Reports from the Economic Front

a blog by Marty Hart-Landsberg

Billionaires Battle

Well, perhaps billionaires don’t really battle—but here is a case where the super-rich in the U.S. and Germany don’t see eye-to-eye.

Bill and Melinda Gates and Warren Buffett are leading a campaign to “persuade fellow billionaires to commit half of their wealth to good causes. In just a few short weeks, [they] have won over 38 of those listed on the Forbes 400 list of wealthiest Americans to make that pledge.

You can see who these givers are by going to the Giving Pledge website.

The Christian Science Monitor offers the following insights into the motivations of participants:

Included on the list of donors … are California hedge fund investor Thomas Steyer and his wife Kat Taylor, who were worth around $1.2 billion in 2008.

“Right now, when I look around, I think business people and financial people are pretty widely mistrusted and seen as overwhelmingly self interested,” Mr. Steyer said Wednesday. “But, I think that Warren and the Gates’ point is an emphatically different one. It is that business people are not just laboring for themselves or their families, but they have bigger responsibilities and belong to a bigger community.”

Mr. and Mrs. Gates and Mr. Buffett, first and second respectively on the Forbes 400 list, reached out to between 70 and 80 of the Forbes list’s members and around half agreed to pledge. The 40 families and individuals who have joined the Giving Pledge are worth a combined $251 billion, according to recent figures from Forbes….

Pledge signatories have each written letters explaining their commitments. The group does not pool money to support any particular organization or cause, instead list members are encouraged to “find their own unique ways to give that inspire them personally and benefit society.”

Well, it turns out that Germany’s super-rich have rejected overtures from Microsoft founder Bill Gates to participate in this campaign.  In fact, as Spiegel Online explains, German billionaires are quite critical of it.

The pledge has been criticized in Germany, with millionaires saying donations shouldn’t replace duties that would be better carried out by the state….

Peter Krämer, a Hamburg-based shipping magnate and multimillionaire, has emerged as one of the strongest critics of the “Giving Pledge.” Krämer, who donated millions of euros in 2005 to “Schools for Africa,” a program operated by UNICEF, explained his opposition to the Gates initiative in a SPIEGEL interview.

SPIEGEL: 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 fulfill public duties.

SPIEGEL: Should wealthy Germans also give up some of their money?

Krämer: No, not in this form. It would make more sense, for example, to work with and donate to established organizations.

Gee, I wonder whether unity might be built around a different set of demands.  You know like for labor law reform, an end to free trade agreements, strong government regulation of finance . . .

One response to “Billionaires Battle

  1. Christine Ahn August 17, 2010 at 10:01 am

    Thanks for posting this, Marty. The Germans say it like it is. Another problematic angle to enabling these super wealthy billionaires control over their charitable donations is the rise of projects like AGRA, the Alliance for Green Revolution in Africa. Gates and Rockefeller have poured hundreds of millions of dollars into this initiative which mostly supports biotechnology in Africa– “drought-resistant” seeds, et al. I do believe that this must be a critical issue facing the social justice movements in the US–and an urgent task for progressive economists!


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