Warren Buffett’s always been a man to follow the dictates of his own conscience, and that’s why investors revere him. Following his own principles both in terms of how he invests his money and in how he chooses to live, he refuses to behave as other rich men do, still living in a modest house and driving an old car. He has long maintained that he would give most of his money to charity rather than his descendants, and now has done exactly that, signing over 85% of his wealth to a number of charities. That’s US$38 billion. Which makes him the biggest philanthropist in US history.
I particularly like his decision to give most of the money to the Bill and Melinda Gates Foundation, following Buffett’s famous principle of finding organisations where strong management is in place. Most philanthopists would have established their own Foundation or Center, something to glorify their own name and ensure it lives on. Whereas Buffett simply decided that Gates was better at distributing charitable funds than him, so decided to join with him to do it.
The decision follows Gates’ decision to retire from Microsoft over the next two years and devote himself largely to charitable work. The Gates foundation has truly noble aims, primarily the eradication of disease and furthering education. The Times provides handy comparisons for just how much money the Foundation now has:
The Gates/Buffett annual outlays should, when both men’s contributions have been fully disbursed into the fund, rise to well over $3 billion in today’s money, of which about three quarters is currently directed towards international assistance to the very poorest in the world.
For comparison, Unesco, the United Nations Educational, Scientific and Cultural Organisation, distributes about $700 million. Two American philanthropists alone, in other words, will have contributed more to alleviate poverty and disease than the UN’s principal development arm.
What I most admire about Gates and Buffett’s gestures is that their actions tacitly acknowledge that they simply have too much money. That there’s something awry in an economic system that can concentrate so much in the hands of so few, and that it’s the responsibility of those who hit the jackpot in global capitalism to redistribute their absurdly good fortune.
While their children will, of course, be well provided for, Gates’ heirs will not be burdened with too much money, or forced into continuing a family concern that their skills may not necessarily be suited to. This flies in the face of one of our society’s core values, the goal of accumulating wealth cross-generationally.
But you don’t have to have dozens of billions of dollars to have too much money. Many of us do. Drive through some of Sydney’s more well-heeled suburbs and you’ll see evidence of people who honestly can’t think of enough things to spend money on, so they blow millions on too much space and flashy renovations. And if you still want evidence that having too much money can be bad for you, look at Paris Hilton.
Better to do what Buffett has just done. Accumulate if you must – in some professions, or with some talents, it’s fairly inevitable for some to do so in a capitalist society. But know when to say ‘when’. Having enough to be comfortable yourself and provide for your children really is all that’s necessary.
It’s not a complete defence to be cash-strapped either, really. The extent of economic imbalance with the third world between Australians and those in the Third world is less than with Buffett, but it’s still enormous. And hardly justifiable. When a rational person distributes resources between two groups of equally deserving people, they don’t massively advantage one group just because they can. Well, unless they’re a soccer referee in a Juventus game. (Sorry, had to get football in there somewhere – I’m still smarting from the loss against Italy.) And yet that’s exactly how the global economy works – on an unfair basis that would create major tantrums if it were applied to distributing lollies among young siblings.
So it’s ironic that improving the Third World has become the lot of a capitalist like Buffett. And it’s wonderful that he’s done so much for philanthropy already not only was there his donation, but the flow-on treatments among other entrepreneurs have already started a sense of charitable competition. Ultimately the question that we should all be asking ourselves in response to Buffett’s gesture is this: how much, really, can my kids and I afford to live without?