Monday, August 16, 2010

Charity and Government

Here's an interesting link where in Germany a billionaire is upset because Bill Gates and Warren Buffet are urging billionaires to charity. Why? Because it takes away the job of the government.

Here's an interesting clip:


PIEGEL: Forty super wealthy Americans have just announced that they would donate half of their assets, at the very latest after their deaths. As a person who often likes to say that rich people should be asked to contribute more to society, what were your first thoughts?
Krämer: I find the US initiative highly problematic. You can write donations off in your taxes to a large degree in the USA. So the rich make a choice: Would I rather donate or pay taxes? The donors are taking the place of the state. That's unacceptable.
SPIEGEL: But doesn't the money that is donated serve the common good?
Krämer: It is all just a bad transfer of power from the state to billionaires. So it's not the state that determines what is good for the people, but rather the rich want to decide. That's a development that I find really bad. What legitimacy do these people have to decide where massive sums of money will flow?
SPIEGEL: It is their money at the end of the day.
Krämer: In this case, 40 superwealthy people want to decide what their money will be used for. That runs counter to the democratically legitimate state. In the end the billionaires are indulging in hobbies that might be in the common good, but are very personal.
SPIEGEL: Do the donations also have to do with the fact that the idea of state and society is such different one in the United States?
Krämer: Yes, one cannot forget that the US has a desolate social system and that alone is reason enough that donations are already a part of everyday life there. But it would have been a greater deed on the part of Mr. Gates or Mr. Buffet if they had given the money to small communities in the US so that they can fulfil public duties.

To my mind this is a perfect illustration between the differences between the average American and the average European views. Let me make a few comments.

1. It is interesting that Krämer bemoans that "You can write donations off in your taxes to a large degree in the USA. So the rich make a choice: Would I rather donate or pay taxes?" So they give money away freely fully departing with it and it is selfish because 'now they don't have to pay taxes on it. Granted, if you give away so much that you fall into a new income bracket you can save a lot of taxes but the reality is that you most likely still give away more than you'd have to pay taxes on it. Let's say I have $100. Let's say the going tax rate on that $100 is 25% so after taxes I have $75. So if I pay taxes and let government do "it's job" then I still walk away with $75. I can use it however I want. But if I give $100 to charity--because I don't have to pay taxes on it---I now have $0... but oh what a tax break. It doesn't make sense. Say even that I give away $50 for "the tax break". I'd have to pay $12.50 in taxes (a tax 'break of $12.50) but I still have $37.50 to live off of which is a lot less that $75. So yes, maybe I'd be knocked down into a lower tax bracket but I am still never going to have $75 to live off of. 

The only way I could possible gain an advantage is if the tax bracket for those making $100 is so high that giving half my money away leaves me with more money than paying taxes on $100---but then you have pointed to another issue with problems in the tax code, that's another issue.

2. This issue begs the question: does the state actually determine what is good for the people? We'd be naive to think that the state has no self-interest---for one perpetuating the role of the state. Here's an interesting thought scenario: if you were told you alleviate all poverty world wide but you were also told the only way to do it would entail a destruction of the state and poverty relief as we know it--which would you choose? Obviously we will always have poverty and the only way to deal with this isn't to eliminate 100% of the role of the state... but this is just a thought experiment. Do you care more for the poor or for the pet programs which are "helping people." 

There is a blindness and a naivety that can go on. As if the poor are not taken care of sufficiently unless that state does it. I'm not arguing that all aid from government is bad, although a lot of it is junk and actually enslave people--the issue is that we can put blinders on.

So a comment like this: "one cannot forget that the US has a desolate social system and that alone is reason enough that donations are already a part of everyday life there" shows extreme bias. Here it would seem that "desolate social system" is not measured by needs being met, the relative vs. the real poverty of the people--private hospitals picking up out of their own money the cost of the uninsured, etc. Rather "desolate" is measure but less government involvement that America has thrived on.

3. This begs the question: who cares more for people? People who 'let go and let government' or people who step up and "see a need, fill a need." For one this kind of giving away of money can actually lesson the tax burden spread across the whole. It can equally lead to greater accountable over the system that are put in place. If you give to a private soup kitchen but find out the organizer is skimming 50% and giving salaries of $150,000 you not going to say "forget it, the poor don't need a soup kitchen" your gonna say "we don't need this guys soup kitchen, more of that money can actually go to the needy." You actually care more.

Care and love of neighbor is not blindly surrendering the burden to someone else. Care does not entail mandating that we all share the burden equally. Care actually entails sacrificing for other: sacrifice that is personal and leads by example. In fact, to this we might not statistically it's been show that often time the conservative will give more of their money away to charity. Furthermore, often times the lower incomes will willingly give away more of their money to those in need.

4. I do think we'd be naive to think that people directing where their money will go to help others will never lead to intentional or even unintentional favoritism. The billionaire who grew up without a father might see a greater need to help unwed mothers. The person who grew up in rural West Va. or urban Philly may be more in tune to the needs there. But we'd also be naive to think that government and our representative lack this same set of biases.

Competing for aid and help should be a "survival of the fitness," it'd should be like loose women pining for a rose on the bachelor. 

Yet helping the poor and meeting this sort of social needs should flow from compassion. They should flow from our basic humanity. We are made in God's image. We have a responsibility to take care of our fellowman. That is not something that we can advocate to someone else: whether it be a rich foundation or a government. When we do that we actually begin to lack care and treat people less humanely.

5. One final thought: state engineering as the be all and end all of meeting this needs, as if systems and bureaucracies will solve this things through central planning will fall to the "fatal conceit."   

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