11 ms·

The Charitable-Industrial Complex

91 points by tedsuo 13y ago

leot 13y ago
Were the wealthy truly interested in promoting greater social good, they would put their efforts into reforming tax systems and global finance in order to help make the world more fair and just. Replacing income taxation with wealth taxation (plus a value-added tax), e.g., could simplify and make far more equitable the system we operate within, while greatly improving incentives and aligning them with our society's openly professed values. For some reason, there are surprisingly few think tanks and lobbying groups advocating for such a change. [Edit: I'm kind of amazed to see this getting down-voted. I would love to hear from those who think this comment isn't helpful.]
- tocomment 13y ago
  Would a consumption/luxury tax be fairer than a wealth tax? I'd imagine with a wealth tax it would be more difficult for folks to retire?
  - leot 13y ago
    If there are specific policy goals that we'd like to accomplish, it's probably best to make a very simple taxation system (tax the total of everything, using the best appraisal tools we have), and then add specific provisions that address such goals directly. One simple approach to the retirement issue might be to have marginal wealth taxation rates (first $100k are exempt, e.g.), or have (as we do now) limited tax-protected retirement funds (EDIT: e.g., IRAs -- "accounts" might have been the better word).
    - dnautics 13y ago
      that's cute, who would get the privilege to run those tax-protected retirement funds. What sort of investments would be permitted in these funds? Aren't these people, then, the benefits of largesse created as people flee the taxation?
      - michaelt 13y ago
        Plenty of countries already have partly-tax-exempt retirement savings, to encourage people to lock money up for retirement instead of making equivalent instant access investments.
        jeltz 13y ago
        Yes, and there the banks running those tax exempt savings make a killing through their large profit margins.
      - leot 13y ago
        Huh? Instead of "fund" perhaps I should have said "account". I was just thinking of IRAs (as they're named in the U.S.) and the like.
        dnautics 13y ago
        what are you allowed to put into an IRA, and those investment vehicles are the benefits of a privilege that no one else has. Could you use your IRA to invest in a person just released from prison, to give them job training, if he agrees to pay you a portion of his salary back? No. But you could use your IRA to invest in a fortune 500 company.
  - yummyfajitas 13y ago
    Depends on your perspective. A consumption tax charges people in proportion to the benefit they receive from society. An income tax charges people in proportion to the value they create for society. A wealth tax charges people in proportion to how much they save for the future. So the question is what do we want to discourage? Consumption, value creation or savings?
    - rlanday 13y ago
      Savings, right, since we want rich people to spend money instead of hoarding it to drive the economy? Or value creation, since it causes economic inequalities? Or maybe even consumption, I guess, if you hate America and don't believe the amount of money we can borrow and spend by racking up a trade deficit is a good measure of economic health.
    - leot 13y ago
      You don't have to spend any money to benefit from being wealthy.
  - dnautics 13y ago
    yup, also what would happen is the government would get bigger and bigger on these newfound taxation revenues. That's not great, but in the most idealistic situation, it's not necessarily bad. However, what is bad, is when the economy sags, the taxation revenues to sustain this bigger government will fall short, the government will go into debt, and do one of two things: It will either print money or borrow. Borrowing (with interest) implicitly assumes the growth of a revenue stream. With private entities, the lender is on the hook if it goes bankrupt and can't fulfill its obligation. With public entities, the citizen is on the hook, so the only solution is to increase taxation down the pike, unless you have a miraculous recovery that restores the economy to what it was before (plus interest). If you don't think the wealthy will find a way to avoid this taxation down the pike that the middle class and poor will have a harder time leveraging, you are naive. Printing money is worse. Because it devalues the currency, makes everything more expensive, and that $100,000 limit that you set as the point where the wealth tax kicks in becomes a lot more painful. Pretty soon, the poor are paying this tax that only the rich were supposed to pay. Over net time, the people that you are hurting the most are the poor, because the rich have long ago figured out how to avoid this tax. Congratulations. Through your programme of good intentions to fix the divide between the rich and poor you have made the situation far worse than it ever was.
    - eli_gottlieb 13y ago
      Money is debt. There has never been a world without public debt, because that debt has to come from somewhere. Usually, it comes from the government, and the rates of interest and repayment dictate growth or shrinkage of the money supply.
      - dnautics 13y ago
        Contemporary money is certainly equivalent debt, but in the long run historically, debt has been private debt. Keeping in mind that for much of modern history, any form of lending was considered "usury" and generally relegated to corners of society. There is a difference between money that is based on savings and money that is based on debt. Money that is based on savings is net, an exchange for services that have already been rendered. Money that is net based on debt is net, an exchange for services that are expected to be rendered. One of these paradigms is subject to painful corrections as a result of counterparty risk; the other paradigm treats unexpected failures as a sunk cost.
- tedsanders 13y ago
  Couldn't you say that about anyone, not just the wealthy? Also, reforming tax systems seems extremely hard to do. How would you propose a motivated millionaire go about it?
  - leot 13y ago
    Provide money for thoughtful, convincing research and advocacy.
    - dnautics 13y ago
      who gets to decide what is 'thoughtful and convincing'? How can I be that person, so that I can decide my friends and family are thoughtful and convincing?
    - tedsanders 13y ago
      Asking sincerely: How far do you think a few million dollars could go? What sort of research needs to be done (and would be convincing to lawmakers)? How would advocacy money be spent? I think this is a steep challenge, even for a millionaire.
      - leot 13y ago
        The first few million would need to be leveraged to gain the support of others with money and influence. Probably the first bunch would be spent meeting with lobbyists to hear what they propose. I'm afraid I can't speak to the returns on lobbying dollars spent, but clearly money talks in this arena. There are a variety of strategic and tactical moves that could be made. I'd be happy to share whatever ideas I have about them in direct communication (pseudonymous contact info is in my profile).
- ferdo 13y ago
  I think the issue goes deeper. Not enough people are willing to look at the root of the problem: the monopoly on the issuing of currency and credit in the US that is held by private interests. When private interests control the volume of currency, they control the material life of the country, including the government. The growing imbalance of wealth and income is a direct result of this cause. Tax reform is a good idea but it's meaningless if it leaves the nations's ownership of currency and credit in private hands.
  - tedsanders 13y ago
    The Fed is not run by private interests. What are you talking about?
    - ferdo 13y ago
      "Instrumentalities like the national banks or the federal reserve banks, in which there are private interests, are not departments of the government. They are private corporations in which the government has an interest." Justice Louis Brandeis, US Supreme Court, 1928 http://openjurist.org/275/us/415 http://openjurist.org/275/us/415
      - tedsanders 13y ago
        The Fed is not run by private interests. The president appoints its members. It has a dual mandate of low inflation and low unemployment. So...?
        ferdo 13y ago
        The Federal Reserve is owned by private interests with aspects of a public utility. It's the worst of public and private mixed in one package. As Justice Brandeis said, it's a private corporation in which the government has an interest. The Fed of SF has an interesting summary: > "Is the Federal Reserve a privately owned corporation?" > Yes and no. http://www.frbsf.org/education/publications/doctor-econ/2003/september/private-public-corporation http://www.frbsf.org/education/publications/doctor-econ/2003...
- tedsanders 13y ago
  Doesn't a wealth tax encourage immediate consumption? And how do you measure wealth? Would the government hire thousands of wealth assessers to value old houses and cars and furniture? I've always thought that economists consider a consumption tax the ideal tax.
  - leot 13y ago
    Lots of economists like wealth taxes, too, though talking about them to wealthy people often goes over poorly. A wealth tax encourages putting assets to work rather than simply engaging in "wealth preservation". Replacing most tax revenue with a wealth tax + a VAT (a consumption tax) ensures that everyone contributes fairly, and offsets the "immediate consumption" incentives.
    - harryh 13y ago
      Lots of economists like wealth taxes, too. <--- Can you cite some of them please?
      - leot 13y ago
        http://www.economist.com/blogs/freeexchange/2013/06/property-taxes http://www.economist.com/blogs/freeexchange/2013/06/property... http://www.econ.nyu.edu/user/wolffe/ http://www.econ.nyu.edu/user/wolffe/
      - mjn 13y ago
        There's a huge literature on optimal tax policies, usually focused on more specific questions, so I'm not aware of a good survey paper on what economists think of wealth taxes generally. However, two specific questions you could look into, each of which have significant supporters on both sides: 1. What are the relative merits of inheritance taxes and wealth taxes, from the perspective of economic efficiency and/or intergenerational egalitarianism? 2. What are the relative merits of wealth taxes vs. capital-gains taxes? Roughly, is it preferable to tax capital annually based on its current value, or to tax realized gains in capital at the time of realization? The current real-world situation is that inheritance and capital-gains taxes are fairly common, while wealth taxes are uncommon, and there's some disagreement over whether that is the right choice.
- dnautics 13y ago
  the a priori assumption here is that the government is 'better' than private interests in deciding how charitable funds should be spent. Why do you think that these newfound revenues coming into the treasuries of the state will be subjected to good stewardship? The government is liable to be using those funds to fight unjust wars, subject innocent people to draconic and unjust policies with escalating costs (like the drugs wars), and so on and so forth. And there are plenty plenty plenty of corrupt businessmen, but it's way worse in government. right now there is a controversy going on in the central basin municipal water district in california, where overbilling contractors (and kickbacks) happened, the son of an LA councilman was 'hired' as the director, paid six figures to do nothing, and had benefits such as a retirement plan and paid tuition for an expensive private undergraduate degree. How do you get away with that? Almost every director of a nonprofit charity knows that there are rules upon rules prohibiting conflicts of interest that you have to bend over backwards making sure you don't violate in case the IRS comes after you.
  - leot 13y ago
    I don't see where that assumption comes into play. The reform mentioned above need not increase government revenue.
  - quinnchr 13y ago
    People think government is better at it, because that's what the evidence overwhelmingly points to. The U.S. routinely top's the list of the world's most charitable nations (private charity): http://www.npr.org/blogs/thetwo-way/2011/12/20/144035063/survey-u-s-takes-top-spot-as-most-charitable-nation http://www.npr.org/blogs/thetwo-way/2011/12/20/144035063/sur... While we also top the list of OECD countries for child poverty http://www.oecd.org/els/soc/CO2.2%20Child%20poverty%20-%20update%20270112.pdf http://www.oecd.org/els/soc/CO2.2%20Child%20poverty%20-%20up... Now compare those poverty rates with the amount of public and private social spending: http://www.oecd.org/media/oecdorg/directorates/directorateforemploymentlabourandsocialaffairs/Chart2_SOCXWeb2012.JPG http://www.oecd.org/media/oecdorg/directorates/directoratefo... More public social spending has a higher effect on poverty than more private social spending.
    - 13y ago
- michaelt 13y ago
  How would a donor go about doing this, in concrete terms? I mean, should I be spending my money on political lobbyists or what? What measurable outcomes should I expect?
  - leot 13y ago
    Funding and founding organizations that can serve as counterweights to the ones advocating on behalf of the interests of the already powerful would be one way. Though it took some decades, we have seen the results, in the public narrative and in policy, of the founding of the Heritage Foundation (1973), the Cato Institute (1974), and Americans for Tax Reform (1985).
- aspensmonster 13y ago
  It's getting downvoted because it's far too similar-sounding to the dreaded S word. I think the reason the wealthy by and large won't "put their efforts into reforming tax systems and global finance in order to help make the world more fair and just" is precisely because they believe the world already is "fair and just." In a world where money is the single largest broadcaster of a whole slew of societal signals --your caste, your worth, your success, your legitimacy-- finding yourself with lots of money tends to reinforce the notion that you must be doing it right already. To the extent that there are problems in the world, it seems the wealthy feel almost universally as if their own resources and philosophies are best suited for remedying them, rather than governments or other collective structures or any contrasting philosophies. This precludes ever examining whether "tax systems and global finance" --or other attitudes and philosophies of the wealthy-- are the actual perpetrators of those problems. Peter Buffet argues that such philosophical transplantation is the cause of the problems the transplantation is trying to fix and that any sincere attempts to remedy society's ills must address it. Honestly, I don't think the wealthy, on the whole, are really concerned about fairness and justice in any context that parts them from their wealth. If egalitarianism was the highest value and penultimate goal, then the concept of extracting surplus value from others' labour and keeping it for yourself would be thrown out entirely. Suggest that however, and you get thrown under the bus for being a pinko-commie-socialist-marxist-anarchist-class-warfaring-moocher-taker-leech.
  - leot 13y ago
    To be clear, I'm not advocating egalitarianism, or contending that it's the highest value. The goal is to align policy with our most defensible values and ideals (hard work, fairness, merit, etc.). If the wealthy truly believe we live in a meritocracy, in which the hardest working and most competent end up the most well off, then taxing wealth should be preferred to taxing capital gains. Any hard working and competent wealthy person should have little trouble earning returns on their personal capital that far exceed a ~1.5% annual wealth tax (over a multi-year time horizon). Only those who choose to do little with their wealth, or cannot manage it competently, end up worse off. But this accords well with "survival of the fittest", yet another value often espoused by the world's wealthiest. In other words, the goal here isn't socialism, it's rationality.
- consonants 13y ago
  Implementing a negative income tax or minimum income would do wonders for the first world poor. It's been done before with overwhelming success. Honestly, having profit as the sole motivation for enterprise in society is strangling the developing world.
tocomment 13y ago
I came across this a while ago http://www.givewell.org/ http://www.givewell.org/ It looked like a way to find more effective charities. What do you guys think?
- michaelhoffman 13y ago
  I first came across GiveWell when their principals engaged in dishonest behavior to pump it up on MetaFilter, an incident which is described here: http://mefiwiki.com/wiki/Givewell http://mefiwiki.com/wiki/Givewell Since then, seeing GiveWell mentioned anywhere leads to an immediate feeling of distrust.
  - tedsanders 13y ago
    To be fair, they have devoted a top level navigation link to their page of mistakes. It seems like they try very hard to be transparent these days, even going so far as to publish notes on conversations with charities. But that was a shameful and embarrassing episode for them.
  - deleted 13y ago
    [deleted]
- jseliger 13y ago
  Correct. I realize that I've been talking about this book a lot on HN lately, but Ken Stern's With Charity For All discusses both the promise of Givewell and the challenges—specifically, few nonprofits actually measure, or want to measure, the efficaciousness of outcomes. I'm a grant writing consultant who works primarily for nonprofit and public agencies, and by and large I tell clients not to worry about evaluations because funders don't care about them in a substantive way: http://blog.seliger.com/2008/04/24/studying-programs-is-hard-to-do-why-its-hard-to-write-a-compelling-evaluation http://blog.seliger.com/2008/04/24/studying-programs-is-hard.... Yesterday, j_s asked about Dan Pallotta's work, which is in the same vein; if you're interested in this subject, follow j_s's links: https://news.ycombinator.com/item?id=6104569 https://news.ycombinator.com/item?id=6104569. (I wrote more about With Charity For All here: http://blog.seliger.com/2013/06/02/with-charity-for-all-ken-stern-book-discussion/ http://blog.seliger.com/2013/06/02/with-charity-for-all-ken-...).
raldi 13y ago
Could someone rephrase this piece in the form of one or more "Instead of __________, we should be doing ________" statements?
- tptacek 13y ago
  Instead of conditioning improvement in the developing world on the largesse of billionaires, we should identify the structural phenomenon that are retarding quality of life there and invent new solutions that target those phenomenon directly. Instead of buying condoms and bottled water for Haiti, we should fix Haiti's government and economy.
  - gojomo 13y ago
    I think you've shifted his meaning a bunch with that summary. Peter Buffett doesn't mention Haiti specifically or make suggestions that casually translate to "fix [some country's] government and economy". He's vague and impressionistic, and his most concrete suggestions (which aren't very concrete at all) are in the 2nd-to-last paragraph: "Money should be spent trying out concepts that shatter current structures and systems that have turned much of the world into one vast market. Is progress really Wi-Fi on every street corner? No. It’s when no 13-year-old girl on the planet gets sold for sex. But as long as most folks are patting themselves on the back for charitable acts, we’ve got a perpetual poverty machine."
    - hamsternipples 13y ago
      the hypocrisy in his statement is mind blowing. call me out if I'm wrong here, but he just had a bazillion news stories saying he was going to do philanthropy. how is that not back patting? finally, he concludes that we will have a perpetual poverty machine by people patting themselves on the back with charitable acts, so his solution is to try and get all 13 year old girls to no longer be sold for sex. that makes zero sense! I'm gonna try and follow his logic here: he says the market is too vast. ok. we should shatter those structures and vast markets. ok. we gatta be absolutely sure that 13 year-old girls are no longer sold for sex any more. so, could he be implying that he really wants to return to traditional markets without wifi on every street corner and just the regular old 18+ year-olds sold for sex? (sorry for the crude comment. it is not meant in harm. after thinking about it more than 10 seconds, I have no idea what kind of world he wants to create!!) EDIT: I would imagine that what he really want's to do, is invest all that cash into google, install wifi on their street corners along with a chromebook so they can get them some form of education, and then track all their communications, to be 100% sure that they're not being sold for sex.
cotega 13y ago
I hope this doesn't sound like preaching. In almost every discussion about charities and non-profits the main discussion seems to revolve around the money we donate and how efficiently charities use these donations. One thing that I find people forgetting is how valuable their time can be to non-profits and how that often is way more valuable than donations. Each one of you on HN certainly has a skill that would be valuable to charities (especially small ones) whether that be technical help or in taking your skills in finding customers for your startup and applying those skills to fundraising for the non-profits. You would be surprised at how limited many non-profits are in these areas and how even an hour here and there each month can make a huge impact. I realize many of you just don't have the time and I am not suggesting this is for everyone. However, if you do, try sending a quick email to the director of a non-profit you find interesting and you might be surprised at how happy they are to hear from you.
- nostromo 13y ago
  The primary thing most nonprofits need is money. Here, I'll give you an example: My mom ran a branch of Habitat for Humanity for a while. People universally loovvee Habitat. People were constantly volunteering, which is great! However, most of the time, there just is no work to be done by volunteers. The primary thing Habitat needs is land and construction materials (which usually means: money). People were sometimes upset about being turned away... but unless they could donate land, money, or construction supplies, there just wasn't much unmet need for general laborers.
  - zanny 13y ago
    I think you point a more systemic issue in the modern world. It isn't just in non-profits, there is a general lack of land, money, and construction supplies. First world infrastructure crumbles not due to a lack of unskilled labor to set to paving streets with vehicles, it is a lack of those vehicles for people to drive, and a lack of money to push politicians to allow it. I'm not well versed at all in the problem, but I see it as a major one - there needs to be some major innovations in materials extraction and distribution to enable a next generation deployment of machinery to make the next round of renovation globally possible. And there is just no one picking up supply to meet that demand, mainly because while people want to fix all the broken infrastructure and build nations on new roads and proper housing, there is just no machinery to meet the demand, and no money to pay for it.
DanielBMarkham 13y ago
I'm voting this up because it seems a heartfelt reaction against figuring out that charitable giving is its own scam -- a scam by well-meaning people all out to do good in the world, but a scam. By that I mean that there is no feedback loop in place to assure the donors that they're wrong. Every deal is one to save the day. Every idea is some great idea from one place transplanted somewhere else. There's a business in assembling ideas into attractive memes and then getting rich people to make themselves feel better by paying for them. A very big business. So hats off to Buffett for pointing it out. I especially like the term “conscience laundering” Having said that, I call bullshit here. While he's done a bit of fumbling around at what his end of the problem looks like, and he's certainly correct that preventing slavery beats the shit out of having free wi-fi, I'm not feeling he has any better idea of what the hell he's talking about than the folks peddling the latest charitable cause. And he admits as much. So as a plea for the system being broken, count me in. As any indication of way forward? It's not in the essay. I also want to point out that everybody seems to understand that you make money in your life one way, you may find value in a completely different way. But people giving money, most of which are rich, seem to be completely detached from this concept. Working in a factory for two bucks a day and not starving, while watching your family grow up and being involved in some religious or civic group might be a freaking ton better than not being "exploited" We cut ourselves slack for finding value in things other than money, but we do not allow the same privilege to others. Because charities run on dollars, we tend to subconsciously value their lives in dollars as well. Bad premise. Since the solution space is so thin, I'll take a flyer on what he might like to see. As opposed to the latest in charitable wizardry, my ideas and five bucks will get you a cup of coffee. Societies evolve by the flow of information and goods contributing to an open market. Information flow to people? Education. Unrestricted goods flowing to an informed buyer? A win for all parties. Innovation and solutions formed by cross-pollinating folks with radically different backgrounds and knowledge? Another win for everybody. It's all information and trades. Bad societies control information and trade. Good societies let a thousand flowers bloom and grow by productive creative destruction. So far, many folks are on-board with this. But what we continue to forget is that forms of society itself is just another structure that can benefit from these same principles. My position is that the problem here lies in our hidden assumptions. Every charitable intervention has a bunch of a priori assumptions made about what would work or wouldn't. As Buffett said, many times it's just playing MadLibs with good ideas. This is the wrong way to look at the problem, and will continue to lead to suboptimal solutions. If you're looking to do something radical, encourage governmental units to become much smaller. Instead of having one third-world country rule tens of millions over a large area, replace it with a hundred smaller governments with much less land area. Create zones where completely new ways of getting along can be tried -- a new form of socialism, radical objectivism, whatever. Instead of arrogantly thinking we know the answer to the problems and they must fit into one of our predefined categories and work inside existing societal structures, work on giving people ownership and control over trying zillions of their own ideas, and let's all watch and see what works for them. In this way, we actually create a huge pool of new information that didn't exist before about what works or doesn't work in various circumstances instead of just rehashing theory. This information can be shared and will have value to many millions more. And then we can all move forward. Our problem is that we insist on taking highly-complex and intricately-detailed problems and then solving them by banging on them with feel-good hammers of convenient and easily-understood slogans from our own life experiences.
bane 13y ago
blocked by paywall One thing I've learned from many so-called "philanthropists" is that hosting charity events can be a great status and money making/saving opportunity for those in the business of it. If you've ever watched a "real housewive of ..." episode, those wacky ladies are constantly hosting charity events and provide a pretty good example of how this works: 1) Get a really good tax accountant and lawyer. 2) Establish a charity (in the U.S. they're called 501(c)(3) organizations and have various laws about how they operate. Dedicate it to "Cancer Research" or "Helping Orphans" or whatever. 3) Set yourself up as the head of the charity, give yourself a respectable, but not over the top salary. This is the "organizational overhead" you often hear about. 4) Recruit a bunch of free volunteers concerned about your cause and host a charity event. Well done theme parties can bring in the most money. Include a donation envelope in case people can't come but still want to "support your cause". 5) Collect money. Make sure you remind everybody that their charitable donations are tax deductions! This will keep them coming. Guilt your friends into coming as well. If you get popular in the charity circuit you can even start charging a "cover charge for the even expenses, recommended donation is...$xxx" or "$xxx per plate" if it's a dinner. 6) Subtract misc expenses for room rental, supplies, cheap gifts for volunteers etc. 7) Take the donated money, subtract a percentage for "organizational overhead" 8) Donate the remainder to your cause or if you have time, spend the money on "donation events" where you get press for doing some kind of community service (advertising). 9) Get your charity to spend money on office equipment, cars, travel expenses etc. Deduct as business expenses. 10) Any left over money is a bonus to you for a job well done (can't show a profit!) 11) rinse and repeat There actually are good charities out there that do good work, but separating them from this kind of self-service is hard to do.
- rdouble 13y ago
  Another thing to consider is that just because an org is a non profit, does not mean the people working there are making social worker salaries. One of my aunts makes over $400K/yr as an administrator at a non profit, and she's still technically on the bottom half of the management totem pole.
  - muzz 13y ago
    The general form of this is such an urban legend that there's even a Snopes page: http://www.snopes.com/politics/business/charities.asp http://www.snopes.com/politics/business/charities.asp
andrewljohnson 13y ago
The conclusion of the article presents a false choice, and is flabbergastingly short-sighted: "Is progress really Wi-Fi on every street corner? No. It’s when no 13-year-old girl on the planet gets sold for sex." First, wifi on every corner is progress. Second, you might need wifi on every corner to prevent the sex slavery. Third, even if you don't need the wifi, you can have both the arguable utility of wifi for the poor, and stop the sex slavery. I don't understand how anyone can fail to see the spread of the internet as a big step in the spread of knowledge, fail to marvel at our modern day printing press and all the good it has done. "Internet everywhere" seems like a pretty good philanthropic strategy to me.
- capex 13y ago
  From the business point of view, 'wifi everywhere' is a lot more desirable than say, clean water everywhere.
  - nine_k 13y ago
    Clean water is often harder to provide. People that lack clean water usually don't have any use for wifi; if they had enough money for a wifi-enabled gadget, they'd probably spend it on clean water provisioning or other life-support needs. So they are a bad market for wifi deployments. From business point of view, "well-off people everywhere" is very desirable, since poor people are poor customers. Unfortunately, this problem is not readily solved by pouring in some modest money. Imagine donating to North Korea; probably the money will mostly end up in military programs, even if some of the money will actually feed the undernourished. But political influence is usually a big no-no.
    - hamsternipples 13y ago
      the first thing I thought about is paying my taxes in the US: most of my money will end up in military programs [0], but I do have the option to opt a percentage of my money out of those military programs by donating to charity -- a tax break. I agree, clean water should be a top priority, whether it's cleaning oil spills, rain water, pollution, or drinking water, whatever... another controversial point of philanthropy: is it better to fund a program to solve an existing problem using money, or to instead invest that money instead into education? I just don't know... [0] looking up military spending, I found multiple results. some sites claiming as low as 19% of income tax goes to military spending, and others claiming much higher numbers.. ~45% (https://www.warresisters.org/content/how-pie-chart-figures-were-determined https://www.warresisters.org/content/how-pie-chart-figures-w...) -- without a doubt though, and according to wikipedia, the USA definitely tops the charts by a long shot. it also appears (acc to wikipedia) that south korea spends more than it's northern counterpart (http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures http://en.wikipedia.org/wiki/List_of_countries_by_military_e...) on military programs
jmillikin 13y ago
> It’s time for a new operating system. Not a 2.0 or a > 3.0, but something built from the ground up. New code. The author's metaphor here assumes a world where a massively complex system, which is basically working but has some problems, can be "fixed" via replacement by a new system designed from scratch. In all of human history, how many times has this ever actually worked? Continuing the comparison to operating systems, the three most popular OSes of today (Windows, Mac OS, Linux[1]) are built on foundations dating back to the dawn of microcomputers. The intervening forty-odd years have seen hundreds of competitors invented and abandoned, while the last scion of CP/M holds its ground and the descendants of UNIX consume the world. Or going back to the world of international politics, what is the half-life of a newly established form of government? All of our philosophy, reason, war, and technological advancement have brought us nothing but small improvements to systems of democracy founded thousands of years ago in Greece and Rome. The NSA scandal and ongoing derailment of the Arab Spring show that we still don't know how to even control our own governments, much less design sweeping improvements to them. [1] I'm counting Android as Linux despite not being GNU/Linux, because it runs the Linux kernel. --- On the topic of charity: One might think of charity as a medication, given to a sick society. It is effective in some cases, ineffective in others, and sometimes outright harmful[2]. Objecting to charity in general is equivalent to advocating against antibiotics. Charity can't solve massive structural problems in a society, but when properly focused it can do things that malfunctioning governments aren't capable of. Just giving twenty dollars to everyone in Pakistan will make their own lives temporarily better, but spending twenty dollars per capita on Polio eradication will improve the lives of their children, and grandchildren, and so on until the end of time. [2] See: the near-annihilation of Africa's textile industry due to donations of second-hand clothing.
- philwelch 13y ago
  > The author's metaphor here assumes a world where a massively complex system, which is basically working but has some problems, can be "fixed" via replacement by a new system designed from scratch. > In all of human history, how many times has this ever actually worked? I think the most recent serious attempt at this was Cambodia under the Khmer Rouge. I think that states it all.
- 13y ago
krrrh 13y ago
There seems to be a lot of concern in this discussion about charities that have too much overhead, or people who work for charities that pull in salaries competitive with for-profit. This econtalk with Dan Pallotta presents an interesting counter-narrative. He says the non-profit sector is held back by attitudes that discourage competing for top talent, risk-taking, and innovation. If any group would be sympathetic to these arguments it might be HN readers, but I suspect that these biases are pretty persistent. http://www.econtalk.org/archives/2013/06/pallotta_on_cha.html http://www.econtalk.org/archives/2013/06/pallotta_on_cha.htm...

91 points by tedsuo 13y ago

leot 13y ago

Were the wealthy truly interested in promoting greater social good, they would put their efforts into reforming tax systems and global finance in order to help make the world more fair and just. Replacing income taxation with wealth taxation (plus a value-added tax), e.g., could simplify and make far more equitable the system we operate within, while greatly improving incentives and aligning them with our society's openly professed values. For some reason, there are surprisingly few think tanks and lobbying groups advocating for such a change. [Edit: I'm kind of amazed to see this getting down-voted. I would love to hear from those who think this comment isn't helpful.]

tocomment 13y ago
Would a consumption/luxury tax be fairer than a wealth tax? I'd imagine with a wealth tax it would be more difficult for folks to retire?
- leot 13y ago
  If there are specific policy goals that we'd like to accomplish, it's probably best to make a very simple taxation system (tax the total of everything, using the best appraisal tools we have), and then add specific provisions that address such goals directly. One simple approach to the retirement issue might be to have marginal wealth taxation rates (first $100k are exempt, e.g.), or have (as we do now) limited tax-protected retirement funds (EDIT: e.g., IRAs -- "accounts" might have been the better word).
  - dnautics 13y ago
    that's cute, who would get the privilege to run those tax-protected retirement funds. What sort of investments would be permitted in these funds? Aren't these people, then, the benefits of largesse created as people flee the taxation?
    - michaelt 13y ago
      Plenty of countries already have partly-tax-exempt retirement savings, to encourage people to lock money up for retirement instead of making equivalent instant access investments.
      - jeltz 13y ago
        Yes, and there the banks running those tax exempt savings make a killing through their large profit margins.
    - leot 13y ago
      Huh? Instead of "fund" perhaps I should have said "account". I was just thinking of IRAs (as they're named in the U.S.) and the like.
      - dnautics 13y ago
        what are you allowed to put into an IRA, and those investment vehicles are the benefits of a privilege that no one else has. Could you use your IRA to invest in a person just released from prison, to give them job training, if he agrees to pay you a portion of his salary back? No. But you could use your IRA to invest in a fortune 500 company.
- yummyfajitas 13y ago
  Depends on your perspective. A consumption tax charges people in proportion to the benefit they receive from society. An income tax charges people in proportion to the value they create for society. A wealth tax charges people in proportion to how much they save for the future. So the question is what do we want to discourage? Consumption, value creation or savings?
  - rlanday 13y ago
    Savings, right, since we want rich people to spend money instead of hoarding it to drive the economy? Or value creation, since it causes economic inequalities? Or maybe even consumption, I guess, if you hate America and don't believe the amount of money we can borrow and spend by racking up a trade deficit is a good measure of economic health.
  - leot 13y ago
    You don't have to spend any money to benefit from being wealthy.
- dnautics 13y ago
  yup, also what would happen is the government would get bigger and bigger on these newfound taxation revenues. That's not great, but in the most idealistic situation, it's not necessarily bad. However, what is bad, is when the economy sags, the taxation revenues to sustain this bigger government will fall short, the government will go into debt, and do one of two things: It will either print money or borrow. Borrowing (with interest) implicitly assumes the growth of a revenue stream. With private entities, the lender is on the hook if it goes bankrupt and can't fulfill its obligation. With public entities, the citizen is on the hook, so the only solution is to increase taxation down the pike, unless you have a miraculous recovery that restores the economy to what it was before (plus interest). If you don't think the wealthy will find a way to avoid this taxation down the pike that the middle class and poor will have a harder time leveraging, you are naive. Printing money is worse. Because it devalues the currency, makes everything more expensive, and that $100,000 limit that you set as the point where the wealth tax kicks in becomes a lot more painful. Pretty soon, the poor are paying this tax that only the rich were supposed to pay. Over net time, the people that you are hurting the most are the poor, because the rich have long ago figured out how to avoid this tax. Congratulations. Through your programme of good intentions to fix the divide between the rich and poor you have made the situation far worse than it ever was.
  - eli_gottlieb 13y ago
    Money is debt. There has never been a world without public debt, because that debt has to come from somewhere. Usually, it comes from the government, and the rates of interest and repayment dictate growth or shrinkage of the money supply.
    - dnautics 13y ago
      Contemporary money is certainly equivalent debt, but in the long run historically, debt has been private debt. Keeping in mind that for much of modern history, any form of lending was considered "usury" and generally relegated to corners of society. There is a difference between money that is based on savings and money that is based on debt. Money that is based on savings is net, an exchange for services that have already been rendered. Money that is net based on debt is net, an exchange for services that are expected to be rendered. One of these paradigms is subject to painful corrections as a result of counterparty risk; the other paradigm treats unexpected failures as a sunk cost.
tedsanders 13y ago
Couldn't you say that about anyone, not just the wealthy? Also, reforming tax systems seems extremely hard to do. How would you propose a motivated millionaire go about it?
- leot 13y ago
  Provide money for thoughtful, convincing research and advocacy.
  - dnautics 13y ago
    who gets to decide what is 'thoughtful and convincing'? How can I be that person, so that I can decide my friends and family are thoughtful and convincing?
  - tedsanders 13y ago
    Asking sincerely: How far do you think a few million dollars could go? What sort of research needs to be done (and would be convincing to lawmakers)? How would advocacy money be spent? I think this is a steep challenge, even for a millionaire.
    - leot 13y ago
      The first few million would need to be leveraged to gain the support of others with money and influence. Probably the first bunch would be spent meeting with lobbyists to hear what they propose. I'm afraid I can't speak to the returns on lobbying dollars spent, but clearly money talks in this arena. There are a variety of strategic and tactical moves that could be made. I'd be happy to share whatever ideas I have about them in direct communication (pseudonymous contact info is in my profile).
ferdo 13y ago
I think the issue goes deeper. Not enough people are willing to look at the root of the problem: the monopoly on the issuing of currency and credit in the US that is held by private interests. When private interests control the volume of currency, they control the material life of the country, including the government. The growing imbalance of wealth and income is a direct result of this cause. Tax reform is a good idea but it's meaningless if it leaves the nations's ownership of currency and credit in private hands.
- tedsanders 13y ago
  The Fed is not run by private interests. What are you talking about?
  - ferdo 13y ago
    "Instrumentalities like the national banks or the federal reserve banks, in which there are private interests, are not departments of the government. They are private corporations in which the government has an interest." Justice Louis Brandeis, US Supreme Court, 1928 http://openjurist.org/275/us/415 http://openjurist.org/275/us/415
    - tedsanders 13y ago
      The Fed is not run by private interests. The president appoints its members. It has a dual mandate of low inflation and low unemployment. So...?
      - ferdo 13y ago
        The Federal Reserve is owned by private interests with aspects of a public utility. It's the worst of public and private mixed in one package. As Justice Brandeis said, it's a private corporation in which the government has an interest. The Fed of SF has an interesting summary: > "Is the Federal Reserve a privately owned corporation?" > Yes and no. http://www.frbsf.org/education/publications/doctor-econ/2003/september/private-public-corporation http://www.frbsf.org/education/publications/doctor-econ/2003...
tedsanders 13y ago
Doesn't a wealth tax encourage immediate consumption? And how do you measure wealth? Would the government hire thousands of wealth assessers to value old houses and cars and furniture? I've always thought that economists consider a consumption tax the ideal tax.
- leot 13y ago
  Lots of economists like wealth taxes, too, though talking about them to wealthy people often goes over poorly. A wealth tax encourages putting assets to work rather than simply engaging in "wealth preservation". Replacing most tax revenue with a wealth tax + a VAT (a consumption tax) ensures that everyone contributes fairly, and offsets the "immediate consumption" incentives.
  - harryh 13y ago
    Lots of economists like wealth taxes, too. <--- Can you cite some of them please?
    - leot 13y ago
      http://www.economist.com/blogs/freeexchange/2013/06/property-taxes http://www.economist.com/blogs/freeexchange/2013/06/property... http://www.econ.nyu.edu/user/wolffe/ http://www.econ.nyu.edu/user/wolffe/
    - mjn 13y ago
      There's a huge literature on optimal tax policies, usually focused on more specific questions, so I'm not aware of a good survey paper on what economists think of wealth taxes generally. However, two specific questions you could look into, each of which have significant supporters on both sides: 1. What are the relative merits of inheritance taxes and wealth taxes, from the perspective of economic efficiency and/or intergenerational egalitarianism? 2. What are the relative merits of wealth taxes vs. capital-gains taxes? Roughly, is it preferable to tax capital annually based on its current value, or to tax realized gains in capital at the time of realization? The current real-world situation is that inheritance and capital-gains taxes are fairly common, while wealth taxes are uncommon, and there's some disagreement over whether that is the right choice.
dnautics 13y ago
the a priori assumption here is that the government is 'better' than private interests in deciding how charitable funds should be spent. Why do you think that these newfound revenues coming into the treasuries of the state will be subjected to good stewardship? The government is liable to be using those funds to fight unjust wars, subject innocent people to draconic and unjust policies with escalating costs (like the drugs wars), and so on and so forth. And there are plenty plenty plenty of corrupt businessmen, but it's way worse in government. right now there is a controversy going on in the central basin municipal water district in california, where overbilling contractors (and kickbacks) happened, the son of an LA councilman was 'hired' as the director, paid six figures to do nothing, and had benefits such as a retirement plan and paid tuition for an expensive private undergraduate degree. How do you get away with that? Almost every director of a nonprofit charity knows that there are rules upon rules prohibiting conflicts of interest that you have to bend over backwards making sure you don't violate in case the IRS comes after you.
- leot 13y ago
  I don't see where that assumption comes into play. The reform mentioned above need not increase government revenue.
- quinnchr 13y ago
  People think government is better at it, because that's what the evidence overwhelmingly points to. The U.S. routinely top's the list of the world's most charitable nations (private charity): http://www.npr.org/blogs/thetwo-way/2011/12/20/144035063/survey-u-s-takes-top-spot-as-most-charitable-nation http://www.npr.org/blogs/thetwo-way/2011/12/20/144035063/sur... While we also top the list of OECD countries for child poverty http://www.oecd.org/els/soc/CO2.2%20Child%20poverty%20-%20update%20270112.pdf http://www.oecd.org/els/soc/CO2.2%20Child%20poverty%20-%20up... Now compare those poverty rates with the amount of public and private social spending: http://www.oecd.org/media/oecdorg/directorates/directorateforemploymentlabourandsocialaffairs/Chart2_SOCXWeb2012.JPG http://www.oecd.org/media/oecdorg/directorates/directoratefo... More public social spending has a higher effect on poverty than more private social spending.
  - 13y ago
michaelt 13y ago
How would a donor go about doing this, in concrete terms? I mean, should I be spending my money on political lobbyists or what? What measurable outcomes should I expect?
- leot 13y ago
  Funding and founding organizations that can serve as counterweights to the ones advocating on behalf of the interests of the already powerful would be one way. Though it took some decades, we have seen the results, in the public narrative and in policy, of the founding of the Heritage Foundation (1973), the Cato Institute (1974), and Americans for Tax Reform (1985).
aspensmonster 13y ago
It's getting downvoted because it's far too similar-sounding to the dreaded S word. I think the reason the wealthy by and large won't "put their efforts into reforming tax systems and global finance in order to help make the world more fair and just" is precisely because they believe the world already is "fair and just." In a world where money is the single largest broadcaster of a whole slew of societal signals --your caste, your worth, your success, your legitimacy-- finding yourself with lots of money tends to reinforce the notion that you must be doing it right already. To the extent that there are problems in the world, it seems the wealthy feel almost universally as if their own resources and philosophies are best suited for remedying them, rather than governments or other collective structures or any contrasting philosophies. This precludes ever examining whether "tax systems and global finance" --or other attitudes and philosophies of the wealthy-- are the actual perpetrators of those problems. Peter Buffet argues that such philosophical transplantation is the cause of the problems the transplantation is trying to fix and that any sincere attempts to remedy society's ills must address it. Honestly, I don't think the wealthy, on the whole, are really concerned about fairness and justice in any context that parts them from their wealth. If egalitarianism was the highest value and penultimate goal, then the concept of extracting surplus value from others' labour and keeping it for yourself would be thrown out entirely. Suggest that however, and you get thrown under the bus for being a pinko-commie-socialist-marxist-anarchist-class-warfaring-moocher-taker-leech.
- leot 13y ago
  To be clear, I'm not advocating egalitarianism, or contending that it's the highest value. The goal is to align policy with our most defensible values and ideals (hard work, fairness, merit, etc.). If the wealthy truly believe we live in a meritocracy, in which the hardest working and most competent end up the most well off, then taxing wealth should be preferred to taxing capital gains. Any hard working and competent wealthy person should have little trouble earning returns on their personal capital that far exceed a ~1.5% annual wealth tax (over a multi-year time horizon). Only those who choose to do little with their wealth, or cannot manage it competently, end up worse off. But this accords well with "survival of the fittest", yet another value often espoused by the world's wealthiest. In other words, the goal here isn't socialism, it's rationality.
consonants 13y ago
Implementing a negative income tax or minimum income would do wonders for the first world poor. It's been done before with overwhelming success. Honestly, having profit as the sole motivation for enterprise in society is strangling the developing world.

tocomment 13y ago

I came across this a while ago http://www.givewell.org/ http://www.givewell.org/ It looked like a way to find more effective charities. What do you guys think?

michaelhoffman 13y ago
I first came across GiveWell when their principals engaged in dishonest behavior to pump it up on MetaFilter, an incident which is described here: http://mefiwiki.com/wiki/Givewell http://mefiwiki.com/wiki/Givewell Since then, seeing GiveWell mentioned anywhere leads to an immediate feeling of distrust.
- tedsanders 13y ago
  To be fair, they have devoted a top level navigation link to their page of mistakes. It seems like they try very hard to be transparent these days, even going so far as to publish notes on conversations with charities. But that was a shameful and embarrassing episode for them.
- deleted 13y ago
  [deleted]
jseliger 13y ago
Correct. I realize that I've been talking about this book a lot on HN lately, but Ken Stern's With Charity For All discusses both the promise of Givewell and the challenges—specifically, few nonprofits actually measure, or want to measure, the efficaciousness of outcomes. I'm a grant writing consultant who works primarily for nonprofit and public agencies, and by and large I tell clients not to worry about evaluations because funders don't care about them in a substantive way: http://blog.seliger.com/2008/04/24/studying-programs-is-hard-to-do-why-its-hard-to-write-a-compelling-evaluation http://blog.seliger.com/2008/04/24/studying-programs-is-hard.... Yesterday, j_s asked about Dan Pallotta's work, which is in the same vein; if you're interested in this subject, follow j_s's links: https://news.ycombinator.com/item?id=6104569 https://news.ycombinator.com/item?id=6104569. (I wrote more about With Charity For All here: http://blog.seliger.com/2013/06/02/with-charity-for-all-ken-stern-book-discussion/ http://blog.seliger.com/2013/06/02/with-charity-for-all-ken-...).

raldi 13y ago

Could someone rephrase this piece in the form of one or more "Instead of __________, we should be doing ________" statements?

tptacek 13y ago
Instead of conditioning improvement in the developing world on the largesse of billionaires, we should identify the structural phenomenon that are retarding quality of life there and invent new solutions that target those phenomenon directly. Instead of buying condoms and bottled water for Haiti, we should fix Haiti's government and economy.
- gojomo 13y ago
  I think you've shifted his meaning a bunch with that summary. Peter Buffett doesn't mention Haiti specifically or make suggestions that casually translate to "fix [some country's] government and economy". He's vague and impressionistic, and his most concrete suggestions (which aren't very concrete at all) are in the 2nd-to-last paragraph: "Money should be spent trying out concepts that shatter current structures and systems that have turned much of the world into one vast market. Is progress really Wi-Fi on every street corner? No. It’s when no 13-year-old girl on the planet gets sold for sex. But as long as most folks are patting themselves on the back for charitable acts, we’ve got a perpetual poverty machine."
  - hamsternipples 13y ago
    the hypocrisy in his statement is mind blowing. call me out if I'm wrong here, but he just had a bazillion news stories saying he was going to do philanthropy. how is that not back patting? finally, he concludes that we will have a perpetual poverty machine by people patting themselves on the back with charitable acts, so his solution is to try and get all 13 year old girls to no longer be sold for sex. that makes zero sense! I'm gonna try and follow his logic here: he says the market is too vast. ok. we should shatter those structures and vast markets. ok. we gatta be absolutely sure that 13 year-old girls are no longer sold for sex any more. so, could he be implying that he really wants to return to traditional markets without wifi on every street corner and just the regular old 18+ year-olds sold for sex? (sorry for the crude comment. it is not meant in harm. after thinking about it more than 10 seconds, I have no idea what kind of world he wants to create!!) EDIT: I would imagine that what he really want's to do, is invest all that cash into google, install wifi on their street corners along with a chromebook so they can get them some form of education, and then track all their communications, to be 100% sure that they're not being sold for sex.

cotega 13y ago

I hope this doesn't sound like preaching. In almost every discussion about charities and non-profits the main discussion seems to revolve around the money we donate and how efficiently charities use these donations. One thing that I find people forgetting is how valuable their time can be to non-profits and how that often is way more valuable than donations. Each one of you on HN certainly has a skill that would be valuable to charities (especially small ones) whether that be technical help or in taking your skills in finding customers for your startup and applying those skills to fundraising for the non-profits. You would be surprised at how limited many non-profits are in these areas and how even an hour here and there each month can make a huge impact. I realize many of you just don't have the time and I am not suggesting this is for everyone. However, if you do, try sending a quick email to the director of a non-profit you find interesting and you might be surprised at how happy they are to hear from you.

nostromo 13y ago
The primary thing most nonprofits need is money. Here, I'll give you an example: My mom ran a branch of Habitat for Humanity for a while. People universally loovvee Habitat. People were constantly volunteering, which is great! However, most of the time, there just is no work to be done by volunteers. The primary thing Habitat needs is land and construction materials (which usually means: money). People were sometimes upset about being turned away... but unless they could donate land, money, or construction supplies, there just wasn't much unmet need for general laborers.
- zanny 13y ago
  I think you point a more systemic issue in the modern world. It isn't just in non-profits, there is a general lack of land, money, and construction supplies. First world infrastructure crumbles not due to a lack of unskilled labor to set to paving streets with vehicles, it is a lack of those vehicles for people to drive, and a lack of money to push politicians to allow it. I'm not well versed at all in the problem, but I see it as a major one - there needs to be some major innovations in materials extraction and distribution to enable a next generation deployment of machinery to make the next round of renovation globally possible. And there is just no one picking up supply to meet that demand, mainly because while people want to fix all the broken infrastructure and build nations on new roads and proper housing, there is just no machinery to meet the demand, and no money to pay for it.

DanielBMarkham 13y ago

I'm voting this up because it seems a heartfelt reaction against figuring out that charitable giving is its own scam -- a scam by well-meaning people all out to do good in the world, but a scam. By that I mean that there is no feedback loop in place to assure the donors that they're wrong. Every deal is one to save the day. Every idea is some great idea from one place transplanted somewhere else. There's a business in assembling ideas into attractive memes and then getting rich people to make themselves feel better by paying for them. A very big business. So hats off to Buffett for pointing it out. I especially like the term “conscience laundering” Having said that, I call bullshit here. While he's done a bit of fumbling around at what his end of the problem looks like, and he's certainly correct that preventing slavery beats the shit out of having free wi-fi, I'm not feeling he has any better idea of what the hell he's talking about than the folks peddling the latest charitable cause. And he admits as much. So as a plea for the system being broken, count me in. As any indication of way forward? It's not in the essay. I also want to point out that everybody seems to understand that you make money in your life one way, you may find value in a completely different way. But people giving money, most of which are rich, seem to be completely detached from this concept. Working in a factory for two bucks a day and not starving, while watching your family grow up and being involved in some religious or civic group might be a freaking ton better than not being "exploited" We cut ourselves slack for finding value in things other than money, but we do not allow the same privilege to others. Because charities run on dollars, we tend to subconsciously value their lives in dollars as well. Bad premise. Since the solution space is so thin, I'll take a flyer on what he might like to see. As opposed to the latest in charitable wizardry, my ideas and five bucks will get you a cup of coffee. Societies evolve by the flow of information and goods contributing to an open market. Information flow to people? Education. Unrestricted goods flowing to an informed buyer? A win for all parties. Innovation and solutions formed by cross-pollinating folks with radically different backgrounds and knowledge? Another win for everybody. It's all information and trades. Bad societies control information and trade. Good societies let a thousand flowers bloom and grow by productive creative destruction. So far, many folks are on-board with this. But what we continue to forget is that forms of society itself is just another structure that can benefit from these same principles. My position is that the problem here lies in our hidden assumptions. Every charitable intervention has a bunch of a priori assumptions made about what would work or wouldn't. As Buffett said, many times it's just playing MadLibs with good ideas. This is the wrong way to look at the problem, and will continue to lead to suboptimal solutions. If you're looking to do something radical, encourage governmental units to become much smaller. Instead of having one third-world country rule tens of millions over a large area, replace it with a hundred smaller governments with much less land area. Create zones where completely new ways of getting along can be tried -- a new form of socialism, radical objectivism, whatever. Instead of arrogantly thinking we know the answer to the problems and they must fit into one of our predefined categories and work inside existing societal structures, work on giving people ownership and control over trying zillions of their own ideas, and let's all watch and see what works for them. In this way, we actually create a huge pool of new information that didn't exist before about what works or doesn't work in various circumstances instead of just rehashing theory. This information can be shared and will have value to many millions more. And then we can all move forward. Our problem is that we insist on taking highly-complex and intricately-detailed problems and then solving them by banging on them with feel-good hammers of convenient and easily-understood slogans from our own life experiences.

bane 13y ago

blocked by paywall One thing I've learned from many so-called "philanthropists" is that hosting charity events can be a great status and money making/saving opportunity for those in the business of it. If you've ever watched a "real housewive of ..." episode, those wacky ladies are constantly hosting charity events and provide a pretty good example of how this works: 1) Get a really good tax accountant and lawyer. 2) Establish a charity (in the U.S. they're called 501(c)(3) organizations and have various laws about how they operate. Dedicate it to "Cancer Research" or "Helping Orphans" or whatever. 3) Set yourself up as the head of the charity, give yourself a respectable, but not over the top salary. This is the "organizational overhead" you often hear about. 4) Recruit a bunch of free volunteers concerned about your cause and host a charity event. Well done theme parties can bring in the most money. Include a donation envelope in case people can't come but still want to "support your cause". 5) Collect money. Make sure you remind everybody that their charitable donations are tax deductions! This will keep them coming. Guilt your friends into coming as well. If you get popular in the charity circuit you can even start charging a "cover charge for the even expenses, recommended donation is...$xxx" or "$xxx per plate" if it's a dinner. 6) Subtract misc expenses for room rental, supplies, cheap gifts for volunteers etc. 7) Take the donated money, subtract a percentage for "organizational overhead" 8) Donate the remainder to your cause or if you have time, spend the money on "donation events" where you get press for doing some kind of community service (advertising). 9) Get your charity to spend money on office equipment, cars, travel expenses etc. Deduct as business expenses. 10) Any left over money is a bonus to you for a job well done (can't show a profit!) 11) rinse and repeat There actually are good charities out there that do good work, but separating them from this kind of self-service is hard to do.

rdouble 13y ago
Another thing to consider is that just because an org is a non profit, does not mean the people working there are making social worker salaries. One of my aunts makes over $400K/yr as an administrator at a non profit, and she's still technically on the bottom half of the management totem pole.
- muzz 13y ago
  The general form of this is such an urban legend that there's even a Snopes page: http://www.snopes.com/politics/business/charities.asp http://www.snopes.com/politics/business/charities.asp

andrewljohnson 13y ago

The conclusion of the article presents a false choice, and is flabbergastingly short-sighted: "Is progress really Wi-Fi on every street corner? No. It’s when no 13-year-old girl on the planet gets sold for sex." First, wifi on every corner is progress. Second, you might need wifi on every corner to prevent the sex slavery. Third, even if you don't need the wifi, you can have both the arguable utility of wifi for the poor, and stop the sex slavery. I don't understand how anyone can fail to see the spread of the internet as a big step in the spread of knowledge, fail to marvel at our modern day printing press and all the good it has done. "Internet everywhere" seems like a pretty good philanthropic strategy to me.

capex 13y ago
From the business point of view, 'wifi everywhere' is a lot more desirable than say, clean water everywhere.
- nine_k 13y ago
  Clean water is often harder to provide. People that lack clean water usually don't have any use for wifi; if they had enough money for a wifi-enabled gadget, they'd probably spend it on clean water provisioning or other life-support needs. So they are a bad market for wifi deployments. From business point of view, "well-off people everywhere" is very desirable, since poor people are poor customers. Unfortunately, this problem is not readily solved by pouring in some modest money. Imagine donating to North Korea; probably the money will mostly end up in military programs, even if some of the money will actually feed the undernourished. But political influence is usually a big no-no.
  - hamsternipples 13y ago
    the first thing I thought about is paying my taxes in the US: most of my money will end up in military programs [0], but I do have the option to opt a percentage of my money out of those military programs by donating to charity -- a tax break. I agree, clean water should be a top priority, whether it's cleaning oil spills, rain water, pollution, or drinking water, whatever... another controversial point of philanthropy: is it better to fund a program to solve an existing problem using money, or to instead invest that money instead into education? I just don't know... [0] looking up military spending, I found multiple results. some sites claiming as low as 19% of income tax goes to military spending, and others claiming much higher numbers.. ~45% (https://www.warresisters.org/content/how-pie-chart-figures-were-determined https://www.warresisters.org/content/how-pie-chart-figures-w...) -- without a doubt though, and according to wikipedia, the USA definitely tops the charts by a long shot. it also appears (acc to wikipedia) that south korea spends more than it's northern counterpart (http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures http://en.wikipedia.org/wiki/List_of_countries_by_military_e...) on military programs

jmillikin 13y ago

> It’s time for a new operating system. Not a 2.0 or a > 3.0, but something built from the ground up. New code. The author's metaphor here assumes a world where a massively complex system, which is basically working but has some problems, can be "fixed" via replacement by a new system designed from scratch. In all of human history, how many times has this ever actually worked? Continuing the comparison to operating systems, the three most popular OSes of today (Windows, Mac OS, Linux[1]) are built on foundations dating back to the dawn of microcomputers. The intervening forty-odd years have seen hundreds of competitors invented and abandoned, while the last scion of CP/M holds its ground and the descendants of UNIX consume the world. Or going back to the world of international politics, what is the half-life of a newly established form of government? All of our philosophy, reason, war, and technological advancement have brought us nothing but small improvements to systems of democracy founded thousands of years ago in Greece and Rome. The NSA scandal and ongoing derailment of the Arab Spring show that we still don't know how to even control our own governments, much less design sweeping improvements to them. [1] I'm counting Android as Linux despite not being GNU/Linux, because it runs the Linux kernel. --- On the topic of charity: One might think of charity as a medication, given to a sick society. It is effective in some cases, ineffective in others, and sometimes outright harmful[2]. Objecting to charity in general is equivalent to advocating against antibiotics. Charity can't solve massive structural problems in a society, but when properly focused it can do things that malfunctioning governments aren't capable of. Just giving twenty dollars to everyone in Pakistan will make their own lives temporarily better, but spending twenty dollars per capita on Polio eradication will improve the lives of their children, and grandchildren, and so on until the end of time. [2] See: the near-annihilation of Africa's textile industry due to donations of second-hand clothing.

philwelch 13y ago
> The author's metaphor here assumes a world where a massively complex system, which is basically working but has some problems, can be "fixed" via replacement by a new system designed from scratch. > In all of human history, how many times has this ever actually worked? I think the most recent serious attempt at this was Cambodia under the Khmer Rouge. I think that states it all.
13y ago

krrrh 13y ago

There seems to be a lot of concern in this discussion about charities that have too much overhead, or people who work for charities that pull in salaries competitive with for-profit. This econtalk with Dan Pallotta presents an interesting counter-narrative. He says the non-profit sector is held back by attitudes that discourage competing for top talent, risk-taking, and innovation. If any group would be sympathetic to these arguments it might be HN readers, but I suspect that these biases are pretty persistent. http://www.econtalk.org/archives/2013/06/pallotta_on_cha.html http://www.econtalk.org/archives/2013/06/pallotta_on_cha.htm...