Why is Warren Buffet Persecuting Us?
So, what exactly does it mean that Warren Buffet has decided to give $10 billion to the Bill and Melinda Gates Foundation? What does charity actually accomplish, if anything?
First, note that the world of goods and services exists as a kind of continuous auction. There is a limited supply of just about anything and everything at any point in time. We either produce, trade or steal to get pieces of that limited supply.
When we produce, we add to the supply. When we trade, we effectively add to the supply, because the partners to a free exchange all agree to it only because they believe that they will be better off as a consequence. And they usually are. The corn I might grow, beyond what I can eat or otherwise use personally, is worth less to me than the things that you or someone else produce - books, computers, cars, etc. Via specialization and trade, we are able to produce far, far more than as isolated individuals.
So long as we can freely produce and trade, we are generally a positive value to each other. One man's success at producing and trading is not a threat or loss, but a net gain for all. When we steal, however, either directly through force and stealth or indirectly thru fraud, we become instant enemies. Your success as a thief does not in the long term benefit me as either a producer or another thief.
Enter money. $$$. Money is really just an accounting tool. The underlying reality of what we are doing is still trading and producing (and stealing). However, having a common unit of exchange vastly facilitates complex trades of the kind necessary to move beyond a neolithic level of production. One of the classic examples of the need for money has been the production of a book of matches. It turns out that the production of that simple item ultimately involves tens of thousands of participants around the globe. Without money, it is doubtful that any single group would be able to produce even a simple book of matches. Imagine all the separate agreements, commitments and barters that would have to take place.
Unfortunately, money also facilitates theft. Especially paper money issued by states, but that's another story.
For now let's look at the world auction of goods and services. All over the world, people exchange items of value via the exchange medium of money. They depend upon money having value tomorrow. Otherwise, their trade is a loss, or worth less than they had anticipated.
States run banks to control the supply of money (and also to make it easier for them to steal it). Typically they enforce a monopoly on the issuance of their particular brand of money, so that they can both oversee it for good reasons and also manipulate it for bad ones. State banks in many 3rd World countries are notorious for using that control to line the pockets of the local dictators at everyone else's expense.
Then there are the private crooks who accomplish the same thing by counterfieting. What happens when more money is introduced into an economy, whether from a state or a private crook? That money is used to purchase the real products that other people had to work to produce. It is bidding against all the other money for the same goods and services. Since it represents a net increase in the available money to bid with, then it naturally causes a net increase in the bids, or prices. I.e., inflation.
So, introducing more money into an auction, such as the market economy, increases prices without any corresponding increase in actual production. This is a universal rule. There are those so-called economists who will argue that a certain amount of inflation is necessary to "prime the pump" of the economy. Without getting into that whole dreary argument, let's just say that most respected economists disagree.
(Just briefly, the reality is that the new money doesn't go to everyone equally. In a modern economy, the major industrial producers tend to get it first. They see a net gain for a little while, because with cheaper money they can expand their production at a lower cost. However, their increased demand bids up the prices of the capital equipment, which draws more people into producing for that field, meaning fewer producers and thus higher prices for other goods and services, until we get to you and me, who find our rent and electricity and food, etc., all rising in cost for no apparent reason. WE pay for the temporary wealth of the capital goods industry, which itself is not economically justified by any real demand, meaning that they will be needing a new "fix" very soon to keep from going bankrupt.)
So, if someone had $30 billion lieing around, what should they do with it? Let's assume that they have the very best of intentions. They want to "help the world." Great. Here's a thought:
BURN THE MONEY!
If the money is burned, then it can't enter the world auction to bid up prices. Au contrare. Instead, everyone else's money is now a little bit more valuable. Everyone benefits from Warren Buffet burning his billions.
Or, he could INVEST it! What a thought. Here's someone who obviously knows how to generate wealth, one of the great producers of our time. So, do what you do best! Keep investing and we will all benefit.
But no. Instead the money will be going where it will do the LEAST amount of good and cause the most damage to us all, short of giving it to some 3rd world despot like Mugabe, to hire more chile soldiers. So, a general net loss... How sad.
Of course, Mr. Buffet probably did not intend to hurt us all (except those first in line for the moola). It's likely that he had the best of intentions - and we know where that leads. Mr. Buffet is assuming, like so many would-be philosopher kings amongst us, that he or his proxies, Bill and Melinda, somehow know better how to help out the poor people of the world than they themselves do, or that would naturally happen anyway, as incomes and overall wealth increases, as has been happening.
Which is more likely to increase the general wealth, thereby creating more jobs, more income, more demand bidding up the price of labor, etc., giving money or gratuitous services to those who have not demonstrated any ability to use it effectively or giving it to the people who have consistently demonstrated an ability to turn it into much more wealth?
But if you assume that wealth itself is a matter of luck and/or theft from everyone else, then of course if you are wealthy then you can stew in your guilt or demonstrate your repentance. Now I don't know much at all about Mr. Buffet, except that he is incredibly wealthy. Giving him the benefit of the doubt, I assume that he has probably earned it. Most people do earn their wealth, evidenced by the simple fact that overall wealth keeps increasing, which couldn't happen in a society of thieves.
Some people, however, have done proportionately much less to earn their wealth than others, and some people are simply frauds, as with Ken Lay and his cohorts at Enron. While I'm in the dark as to Mr. Buffet, I do know something about Bill Gates. I use his products virtually every day, both at home and at work.
They STINK!
Of all the major operating systems (OS's), Microsoft's has been consistently the worst ever. There were MANY things I could do in the '80's on my Amiga that are virtually impossible to do today on a state of the art fast Pentium system running Microsoft Windose. Everyone knows that the Mac is better - and also more expensive, but the plain fact is that Windose is JUNK! We had MANY alternatives to it - the Amiga, NEXT, the Atari ST, the Be Box (which should have become the Mac OS, but the bankers screwed us again), Linux, OS/2. Every one of these OS's were far superior to Microsoft's products and in many cases cheaper to use.
So, how did we end up with a garbage product and how did Bill Gates end up as the world's richest man? Stay tuned.
Suggested supplementary reading material: "Hackers," by Steven Levy.