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Did Gates and Buffett do more good as businessmen than as philanthropists?

Provocative case for “yes” in today’s Wall Street Journal (gated link), by Kimberley Dennis,  President of Searle Freedom Trust:

Wealthy businessmen often feel obligated to ‘give back.’ Who says they’ve taken anything?

Full disclosure: DRI benefits from post-docs indirectly funded by the Searle Foundation.

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  1. Robert wrote:

    An a related gripe folks are having is whether it would be better for Gates and Buffet to provide seed and start-up funds for would-be entrepreneurs rather than donate the money to “charity”.

    Posted August 20, 2010 at 2:20 pm | Permalink
  2. AndyB wrote:

    Straw man alert!!! Very few of us, least of all Buffet or Gates, believes they are giving back to make up for the alleged evil they have done as businessmen.

    Buffet has pointed out that in the birth lottery he was designed for the American system — and he was lucky to be born into it. He can allocate capital, and he lives in a place and at a time when those skills are well rewarded.

    So you have been blessed with luck, and it has made you wealthy, why not give some “back”.

    Posted August 20, 2010 at 2:24 pm | Permalink
  3. I pondered that recently after reading the Guardian article on the Gates Foundation – why Bill Gates, who’s clearly so good at business, decides that Africa doesn’t need business, but charity:

    Posted August 20, 2010 at 2:25 pm | Permalink
  4. Ted wrote:

    I think it depends what they would do with the money otherwise. I think it’s reasonable to believe there is a certain satiation point of consumption. There is really only so many things you can practically want. When your net worth is in the range of Bill Gates and Warren Buffet you can probably buy anything you could plausibly want several times over. There are so only so many houses, planes, cars, paintings that a person would even reasonably want to have. So, if Bill Gates and Warren Buffet are at their consumption satiation point – which it seems they obviously are – so the question is what would they do with their remaining money? There are two options. They could either sit on it or they could re-invest it with their companies. The former would obviously be worse than giving it to charity and the a charitable donation would probably have a greater societal impact than re-investing in their own companies.

    So, while being a businessman has probably done more good for the world than just being a philanthropist – once you have made your business impact and you are at your consumption satiation point you will probably positively impact society more by becoming a philanthropist.

    Posted August 20, 2010 at 2:51 pm | Permalink
  5. Ari wrote:

    @Andrea, but that’s an inaccurate oversimplification. Microsoft does do business in Africa, so first of all, it’s not even true. Second, the Foundation uses a number of different approaches to target issues that are very likely not best solved through business – for example, the spread of HIV and malaria. Gates recognizes a need and is making an effort to address it using the resources they have available. The Foundation’s model can hardly be described as “charity”. They are funding cutting-edge research, using data to an extent few others ever have in order to direct investments, and taking risks in their work that the usual donors aren’t able to do. This is very much not throwing money at a problem or showing up with foreign solutions.

    Posted August 20, 2010 at 3:35 pm | Permalink
  6. Dan Kyba wrote:

    A simple question with a complex answer which very simplified, I would put this way:

    As businesspeople in a market economy, Gates and Buffett gained their wealth in a productive, rather than extractive manner. Creating productive wealth has a multiplier effect meaning that for all the hundreds of millions earned by someone such as Gates, hundreds upon hundreds of more millions were earned by other people using his Microsoft products.

    For a market economy to function properly, the appropriate public goods must be invested by both government and society – the formal and informal rules of the game is another interpretation. At the community level, we see local businesspeople and entrepreneurs who are strong supporters of local charities, education, sports, governance or social causes because they are aware in their own way that healthy communities and their civil societies beget healthy business environments and enhanced market opportunities and vice versa.

    Gates and Buffett have benefited from such investments en route to their own material success and are now doing the same for others’ future success. If ever the time comes when the spirit of philanthropy and engagement with civil society dies out in favour of narcissism and extractive behaviour then kiss the market economy good-bye.

    Posted August 21, 2010 at 6:58 pm | Permalink

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