Investor Warren Buffett and Microsoft founder Bill Gates announced that they are asking hundreds of billionaire Americans to give away at least 50 percent of their wealth to charity. According to Reuters, “They have named the campaign the Giving Pledge and are asking those who commit to giving away at least half their fortune during their lifetime or after their death to publicly state their intention with a letter explaining their decision.” A worthwhile endeavor, but why wait and why donate to just any charity when they can use the wealth for a more worthwhile purpose, to save the economy?
Accumulation of wealth for expressive purposes detracts entirely from its economic purpose, to grow the economy. Letting investment lay fallow, which these captains of industry have partly done, or detouring gigabucks for disbursement through depleting charities, rather than organizing assets towards further growth through investment in growing industries, will soon turn the entire nation into one big charity. Can the free enterprise system survive without growth? Can it maintain growth when an already falling economy is deprived of almost a trillion dollars of needed investment funds?
Forbes relates that the assets of four hundred U.S. billionaires total 1.2 trillion dollars. If all of them were willing to sell one-half of their assets to investors, the sales will transfer 600 billion dollars of green currency to their bank accounts. By surrendering the 600 billion dollars, without obtaining tax deductions, to the world’s largest charity, which is the United States government, the billions of dollars can be used for one or more of the following:
Pay for most of next year’s public deficit.
Supply massive funds to private industries, especially in new energy technologies, and enable them to grow again.
Reimburse one year of salaries for new employees ($40,000/person average). This will temporarily reduce unemployment by 15 million, erase most of the unemployment compensation, and assist the states to achieve balanced budgets,
Support new export industries and assist in overcoming the trade deficit,
Maintain low taxes
Provide low cost loans for small businesses.
We need to help the deprived and less fortunate around the wide world, but are those of their own United States citizens, many suffering from the shocks of a failing economy, any less in need? Perhaps it seems that those who purchase the assets could have performed the same philanthropy. Not so. Unlike the wealthiest, who remain with hundreds of million or billions after halving their assets, the investors purchasing the assets, say, those who have millions of dollars, will remain with only millions of dollars after purchasing the assets, a worthwhile amount but insufficient for being too zealous in assisting others. Summarizing — the sellers don’t need the assets; the buyers, who are of much lesser wealth, are still accumulating.
The brief analysis also indicates that an excessive accumulation of assets by one person can stifle an economy, and reworking of these assets, so their value circulates, can advance an economy. Thousands of persons, each with hundreds of thousand dollars of assets (such as owning a house), cannot ordinarily sell the assets and, if they could, have no means to group together with others to support the economy. One person with more than one billion dollars of assets can sell assets and direct the funds to advantageous economic use without teaming with anyone.
Apparently not considered by the top 400 is that selling massive amounts of assets and transferring the funds to charities have detrimental effects to the economy.
Many charities exist overseas, which means dollars will leave the nation.
If the contributors obtain massive tax deductions, then the decreased tax revenue will widen the government deficits.
Charities are localized and non-growth industries. They cannot efficiently handle huge investments, and their objective is to disappear. Huge investments to promote growth benefit the entire economy and eventually, either resolve the problems of, or provide the assistance to, the charitable organizations.
Selling assets to obtain funds for reconstituting America and paying full taxes for the transactions will enable the nation to grow again and produce massive benefits for all — government deficit reduced, population escaped from poverty, charities relieved of their own burdens. Eventually the same persons who performed the noble act will find their assets growing once again. What more can the country ask of them, or they of their nurturing country?