In defence of philanthropy

Three weeks ago, an article by Robert Newman appeared on the Guardian website, entitled ‘Philanthropy is the enemy of justice’. In this post, I want to explain what I think is wrong with his view. As the article is short-ish, I take the liberty of reproducing most of it below.

‘It’s strange that at this week’s World Economic Forum, the designated voice of the world’s poor has been Bill Gates, who has pledged £478m to the Global Fund to fight aids, tuberculosis and malaria, telling Davos that the world economic crisis was no excuse for cutting aid.

Gates does not speak with the voice of the world’s poor, of course, but with the voice of its rich. It’s a loud voice, but the model of development it proclaims is the wrong one because philanthropy is the enemy of justice.

Am I saying that philanthropy has never done good? No, it has achieved many wonderful things. Would I rather people didn’t have polio vaccines than get them from a plutocrat? No, give them the vaccines. But beware the havoc that power without oversight and democratic control can wreak.

[The] Bill and Melinda Gates Foundation [is] keen to get deeper into agriculture, especially in Africa. But top-down nostrums for the rural poor don’t end well. The list of autocratic hubris in pseudo-scientific farming is long and spectacularly calamitous. It runs from Tsar Alexander I’s model village colonies in 1820s Novgorod to 1920s Hollywood film producer Hickman Price, who, as Simon Schama brilliantly describes in The American Future, “bought 54 square miles of land to show the little people how it was really done, [and] used 25 combines all painted glittery silver”. His fleet of tractors were kept working day and night, and the upshot of such sod-busting was the Great Plains dustbowl. But there’s no stopping a plutocratic philanthropist in a hurry.

And then there is the vexed question of whether these billions are really the billionaires’ to give away in the first place. When Microsoft was on its board, the American Electronics Association, the AeA, challenged European Union proposals for a ban on toxic components and for the use of a minimum 5% recycled plastic in the manufacture of electronic goods.

AeA took the EU to the World Trade Organisation on a charge of erecting artificial trade barriers. (And according to the American NGO Public Citizen, “made the astounding claim that there is no evidence that heavy metals, like lead, pose a threat to human health or the environment”.)

Now, the EU is big enough and ugly enough to have fought and won the case. But many an African country lacks the war chest for such a fight, and so will end up paying for the healthcare of those exposed to leaky old PCs’ cadmium, chromium or mercury, instead of embarking on, let’s say, a nationwide anti-malaria strategy. Bill Gates himself may not indeed have known about what the AeA was doing on Microsoft’s behalf, but the fact remains that if a philanthropist’s money comes from externalising corporate costs to taxpayers, and that if Microsoft is listed for its own tax purposes as a partly Puerto Rican and Singaporean company, then the real philanthropists behind these glittering foundations might be a sight more ragged-trousered than Bill and Melinda.

Free marketeers will spring to the defence of billionaire philanthropists with a remark like: “Oh, so you’d rather they spent all their money selfishly on golf courses and mansions, would you?” To which I reply: “Oh, you mean that trickle-down doesn’t work, after all?” But the point is that the poor are not begging us for charity, they are demanding justice. And when, on the occasion of his birthday, a sultan or emperor reprieved one thousand prisoners sentenced to death, no one ever called those pardons justice. Nor is it justice when a plutocrat decides to reprieve untold thousands from malaria. Human beings should not have to depend upon a rich man’s whim for the right to life.’

*       *       *

First of all, the ‘facts’ quoted in the article are hugely misleading. It is ludicrous to suggest that most, or even much, of Bill Gates’ fortune came from ‘externalizing costs to taxpayers’. At most 5% of Microsoft’s profits ever came from hardware sales; the rest is software, which carries no such pollution risk as Newman refers to. Does he think that Microsoft manufactured the ‘leaky old PCs’? In the words of another blogger, ‘Microsoft didn’t run over your dog!’

Of course, claims that other companies and individuals made their money by ‘externalizing costs to taxpayers’ have to be assessed on a case-by-case basis, but many of America’s richest made most of their money entirely legitimately. Warren Buffett of Berkshire Hathaway and Larry Ellison of Oracle (the second and third richest Americans in 2011) are two good examples; likewise the founders of Google and Facebook. The nature of their businesses must mean that only a small proportion of their fortunes could come from ‘unethical’ business practices. Some ideas just inevitably generate a lot of money!

Should they pay more tax? Perhaps – and Bill Gates admitted as much, in a TV interview with the BBC:

“And I certainly agree that [taxes] should go up more on the rich than everyone else. That’s just justice.”

But the rich should certainly not be taxed so heavily as to discourage philanthropy. Voluntary giving is a great thing: within a country, it produces a social cohesion which is hard to achieve through state welfare. The recipient has more of a sense of obligation to make good use of their opportunity than they would have after receiving, say, a state benefit, because someone has chosen freely to help them. The giver in turn sees the positive impact of their philanthropy, and is inspired to give more. It is much better that the rich give voluntarily, than that they be forced to surrender a large part of their income by others. Compulsory income redistribution via taxation should be viewed as necessary, only because voluntary giving on its own is not sufficient to alleviate poverty. But it is an unfortunate necessity. (Indeed, one could argue that in an ideal world, taxation would not be necessary, because there would be enough voluntary giving.)

What about the ‘havoc that power without oversight and democratic control can wreak?’ Newman seems to be claiming that governments know better how to spend money abroad than the ‘billionaire philanthropists’. There is certainly a risk that a philanthropist will spend their money unwisely, but there is also a risk that governments will spend their tax revenue unwisely – giving billions of dollars of military aid to countries guilty of war crimes, and waging wars which the voter may not support. The latter is, in a sense, forcing a citizen to fund positively unethical action.

At the moment, I trust the Bill and Melinda Gates foundation much more than either the US or the UK governments, to spend money abroad in the most effective possible way. A philanthropist such as Bill Gates, nearing the end of their career, and deciding how best to spend money on philanthropy, has generally only one objective: to do the maximum amount of good. (A cynic might raise the Kantian possibility that they are really doing it to gain accolades, but this is irrelevant to the actual impact of their giving.) A politician, on the other hand, may wish to achieve other things: to bolster or curry favour with a foreign ruler, to win support from a (partly selfish) electorate, or to advance their political career. Even if they have good intentions, these might be frustrated by an act of Congress. The Bill and Melinda Gates Foundation has access to the foremost health experts in the world, and can make a decision based on the best available evidence. The UK government, on the other hand, repeatedly ignores the advice of its own experts (for example, those who resigned from the Advisory Council on the Misuse of Drugs) out of fear of a populist backlash. It is a running joke in the Department for Education that Michael Gove and his team want ‘policy-based evidence’, rather than evidence-based-policy, to justify their rash decisions retrospectively and save face. Of course, in an ideal world, governments would not have such problems, but we have to be realistic. Who is more likely at the moment to make a good decision on how to spend money abroad: a billionaire philanthropist or the US Congress? At the moment, my money is on the philanthropist.

(Of course, we should still try to make government aid more effective, and Gates himself is calling for that very thing!)

When it comes to domestic spending, the government may be in a better position: it has a clear incentive to spend money well, or it will not be re-elected, and the electorate, while sometimes prone to supporting an unethical foreign policy, often know what will make them happy in terms of domestic policy. But voluntary giving is still to be valued, because of its additional positive impact on both the receiver and the giver, and the consequent strengthening of social cohesion. (An aside: perhaps people could be encouraged to pay voluntarily into a national ‘Poverty Alleviation Fund’, which would then be spent with ‘oversight and democratic control’?) And there is no substitute for personal acts of charity: as a member of a community, a philanthropist will often know far better than a bureaucrat, who needs help most, and who will make best use of it.

Finally, a word about justice. I could scarcely believe the article’s closing paragraph. Aside from the fact that condemning someone to death and then reprieving them is clearly different to organizing a global effort to save people from malaria, the statement ‘human beings should not have to depend upon a rich man’s whim for the right to life’, is particularly insidious. In reality, the proper working of international aid is just philanthropy on a more spread-out scale. If the UK government decides to spend some of its revenue on eradicating malaria, it does so with at least some support from the electorate, and hopefully after some public discussion on why it’s a good thing to do.  Effectively, millions of taxpayers are giving about £10 each, as opposed to a few people, each giving millions each. Why is the first one ‘justice’, and the second ‘a rich man’s whim?’ The first can be viewed as lots of moderately rich people’s ‘whims’ – or ‘decisions’, as they are more usually called. There is only a real difference between the two when many of the taxpayers are unwilling to help, but are forced to do so against their will. Effectively, this is one group of people being ‘philanthropic’ with the money of another group! It is actually a less sustainable and less desirable state of affairs than genuine philanthropy: it will create resentment, and the resentful rich will move elsewhere, to a country where they have more say in how their money is spent.

How can anyone in their right mind prefer enforced ‘giving’ to voluntary giving? For as long as there is inequality in health and wealth, there will be a need for those with more to help those with less. How much better that this help be largely voluntary, rather than forced?

Philanthropy literally means ‘love of humanity’; love means nothing unless it is translated into voluntary action. Philanthropy is the enemy of justice? One might as well say that love is the enemy of justice.


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