You know, like most Americans, I give a fair amount of money to charity, and I
don’t write much of it off, because I really don’t really care if my charity goes to
an “official 5093B charitable organization”. In fact, I really prefer NOT to give to charitable orgs., because the slick offices and the "Directors of Giving" that pull in a hundred grand a year (those 'non-profits" need to go somewhere, don' t they?) seem venal, somehow.
If you doubt that dollars are more precious than God to an American, try this little exercise sometime. Pay for the groceries of someone behind you in line. Pick up dinner for the old couple in the corner at a restaurant. A few bucks... but, the recipients will be blown away. Why is THAT bit of grace, cheap on its face, so... rare?
In any case, you will get lauded for charity as a huge humanitarian for parting with sums that are less than what you might piss away at a craps table or stuff into a g-string (if you are into that sort of thing...). It seems out of whack to me.
You know what I am really proud of? The companies I have founded or co-founded today employ hundreds of people and have combined payrolls in the $10's of millions a year. This money pays for over hundreds of homes, hundreds of cars (and some harleys), countless meals, primary through college education for lots of kids, and worthwhile, productive lives for hundreds of families, and dozens or hundreds of, yes, charitable contributions of time or money on the part of the individual. What he or she feels is a good use of their money. Not me dictating it.
Best of all, the beneficiaries of this “largesse” are hugely capable folks that don’t have the stigma of feeling that they are charity cases at all. They find or create or sell things that other people want to buy. No one is forced to buy… they WANT to buy. To be honest, the charitable giving we do corporately is marketing. Why do I think I can make better charitable decisions than my shareholders? Should I be using their money to support my charities? I decided I could not. They bought into a business plan, not a charitable giving plan. I am not against corporate charitable giving, per se, as long as it is up front in the prospectus and defined in a way that, as a shareholder, I would want to give on my own. Having some CEO use my money to gain accolades for his charitable contributions for causes I could care less about is a problem, however.
I was pretty much broke when I first started these endeavors. A good idea, hard work, a huge amount of luck, some great people, and being fiscally conservative, ie not betting the livelihoods of those hundreds of people on risky deals, made it all possible. Even better, this isn't a one-off story. There are millions of people in this great country that are trying to do the same thing at all different scales, and lots succeed.
What do these millions of humanitarians do? They make things or doing services that you might want to buy. THAT is free-market capitalism. A beautiful thing. People thinking about what I miogth want and providing me a chance to choose to buy it. It is amazing how few Americans even understand that. Admit it. When you think "capitalism", you think Enron, Madoff, and failing banks caused by mind-bending things called derivatives that you don't really understand. That is no more capitalism than bak robbery is banking. Fraud is fraud.
You know what else? I don't feel sorry for people that lost money on Enron stock, or lost all they had with Bernie Maddoff, or are threatened with bankruptcy fromwalking away from their homes that they have no equity anymore, or that will have to sell their oil and gas assets because they got too highly leveraged when commodity prices were at the highest they had ever been in real dollars.
Why in the world would you invest your hard-earned money in something you didn't understand? Cons depend upon your greed. Madoff and Skilling used to deflect questions about their business using esoteric language or saying what they did was "proprietary". You wouldn't think about investing in a secret scheme that your neighbor Larry came up with and won't let you in on the details. But God forbid that Larry gets your other neighbor Delbert in and Delbert makes some money. Damn the details! I want in!
This is the formula for fraud. Learn to recognize it. The victims of this have a less than pure soul, that is why they got victimized. I learned these lessons the hard way a long time ago. I learned that it was my own larcenous nature that caused me these problems, and I altered my way of thinking. Hd someone made me whole because I was a victim, I would still have this spot on my soul.
So, people making things that other people want, and can choose to buy, or to buy from someone else that is selling it cheaper. That is free markets. When I drill a well in the US, I contract with, on average, 50 or 60 companies or entities to do all the work necessary to drill and produce that well. Because we don't have onerous regulations on starting businesses, I have a lot of choices of who to use. Overseas, where the hurdle rate is ten or more times higher than here, and there are only a handful of service companies to choose from, my costs are 4 to 10 times higher. That is the cost of bad law, bad policy, and too much needless regulation (as opposed to desireable regulation, of which there is some). Big business knows this. It knows it is not nimble. That's why it uses the power of government to write those precious regulations that keep small players out that are so beloved by lawmakers and "anti-business" advocates. Ironic, isn't it?
For a quick reference of how powerful small business is, lets compare the returns from a T-Bill and companies like mine. This is also a great proxy for classic charity. A perfectly run charity with no overhead can invest the returns of its endowment at the prevailing rates of return. Let's pretend it isn't -40% as it is today, but the T-Bill rate. To pay my payrolls, and thus support the hundreds of people I do today in exactly the same scale as they are today, I would need to have invested over $1 billion dollars. For the guy with the corner bakery, who pulls in a net of $50k a year? Close to $4 million just for the profit! To pay for the salaries of the two people he has working for him? Add another $4 million. That little place that cost $50k to start provides the same amount of social good as a $10 million endowment that is operated with no overhead. THAT is the magic of what we have here. Best of all, if the guy with the corner bakery is selling more and more every year, he will probably spend his money expanding his facilities and hiring more people... investing in himself. I think, objectively, that the effective social goodness of my baker friend hugely overshadows the social goodness of my wealthy friend who chooses to charitably give away his inheritence.
Creating, growing, and supporting small (and large) businesses, or at least businesses that provide stuff you want, and that don't look to the government to keep competition down via needless regulations or to subsidize the crap they make that we consumers are unwilling to buy ourselves. When they do so, they acknowledge their failure as a contributing member of society and now demand that we collectively pay for their failure... so F*** GM and Chrysler, as far as I am concerned. Maybe a company that cares about what buyers think can take their place. Maybe they can spin out VOLT and Cadillac as independent companies. I bet someone would buy those stand alone!
Thomas Jefferson had a great quote. “A government that is big enough to give you anything you want is big enough to take away everything you have”.