capitalism, what could the childish promoters of wealth redistribution promise to redistribute?

What was plainly a throwaway line penned by Mises came to mind recently while reading the class warfare musings of Financial Times columnist Jenny Lee.  In a column meant to expose billionaires as “silly,” Lee reminded us how silly people can be when they grow up in an era of plenty.  Capitalistic wealth (a redundancy of there ever was one) affords all-too-many a perch from which to preach.  The problem for Lee is that hers unwittingly contradicts her argument. 

Lee has a problem with the superrich.  As she sees it, “We don’t need billionaires.  We need their billions back.  For the cities that already exist.  For the people in them.” That’s why Lee supports Warren Buffett’s “Giving Pledge.” She believes that “it is moral to fix what is broken,” and that the billions given back by billionaires will help fix what she deems broken.  Where does one begin?

Up front, it’s their wealth.  So while the self-unaware Lee isn’t at all guilty about giving away that which she had no role in producing, it should be said that it’s not my place to tell the rich what to do with their billions. 

At the same time, it’s not untoward to ask in a broad sense why? Wealth invariably springs from removing unease from the lives of many through mass-production of the formerly obscure, so why direct precious wealth away from production? Specifically, Red Cross doesn’t have near the track record that Walmart does when it comes to meeting our needs (in crisis and in calm), so why not leave precious wealth in the private sector? There are no Sam Walton equivalents without capital, successful entrepreneurs constantly innovate in ways that make life more convenient, so why direct wealth away from wannabe innovators in favor of non-profits?

Which leads to a follow-up question perhaps not asked enough: why does one’s success in the for-profit space supposedly make this same person primed for success in the non-profit? That Bill Gates endlessly improved the lives of billions with his Microsoft achievements is a given.  Can the same be said about his charitable foundation?

In Lee’s case, she says she “shouldn’t be a billionaire.” Sure, but the greater truth is that Lee likely couldn’t be a billionaire. Rare is the columnist who turns witticisms into billions.  But even if Lee left writing to try her hand at actual commerce, nearly as rare is the individual who meets the needs of millions and millions in order to earn billions.  It’s a good bet that the only positive result of Lee entering the proverbial arena is that her entrance into that which is typically defined by failure might cause her to appreciate the entrepreneurs whom she presently decries. 

To all this, Lee might respond that while her skills render her unfit to meet the needs of the millions necessary to attain billionaire status, most billionaires can’t write columns like she does.  Which is precisely the point.  It’s not nothing to have a perch at the Financial Times.  While some will say reading Martin Wolf contradicts the previous assertion, the reality is that a major global newspaper has given Lee impressive real estate inside.  About that, she should be proud.  Few can do what she does, but then she almost certainly can’t do what billionaires have done. 

Stating the obvious, pursuing one’s comparative advantage is a wise thing.  Lee writes to entertain, Jeff Bezos relentlessly pursues ways to enhance the consumer experience, while Donald Trump’s genius at property and PR means that his last name is on buildings around the world.  Think about Trump for a second.  What he’s achieved in the property space is nothing short of remarkable.  People literally pay him (and now his sons) to slap his name on prominent buildings all over the globe. 

To all this, some will reply that Trump is a dolt.  They’ll point to what he’s said and continues to say about trade wars, authoritarian leaders, and immigration.  Ok, but that too is precisely the point.  In a strict policy sense, Trump is as out of his element as Lee would be if she decided to start up an automobile brand, and having done that, attempted to ship one of her productions into space.  Lee’s column mocked Elon Musk for doing just that, but Lee, like 99.9999% of the world, would appear exponentially more foolish trying to emulate Musk than Trump does when he talks policy. 

Despite this, Lee thinks it essential that billionaires give their billions back in order “to fix what is broken.” Not explained by her is what billionaires would know about charity.  They likely know as much as Lee knows about building cars, or erecting tall buildings.  

But the bigger problem with Lee’s desire to pressure the creators of wealth to give it away is the contradiction at the heart of mass giving in the first place.  Simply put, charities don’t take in dollars in order to stare lovingly at them.  Non-profit charities seek dollars in order to exchange them for actual goods and services created in the for-profit sector. 

Applied to Lee’s confident assertion that seemingly good billionaires have signed Buffett’s “Giving Pledge,” she blithely ignores that the latter only means something insofar as the entrepreneurs she decries are creating goods and services to begin with.  Charities once again take in money so that they can distribute the plenty created by the productive; many of them members of the billionaire class.  Money has worth to profits and non-profits only insofar as worthy goods and services are mass produced in order to improve the lives of the downtrodden, sick and troubled. 

Lee claims that “no one should be” a billionaire.  That she’s confused is a blinding glimpse of the obvious, but it also obscures a crucial point.  Missed by someone who should surely stick to penning alleged “insights” is that absent the billionaires she laments, there’s little money to be given away.  More important is that there are few life-improving goods and services for the money to be exchanged for. 

John Tamny is editor of RealClearMarkets, Director of the Center for Economic Freedom at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is titled They're Both Wrong: A Policy Guide for America's Frustrated Independent Thinkers. Other books by Tamny include The End of Work, about the exciting growth of jobs more and more of us love, Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com.  

Show comments Hide Comments

Related Articles