Chinese, Indian and German Billionaires Tell Gates and Buffett to Stuff It
Bill Gates and Warren Buffett declared victory on the latest stop in their worldwide campaign to convince global billionaires to donate at least half of their vast fortunes to charity. Last night, the floating billionaires club chaired by Messrs. Gates and Buffett gathered in Beijing.
"I was amazed last night, really, at how similar the questions and discussions and all that was to the dinners we had in the U.S.," Buffett told the New York Times this morning. "The same motivations tend to exist. The mechanism for manifesting those motivations may differ from country to country."
At least, that's Buffet's version of the closed-door meeting -- one of a series of events the pair have held. Reuters tells a different story.
"We don't need foreigners coming here to tell us how to be charitable," sniffed one anonymous Chinese philanthropist to the Global Times, a popular tabloid with a strong nationalist bent.
The Chinese aren't alone in rejecting two of the world's richest men, known in China by a composite of their names that sounds like "Barbie." Wealthy Indians also recently gave Barbie the cold shoulder when the subject of donating half their fortunes no later than their deaths came up. According to the Wall Street Journal, Indian billionaires worry that their own charities are too corrupt to be trusted with the money. That echoes concerns expressed by their Chinese counterparts.
Reuters talked to Rupert Hoogewerf, who compiles the Hurun Rich List, China's version of the Forbes 400, about the stinginess of Chinese billionaires. "The main reason is because there is an inherent mistrust in giving your money to any third party to pass it on. They're convinced that for every 100 that they give, the end party won't receive anything near that 100," he said.
Don't chalk up the flinty attitude to third-world immaturity and corruption. The Gates-Buffett initiative -- admirable and impressive as it is -- exposes some serious flaws in the way Americans think about society and efficiency.
When Barbie went to Germany, the pair got an earful from some of the local plutocrats. Der Spiegel recorded Peter Kramer, whose fortune was made in shipping and has donated a great deal of money to African charities. He said:
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. [...] 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?Here's the amazing irony of the Gates-Buffett campaign. Buffett will go down in history as one of the world's greatest -- perhaps the greatest -- allocators of capital. He would be the first to tell you that it is his defining skill set. Bill Gates has set out with his foundation to create a charity that effectively uses its resources to make the maximum positive good. One reason Gates set that as a goal is that charities are notorious for their inefficiency, padding, vanity projects and waste.
Yet if charities are so well known as duplicators of resources and wasteful monuments to the giver's ego, why are Gates and Buffett encouraging so many billionaires -- they've got 40 signed up -- to give up control of their capital?
True, Gates and Buffett are leading by example. Buffett has pledged the vast majority of his fortune to exemplary charities. But nothing in this giving campaign requires the billionaires to apply their capital effectively.
We're not talking about small potatoes here either. In targeting the Forbes 400 to give away half their net worth, Barbie have designs on $600 billion by their own calculations. That's just about as much as the TARP. In other words, a financial bazooka almost the size of the one that saved the banking system is being assembled without much in the way of direction or goals.
Granted, the Indian and Chinese billionaires are less concerned with efficiency than another, more important issue. Money is capital and capital is opportunity. By giving away half their fortunes, these new billionaires would be depleting their own war chests for future economic expansion.
Gates and Buffett, living in the most developed part of the world may see the value of individuality and dispersing their fortunes, but those in emerging markets have good reason to see it differently. That's something Buffett agrees with. While he was in China, Buffett was looking for companies to buy and he declared that he expected large opportunities there, "unlike anything that's ever taken place in history."
It would seem Chinese billionaires agree.
Image of Bill Gates on Magazine covers courtesy of Global X via Flickr