Quote of the Day: Nobody is More Generous than the Miser

In this whole world, there is nobody more generous than the miser—the man who could deplete the world’s resources but chooses not to. The only difference between miserliness and philanthropy is that the philanthropist serves a favored few while the miser spreads his largess far and wide.

If you build a house and refuse to buy a house, the rest of the world is one house richer. If you earn a dollar and refuse to spend a dollar, the rest of the world is one dollar richer—because you produced a dollar’s worth of goods and didn’t consume them.

Who exactly gets those goods? That depends on how you save. Put a dollar in the bank and you’ll bid down the interest rate by just enough so someone somewhere can afford an extra dollar’s worth of vacation or home improvement. Put a dollar in your mattress and (by effectively reducing the money supply) you’ll drive down prices by just enough so someone somewhere can have an extra dollar’s worth of coffee with his dinner. Scrooge, no doubt a canny investor, lent his money at interest. His less conventional namesake Scrooge McDuck filled a vault with dollar bills to roll around in. No matter. Ebenezer Scrooge lowered interest rates. Scrooge McDuck lowered prices. Each Scrooge enriched his neighbors as much as any Lord Mayor who invited the town in for a Christmas meal.

Saving is philanthropy, and—because this is both the Christmas season and the season of tax reform—it’s worth mentioning that the tax system should recognize as much. If there’s a tax deduction for charitable giving, there should be a tax deduction for saving. What you earn and don’t spend is your contribution to the world, and it’s equally a contribution whether you give it away or squirrel it away.

 This is from author and University of Rochester economics professor Steven Landsburg on the virtue of savings.

UK’s Government Discourages Charity

We are often told that the private sector is instinctively greedy, and thus requires intervention to spread ‘charity’ and ‘compassion’.

Well, in the UK, acts of private sector charity or philanthropy will be penalized.

From Wall Street Journal Wealth Blog,

The U.K.’s new budget has ignited all manner of class warfare. Retirees say it’s a gift to the rich at the expense of the poor. The wealthy say it’s another attack on success and job creators.

But one piece has gone largely unnoticed: the limit on philanthropic giving. The measure would cap the tax relief for wealthy givers at 25% of their annual income, or £50,000, whichever is higher. It takes effect next year.

It’s similar to the Obama proposal, which would limit charitable deductions for high earners to 28% for couples with incomes of $250,000 or more or individuals with income of $200,000. The White House says limiting itemized deductions would shrink the deficit by $584 billion over 10 years.

The U.K. expects its measure (along with caps on business deductions) to result in $490 million in saved revenue.

“Giving shouldn’t mean you pay no tax,” according to the U.K. Treasury.

Yet charities say the plan would put a chill on philanthropic giving just as the U.K. government is trying to create a new culture of giving.

The “new culture of giving” is that the government forcibly takes what you own (by taxation), which in turn discourages acts of private charity (both by administrative limits and again by taxation--what you opt to donate will be taken instead).

And as the norm, governments spend these confiscated resources charitably on their pet projects (to the benefit of cronies and or to vote rich welfare dependents or for photo Op sensational projects).

This is not really new. It has been the nature of governments to undertake lawful plunder of the resources of the citizenry when so deemed politically expedient.

As the great Frédéric Bastiat wrote in The Law published in 1850

When does plunder cease, then? When it becomes more burdensome and more dangerous than labor. It is very evident that the proper aim of law is to oppose the fatal tendency to plunder with the powerful obstacle of collective force; that all its measures should be in favor of property, and against plunder.

But the law is made, generally, by one man, or by one class of men. And as law cannot exist without the sanction and the support of a preponderant force, it must finally place this force in the hands of those who legislate.

This inevitable phenomenon, combined with the fatal tendency that, we have said, exists in the heart of man, explains the almost universal perversion of law. It is easy to conceive that, instead of being a check upon injustice, it becomes its most invincible instrument.

It is easy to conceive that, according to the power of the legislator, it destroys for its own profit, and in different degrees amongst the rest of the community, personal independence by slavery, liberty by oppression, and property by plunder.

It is in the nature of men to rise against the injustice of which they are the victims. When, therefore, plunder is organized by law, for the profit of those who perpetrate it, all the plundered classes tend, either by peaceful or revolutionary means, to enter in some way into the manufacturing of laws. These classes, according to the degree of enlightenment at which they have arrived, may propose to themselves two very different ends, when they thus attempt the attainment of their political rights; either they may wish to put an end to lawful plunder, or they may desire to take part in it.

By preventing the private sector from engaging in philanthropic activities and by coercively taking their resources by law, who’s greedy now?

The Essence of True Charity

The Wall Street Journal’s Wealth Report writes,

The 50 top philanthropists last year gave away a total of $10.4 billion – up by more than three-fold from 2010. The Chronicle of Philanthropy says that 29 people gave away more than $50 million each in 2011.

The strange thing is, you’ve probably never heard of most of them…

But what’s striking about the pantheon of top American givers is how little we know about any of them. They’re not in the news for buying giant homes, yachts or planes. They’re not funding Super-PACSs or spouting off about how they would run the country. And they don’t have reality shows.

The top rich givers are quiet, small-town patriarchs who made their riches in unglamorous industries like steel, natural gas and metal frames. They carry their wealth quietly and they honor the responsibilities that come with great wealth. They care about creating opportunities for others, not just for themselves.

My comment:

Real charity is about anonymity. So has it been written in the Bible (Matthews 6:2 New International Edition)

So when you give to the needy, do not announce it with trumpets, as the hypocrites do in the synagogues and on the streets, to be honored by men. I tell you the truth, they have received their reward in full.

And importantly, true charity emanates in the absence of coercion

As libertarian economist Floyd Arthur Harper wrote,

True economic charity has three characteristics:

1. Charity requires the transfer of ownership from one person to another of something having economic worth. The receiver must get a clear title to it, or it cannot be charity. The giver must have had clear title to it, or the giving is like a gift of stolen property — which is not an act of charity. Private ownership at both ends of the transfer, never public ownership, is therefore required.
2. The transfer must be voluntary with both parties. If forced upon the receiver against his will, it is not charity. If taken from the source against the prior owner's will, it is theft rather than an act of charity.
3. True charity requires anonymity. This is difficult to attain, to be sure. But if the conditions of the transfer result in a personal obligation in any form or degree, it is a grant of credit and not an act of charity. Devices other than anonymity usually fail to prevent the creation of a personal obligation.

May the tribe of genuine philanthropists increase!

Quote of the Day: Charity of the Markets

it is impossible to assess Mr. Jobs’s philanthropic legacy without discussing how Apple’s technology has changed the way nonprofits operate.

Devices like the iPhone and iPad have helped many organizations communicate more efficiently. They have allowed groups to improve the way they respond to disasters, communicate with supporters, and carry out their day-to-day work.

From Peter Panepento of the Philanthropy.com (hat tip Jeff Tucker).

Mr. Jobs’s philanthropic legacy can be seen from the largely 'unseen' factors, i.e. the consumer surpluses, wealth creation and in making people's lives significantly better.

Gawad Kalinga Antonio Meloto's Grandest Charitable Act

My salute to Antonio Meloto, founder of private charitable housing organization, the Gawad Kalinga, for declining the offer of President elect Noynoy Aquino to become the country's housing czar.

This from the Inquirer, (bold emphasis mine)

GAWAD KALINGA (GK) founder Antonio Meloto said the post of housing czar was offered to him by President-elect Benigno Aquino III but he turned it down.

In a media interview on the sidelines of the second Global Summit of the GK Community Development Foundation held here, Meloto said he discussed the offer with Aquino’s sisters, Ballsy Aquino-Cruz and Pinky Aquino-Abellada, recently.

At the end of the talks, Meloto said he refused the offer to join the Aquino Cabinet because he felt he would be more effective as a private citizen and philanthropist.

I can do more for my country by not being a Cabinet official,” said the 2006 Ramon Magsaysay awardee for community leadership.

Meloto was also the Inquirer’s Filipino of the Year in 2006.

My comment: Indeed, we share Mr. Meloto's view that his efforts will be more effective if he stays with the private sector.

That's because to quote Floyd Arthur "Baldy" Harper ``True charity must remain purely private rather than public and socialized. It must be voluntary. That is the nature of the greatest economic charity of all — savings invested in privately owned tools of production."

More from the Inquirer,

Meloto is the second RM awardee offered a post in the Aquino government. Former Naga City Mayor Jesse Robredo, the 2000 RM awardee for government service, was also offered the post of heading the Department of Interior and Local Government (DILG).

Meloto said he would rather focus on strengthening and promoting GK, which is expanding its projects to other Asian countries.

GK is a nonprofit organization that builds houses and develops livelihood programs for poor communities in the Philippines and other developing countries.

According to Meloto, developed countries like Singapore and Australia recognize GK not just as a charity organization but also as “a movement for nation-building.”

Schools and government agencies in these countries send students and representatives to the Philippines, through GK, to learn skills for community-building and conduct research studies.

Some companies send investment projects and financial assistance to the Philippines also via GK.

Meloto said foreign governments and organizations were willing to support GK because it is a private, nonprofit organization not connected to the government.

If he joined the Aquino government, Meloto said foreign governments might not trust GK anymore.

“They don’t trust politicians,” he said.

(bold emphasis mine)

My comment: Of course, in government all actions are political, so there will be emergent conflicts.

What is seen as charity is actually political redistribution of resources from coercion (taxation). People mostly see who is giving and what is being given, but they hardly see where and how these resources have been taken from.

As Ludwig von Mises once wrote, ``But the substitution of a legally enforceable claim to support or sustenance for charitable relief does not seem to agree with human nature as it is...The discretion of bureaucrats is substituted for the discretion of people whom an inner voice drives to acts of charity."

Therefore, his objection is not only valid it is realistic.

Likewise, he is living up to genuine charity work or social endeavour by avoiding potential conflict from political intervention.

I hope he doesn't change his mind.

It's a wonder, could Mr. Meloto be a libertarian?

Despite Lesser Wealth, Philanthropic Activities Grows

In an environment where the world's richest have become materially less richer...

This from the Economist, ``THE wealth of the world’s richest people fell by almost a fifth last year to $33 trillion, according to the World Wealth Report from Merrill Lynch and Capgemini. A rich person is defined as having at least $1m of assets besides his main home, its contents and collectable items. The number of rich people shrank by 15% to 8.6m, or 0.1% of the world's population. Their wealth declined by more than 20% in North America, Europe and Asia, but by a bit less in Africa and the Middle East. Latin America’s rich were the least affected: they lost 6% of their wealth, and the number there fell by less than 1%. In North America, which had a large proportion of people just above the $1m threshold, the ranks slimmed by 19%." (emphasis added

Growth in philanthropic activities remain less affected...

According to the Economist, ``THE global recession has failed to dampen philanthropic spirit, with many rich people increasing their charitable giving, according to a new report from Barclays Wealth. Among the 500 British and American individuals with at least $1m of investable assets, only education was considered a more important expense than charitable commitments. Some 28% of Americans say they are giving less money compared with 18 months ago, though 26% are giving more. A similar pattern is seen among those givers from both countries who inherited their fortune. But entrepreneurs are more likely to give their cash away—31% say they have increased their giving and only 17% have reduced it."

The spirit of charity doesn't vanish along with the crisis. On this account, it even increases them.