You can't trust the rich to make the right decisions about where the nation's resources should go
Every once in a while, The New York Times Magazine drops a profound and staggeringly important bit of information into a slot that typically reserved for softer articles. So I read at least the first few paragraphs of everything and on Aug. 22 the opening essay by Judith Warner made a point that ought to be the center of the national debate on the Bush tax cuts, the value of philanthropy, and the direction of economic policy in a lingering recession.
Warner was struck, as I was (see Editor's Notes, Aug. 18) by the massive praise heaped on Bill Gates and Warren Buffet for their vows to donate half their wealth to charity. "After all," she noted, "what better illustration could there be of the great social good that wealthy people can do when the government lets them keep their hard-earned dollars to spend as they please?"
Yet it turns out that Gates and Buffet are very much the exception. It's odd and counterintuitive, but the truth is that most rich people give less of their money to charity than most poor people. Upper-class people, studies show, are much less compassionate toward others and more likely to be selfish with their money.
"This compassion deficit," she wrote, "is perhaps not so surprising in a society that for decades has seen the experiential gap between the well-off and the poor (or even the middle class) significantly widen."
In other words: we already know that cutting taxes on the rich hurts the economy, makes the deficit worse, and does little or nothing to improve the lot of others. Trickle-down economics has been widely proven a fraud.
But the new evidence shows that letting the very wealthy decide how the wealth of society should be divided doesn't work well either. For one thing, very little of the charity coming from the rich goes to the poor; those tax write-off donations tend to wind up helping big cultural institutions or successful universities and those gifts, Warner notes, "come with the not-inconsequential payoff of enhancing the donor's status among his or her peers."
More important, it's a public policy failure. You can't trust the rich to make the right decisions about where the nation's resources should go; that's why we have elections, open government hearings, political debates. And that's why that big, bad word "taxation" taking the money from the rich and giving it out the way the representatives of the rest of us decide is best is actually a far more efficient and fair way to go.