Tuesday, June 27, 2006

Respect for the Wealthy... sometimes!

This week the media have been all over the place about Buffet's philanthropic decision to give to charities 85% of his wealth. When the second richest man in the world - after Bill Gates - makes such an announcement, with a net worth of $44 billion it is only natural that everyone should notice.
I don't know about you, but for me $37.4 billion dollars is so much money that it is beyond any mental representation of what it's worth. It almost becomes meaningless. Maybe that's how Warren Buffet himself feels.
In fact, it is:
  • ten times the UN budget ($3.79 billion for 2006-2007)
  • one tenth of the US military budget ($441.6 billion for the fiscal year 2006) - but that figure does not include combat (Congress had already approved an additional funding total of $300 billion for operations in Iraq and Afghanistan.)
  • it is close to France's total military spending ($41.6)
  • it is the GDP of a few countries.
On the one hand, it is scary that one man alone can be so wealthy, on the other hand, I find it remarkable that he should have a philosophy at odd with his peers and against the privileges of his own class. His views on politics and economics are particularly interesting:
Not only did he oppose repealing the Estate Tax (attempted by President Bush) but he also believes that tax property
should be based on value on purchase date.
He also clearly opposed Bush's policy of tax cuts for the wealthy. He wrote a Washington Post opinion article criticizing a key element of Bush's tax package -- a cut in tax rates on corporate dividends. He urged that any tax cuts should go to lower-income people or others "who both need and will spend the money gained." (Forbes)
"Tax breaks for corporations -- and their investors, particularly large ones -- were a major part of the administration's 2002 and 2003 initiatives," Buffett said. "If class warfare is being waged in America, my class is clearly winning."
"We hope our taxes continue to rise in the future -- it will mean we are prospering -- but we also hope that the rest of corporate America antes up along with us," he also said.
What I appreciate about him is that his actions match his words. That's rare enough to be noticed. He has often said that he had no intention of making mega-heirs and heiresses of his children and he surely didn't.
"It's in keeping with the idea of equality of opportunity in this country, not giving incredible head starts to certain people who were very selective about the womb from which they emerged.".
One is bound to wonder if his children feel any resentment... but apparenly, they don't. Given human nature, that's pretty amazing too, isn't it?
In the NYTimes, he said his children were not at all disappointed not to be receiving the lion's share of his fortune.
"They've known all along my views on inherited wealth, and share them," he said in a news conference this afternoon. "They have money that most people would dream of. They're lucky, in that respect, when they selected their parents."
The guy has won my respect. Besides, he supported John Kerry in the 2004 presidential elections. His philanthropy is in line with American capitalism. You may find it paternalistic but it works, and I have yet to hear a French billionaire ready to give away their wealth to charity.

NOT: Boy do I loathe those who say that "by donating his fortune to his friend’s charity, Buffett may have found a clever way to avoid the estate tax for a large part of his own fortune". More than anything, I find the argument totally nonsensical (just like those who say it is not worth making money because you pay too many taxes). As if it made sense to give it all away in order to avoid paying taxes?! What sort of logic is that?
Of course, those who criticize Buffet for his move are usually on the right and in favor of Bush's tax cuts.
NOTE2: In the end, the question should not be about cutting taxes but rather how well the money is spent. I don't think people would mind if they could see that their money is usefully spent. That requires checks and balances, and Congress s certainly not ready for that.


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