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JOHNSON The Terrible Tragedy of Charity
by Mac Johnson [writer, physician] 6/27/06

Warren Buffet, the world’s second richest man, announced Sunday that, having built a goose that lays golden eggs, he now intends to slaughter the beast to provide meat for soup kitchens.

I applaud his intentions, but I think he is squandering his wealth, and (for once) missing an opportunity.

Buffet’s actual announcement was that he intends to begin giving away most of his $42 billion fortune to five foundations, including the Bill and Melinda Gates Foundation and his beloved late wife’s Susan Thompson Buffet Foundation. The announcement was hailed as a surprise in some reports, but Buffet’s generous actions follow a well-worn script written by Andrew Carnegie over a century ago.

Mac Johnson

Mac Johnson is a freelance writer and biologist in Cambridge, Mass. Mr. Johnson holds a Doctorate in Molecular and Cellular Biology from Baylor College of Medicine. He is a frequent opinion contributor to Human Events Online. His website can be found at macjohnson.com [go to Johnson index]

Carnegie, born poor in Scotland, immigrated to America as a child, and built up one of the most massive fortunes in history through his tireless and innovative piloting of the U.S. Steel Corp. -- transforming the American economy in the process. His life was a testament to the power of capitalism to identify talent, create wealth, and foster change on a huge scale. He then shocked the world by deciding to give away his entire fortune, stating authoritatively, “the accumulation of wealth should be followed by its distribution in the form of public endowments.” It was a noble and humanitarian decision, and one that everyone is safe and right in praising. But I am not sure it was the most beneficial one.

Doubtless the Carnegie Foundation, the 2,500 libraries he built, and his legion of other public works have brought great benefit to our society. But I do not believe that they benefited us nearly as much as U.S. Steel did.

Yes, I know, U.S. Steel was a predatory monster and an unethical mess by today’s standards. But the abundant, inexpensive steel it provided built a powerful new America, from its railroads, to its battleships, to the Brooklyn Bridge. Remember that Carnegie’s prime formula for success was cost cutting and increased efficiency. Carnegie made his fortune by remaking the industrial world in steel. His genius was making a technological revolution affordable.

Afterwards, he reacted against the miserliness and egocentric focus of his career by giving away his riches, almost as an act of egalitarian contrition for his outsized success. But what if, instead of doling out as gifts the capital he had amassed so skillfully, he had reinvested it in other endeavors, guided by his particular genius? Wouldn’t that have benefited the world more in the long run? What other aspects of society might he have transformed? And what effect would such a different example have had on subsequent moguls, such as Warren Buffet and Bill Gates?

In truth, the main problem I have with Carnegie’s model of ethical wealth wielding is that it has been so universally adopted. Every millionaire and billionaire on earth now feels a need to have an eponymous charitable foundation and a building or twelve named after himself. Libraries may have gone the way of parchment, but hospitals and universities remain popular, and have been joined by sponsorships of PBS programs and other high-visibility legacy-building expenditures.

The second problem I have with the Carnegie model is how counter the means of humanitarianism it recommends is to the means that built the wealth that makes such humanitarianism possible in the first place. Men who have been soundly identified by capitalist success as having unique skills in private enterprise, profit building, and competition then turn around and seek to build monuments to themselves through public venture, non-profits, and sentimental demonstrations of co-operation. It’s a little like the world’s greatest poet trying to say thanks to society by painting us a mural. It’s a nice thought, but shouldn’t he really be writing us a poem?

Imagine an alternative model of public service through wealth. If your goal is to spend a few billion dollars in pursuit of a better world and you are among the top entrepreneurs in the history of Earth, why not let it ride? Why not invest in high-risk, high-reward endeavors that could change the world, like Carnegie’s mass-produced steel? If you fail, you are rid of your wealth, have created jobs and hope and possibility and a base upon which others might build in the future. And if you succeed, your wealth does far more benefit for man in creating new wealth -- for employees and investors and suppliers -- than it could ever have done as perishable charity and complementary tote bags.

If your goal is to help the poor, then why not make them less poor while doing what you do best. What job training program could a charity provide that would be better than ... a job? Especially a real, meaningful job from which the holder could be fired, or receive a merit bonus, or be exposed to dozens of successful people actually engaged in the act of being successful?

Our country is full of people that have been ruined by charity -- the mandated charity of government welfare. Why not use the means of capitalism to pull these apathetic dependent poor into self-sufficiency? All you could lose is your wealth, which seems to be the goal, after all.

Let’s look at a two examples of how the different approaches to building a better world can work. Imagine that you had $100 in 1967 and wanted to help the world. You could have donated it to a charity and it would have done real good for a few people for a few days. Or you could have invested it in Warren Buffet’s Berkshire Hathaway company and today it would be worth nearly $500,000. Which $100 would have done more good? I think the invested money would have, and not because you could then donate the huge profits to charity, but because the profits help make charity unneeded. Money creates more good before it is given away, than afterward. Earned money creates much more good than gifted money -- which is why so many rich tycoons want to give away their fortunes rather than have them ruin their kids and grandkids.

Consider as well the success of SpaceShipOne. Paul Allen, who like Bill Gates is one of the founders of Microsoft, could have given his entire fortune to the Paul G. Allen Foundation or the Bill and Melinda Gates Foundation or the Carnegie Foundation, Ford Foundation, Rockefeller Foundation, or even the John D. and Catherine T. MacArthur Foundation. He could have sponsored “Masterpiece Theatre” until Jesus came back. And, of course, he has done some such things. But he used part of his fortune on something much more creative. He decided to fund a private attempt to send an affordable and reusable craft of novel design into space.

And in October of 2004 his team succeeded, becoming the first non-governmental entity in space. For a fraction of what governments would have spent and in fraction of the time governments would have taken, he made possible a new milestone in man’s history. New technology was created, new dreams born, and a new industry conceived when billionaire Richard Branson licensed the technology to create “Virgin Galactic,” which hopes to send tourists into space within this decade. Paul Allen has secured his legacy much more meaningfully than has Bill Gates. He has created an endeavor that will grow on its own, not suckle at a trust fund until it’s exhausted, then fade.

Imagine if someone poured a millions of dollars into a real, honest attempt to find a practical biofuel? And I’m not talking about funding silly wasteful grants to academics that just aim for “some improvement” “someday”. I’ve seen millions wasted that way. Heck, in retrospect, I helped waste part of it. No, I mean imagine if someone of talent formed a genuine, capitalist, make a profit or die trying endeavor, with intellectual property and stock options and the creditors breathing down their necks and a product being the goal -- not a publication designed to make the researchers seem more clever to other researchers.

Actually Craig Venter has done just that, and if successful, it will secure his legacy (and benefit mankind) much more than the J. Craig Venter Foundation. Personally, I think his scientific approach to the problem is somewhat suboptimum, but what the heck do I know? He’s J. Craig Venter and I don’t even have an initial in my name or a foundation to perpetuate that initial’s legacy. I drive a Toyota. And the windshield is cracked.

But, hopefully, you get my point nonetheless. If you have the talent and luck to make a fortune, why blindly imitate Andrew Carnegie and fritter away billions on a foundation that will end up being run by a crew of anti-social Marxists who will work against everything you believed in (all while creating no new wealth), when you could take the business risks that others cannot afford?

Obviously, direct charity is needed in the world. Some people, such as the mentally handicapped, and some entities, such as trees, are not going to be able to participate directly or indirectly in business and reap the benefits of capitalism and its savants. Also, I want to emphasize again that the motivations of men like Buffet and Carnegie are highly admirable. But in my opinion, the obsession with giveaway-style charity, at the expense of other models, has been something of a tragedy of lost opportunity in the century since Andrew Carnegie declared that private wealth “should” be disposed of through public charities. Which was something of a curious belief for a man whose family once struggled mightily to avoid the shame of having to receive the charity of others. CRO

First appeared at Human Events Online

copyright 2006 Mac Johnson



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