Wednesday night I attended a nice little event for Yes! Magazine supporters and enjoyed many great conversations. One conversation in particular, with Jule Meyer Principal of Parkman Foundation Services, revolved around philanthropy and the great Giving Pledge campaign started by Bill and Melinda Gates. Now, I should preface what I’m going to talk about with this statement: I think the world’s wealthiest donating most of their wealth to noble causes is a wonderful idea. I just have a few misgivings around the intention and the implicit idea that the giving is a sacrifice for others.
The Gates’ number one ally in getting the campaign rolling, Warren Buffett attempted to start the giving by pledging that “more than 99% of [his] wealth will go to philanthropy during [his] lifetime or at death.” At face value this appears to be quite the statement: more than 99% of his wealth given away! However, it seems to me that Buffett’s pledge might be more for show and is slightly disingenuously when labeled as philanthropy. Here’s why…
The Richest of the Rich
Perhaps it is difficult for the majority of us to actually realize how much money the top 1% of the world have in their bank accounts. A simply way to think of it: the richest 1% of Americans possess more than all the combined wealth of the bottom 90%. In Warren Buffett’s case, he’s currently valued at around $47 Billion – with a B. That’s more zeros than can fit in most calculators – $47,000,000,000. He recently fell from the #1 richest person in the world to the #3 spot, poor guy.
I wonder if there is even a concept of “enough” with this class of richest of the rich. These top 1% wield an amazing amount of influence and power with their vast sums of monetary wealth. Do they really deserve this power? Is it right for them to have so much while most of the world has hardly enough?
When Is Enough, Enough?
Income and wealth inequality are traceable to many social and environmental problems. In their book The Spirit Level, Kate Pickett and Richard Wilkinson link the wealth inequality in developed nations to shorter, less healthy and increasingly unhappy lives, as well as rising rates of teenage pregnancy, violence, obesity, imprisonment, poverty and addiction. Pickett and Wilkinson starkly point out that economic growth must be halted, as these life-diminishing results of valuing growth above equality in rich societies can be seen all around us.
Growth is the driver of consumption that is quickly depleting the planet’s limited resources and is the instigator of climate change that has drastically reshaped the face of the planet for the foreseeable future. It is no wonder that Buffett, juxtaposed next to the more climate-conscious Gates family, is one of Rolling Stones top ten “Climate Killers.” He’s got hands deep into oil, gas and coal, as well as funding climate denying science organizations and publicly denouncing ideas of a comprehensive climate bill. If he truly cared about his impact in the world, would he really worry about his profits in these industries over the destructive climate change that results from their use? How much good can his wealth do if it is made by destroying the planet?
Why Buffett’s Pledge Is Not Much Of A Sacrifice
I should point out that this is a lot of money that will, eventually, go to (hopefully) worthy organizations doing good in the world. I think that’s spectacular. I take issue with the way Buffett tries to frame his “giving,” and his lack of actual philanthropic action. In my opinion philanthropy means to actually give up wealth to better others because it’s the right thing to do, not to maintain your extremely wealthy position and give away excess that you’re running out of ways to spend.
He outwardly states in his pledge that “my family and I will give up nothing we need or want.” I think the want portion of that statement is where it gets a little muddy: [emphasis added]
“This pledge will leave my lifestyle untouched and that of my children as well. They have already received significant sums for their personal use and will receive more in the future. They live comfortable and productive lives. And I will continue to live in a manner that gives me everything that I could possibly want in life.
Some material things make my life more enjoyable; many, however, would not. I like having an expensive private plane, but owning a half-dozen homes would be a burden….”
He goes on to say, “I will continue to annually distribute about 4% of the shares I retain. At the latest, the proceeds from all of my Berkshire shares will be expended for philanthropic purposes by 10 years after my estate is settled.” Great, so you’re donating what I assume to be enough to help out on your tax return (the 4% annually), but everything else is going to have to wait until you’ve kicked the bucket?
The kicker is this: 1 percent of his wealth amounts to $470,000,000 – $470 million dollars. Even if he did a more philanthropic action of actually giving away 99% of his wealth today, in full, he would still be able to at least earn $14.1 million a year at a low rate of 3%. I would find this a bit more worth of praise, yet even this is an ungodly amount of money – anyone would be able to do well in this world making $14 million a year. So, I don’t buy that his pledge is entirely much of a burden or sacrifice for others – he just has sooo much money that there’s almost nothing else to do with it after he’s dead anyway. Why do we allow a system to give so much excess to some while not providing enough for others?
It’s Not All Bad
It’s not all that bad, here’s more:
“My wealth has come from a combination of living in America, some lucky genes, and compound interest. Both my children and I won what I call the ovarian lottery… My luck was accentuated by my living in a market system that sometimes produces distorted results, though overall it serves our country well. [Actually, it doesn’t many that well, but he seems to serve you well, Mr. Buffett]
I’ve worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions. In short, fate’s distribution of long straws is wildly capricious.”
Buffett at least seems to realize that our economy is distorted and he is lucky to have this much wealth, especially for performing very little for the good of society (whereas the teachers he mentions make next to nothing compared to the benefit they provide). But our system doesn’t need to be constructed this way – we can institute simple and effective measures that encourage a more reasonable distribution of wealth. For now, we can give thanks that at least some of the people at the top are donating large percentages of their money.
As Jule put it last night:
“As a philanthropic adviser, I never want to dish a philanthropic impulse—especially one with such scope and potential impact as Buffet’s. And while giving away the lion’s share of his fortune won’t affect Buffet’s lifestyle (so he has said) it’s curious to ponder the number of zero’s remaining in his wallet (my calculator couldn’t show me all the zeros)…
What is important is that both Buffett and Gates are widely respected in the business community and their leadership is having ripples—forty of the U.S. billionaires have already signed on. In fact, I hope Americans living at all levels will consider giving more and volunteering more, and not because of tax advantages but because if FEELS SO GOOD!”