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The heralded joining of modern American Capitalist icons, Gates and Buffett, in the Gates Foundation (Business Week) is disturbing on several fronts. Everyone should have the right to do with their money as they wish. But why is it unquestionably assumed that “charitable foundations” are somehow better for society than merely leaving money to one’s heirs tax free? Have not free markets made great progress toward alleviating poverty in the 20th/21st century? Does monolithic directed activity from Foundations “solve” social problems (even if done in the private sector) better than free markets? If given a choice, I prefer Gates and Buffet to the US Government—although I am not sure what I base that on other than it seems hard to be worse than the US Government in allocating scarce resources.
Even good for nothing heirs have to do something with their money. All money not spent is invested–and somehow that invisible hand has gotten scarce resources to the right spot more times than other methods of resource allocation. Even profligate consumers make others profitable who in turn invest. One of my favorite quotes, of which there are dozens of variations, relates to a Stalinist Minister who visited London in the 30s and noticed that the stores were all stocked with bread. “Who is in charge of getting bread to the stores?” he wondered to his host. Of course the answer is no one. The question must be asked, “Why are Gates-Buffett style Foundations better at resource allocation than free markets and thus deserving to be untaxed?”
Again, one should have no problem with people doing with their money as they wish. Even “charitable foundations” who fund various and dubious projects (Ford Foundation) should be allowed to do as they wish. However, what is really objectionable about the moralistic crowning of Buffett-Gates is what their own tax views are. Both Buffett and Gates (through his father) have come out square against eliminating the estate tax. Implicit in their opinion is that they know best about what to do with money (i.e., it should be given to foundations). If it is not given to foundations then it should be confiscated (taken, taxed, stolen…whatever) by the Government. However, in no instance should it go untaxed if merely left to heirs. Why, because we need someone in charge of getting bread to the stores? Self important and self righteous, these otherwise admirable men have determined they deserve demi-god status (of course they are not alone, but they are the most well known) in determining what mere mortals should be allowed to do with their earned (and previously taxed) capital.
As far as I’m concerned they can take their foundations (and their nauseating chest beating Bridge Tournaments) and just——shut up and play bridge.
