Andy Kessler recently read about a climate author “investigating how shade can be a powerful civic resource to protect us from climate change.”
Shade! This from the announcement of a new “climate cohort” at a well-regarded philanthropy. It reveals a flaw in capitalism.
There are only four things you can do with your money:
- Spend it.
- Pay taxes.
- Invest it.
- Give it away.
The Nobleness of Giving Money Away
Of these four activities, philanthropy is the most misunderstood. As Mr. Kessler notes in the WSJ, philanthropy sure feels good for the giver.
We all get that warm fuzzy feeling—a psychic reward—when we donate to causes. Help your fellow human. Fund schools. Gild the opera. But does that giving do any lasting good? Sadly, only sometimes.
One Century Ago
Andrew Carnegie funded libraries, while contemporaries Leland Stanford, Ezra Cornell, Cornelius Vanderbilt, and John D. Rockefeller created universities. Cheers to them. “Books and education are the bedrock of human capital.”
What Works Today
Today, gifts to education often enable diversity, equity, and inclusion departments and squishy professors who push the anti-capitalist ideologies du jour. Mr. Kessler doubts that was the intent of Carnegie and friends.
Paul David Hewson, in a 2012 speech at Georgetown University, perhaps said it best. “Aid is just a stopgap,” said Mr. Hewson, whose stage name is Bono. “Commerce [and] entrepreneurial capitalism take more people out of poverty than aid. We need Africa to become an economic powerhouse.”
Effective altruism may be an oxymoron. Much of philanthropy is used to fix government failures in education, welfare, or medicine. Wonders Mr. Kessler, wasn’t that Bono’s point?
But at its shadiest, philanthropy drives the misallocation of capital, overvaluing professors, the U.N. and climate poets and undervaluing those who can productively increase societal wealth to fund solutions to the future’s harder problems.
Elon Musk is trying to colonize Mars. But he’s asking for volunteers rather than going himself, noting “your probability of dying on Mars is much higher than Earth. Really, the ad for going to Mars would be like Shackleton’s ad for going to the Antarctic”—reputedly “Men Wanted for Hazardous Journey.” Mr. Musk was also part of the early $1 billion funding of OpenAI, the ChatGPT creator, as a nonprofit.
Capitalism – the Perfect Cure
If only there were a way to use capital to provide opportunity, train workers, pay middle-class wages, help people build wealth . . . wait, it just came to me. How about starting new companies and investing in entrepreneurs and world-changing technology? Sure, that’s “a hazardous journey,” but so what?
Actually, part of OpenAI is now a for-profit. Yes, it turns out the perfect cure for the flaw in capitalism is, voilà, more capitalism. You may not get that warm fuzzy feeling or media adulation—in fact, you’ll likely be labeled greedy—but you might fund future economic powerhouses.
Scolds will throw shade. Ignore them.
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