A Flawed Idea About Billionaires

 

Quote from a friend on Facebook that's doing the rounds: 

“Elon Musk’s wealth is projected to more than double over the next five years, placing him on track to become the world’s first trillionaire.
Here’s what that actually looks like:
- $1 trillion = $1,000,000,000,000 — that’s a million million dollars.
- A worker on £30,000/year earns around $38,000/year at current exchange rates.  It would take that worker 26.3 million years to earn what Musk could be worth.
- If Musk dropped $10,000 on the floor, it wouldn’t be worth his time to pick it up — he makes more than that in under 10 seconds.
- If you spent $1 million a day, every single day, it would take 2,740 years to spend $1 trillion.
In a world where millions struggle to eat, there is no moral or economic justification for billionaires to exist — never mind trillionaires.”

My response: If you’re worried about ‘millions struggling to eat’ then the anti-billionaire logic is backwards. Billionaires tend to do disproportionately more for the poor than any other group, because the more money that comes into one person’s treasury, the more they can scale up their beneficence in the wider globe (through investment, job creation and charitable causes). Here I make no comment about Musk as a person, but generally, as wealth accumulates for an individual, every increasing pound or dollar increases the chances of it doing some external good elsewhere. This is because very rich people accumulate wealth with capital that has declining marginal utility.

If you look at the history of the world since the Industrial Revolution, significant individual or corporate wealth is frequently tied to large-scale economic impact for good, like investment in companies, global job creation, infrastructure, technological innovation, philanthropy, aid and lifting millions out of poverty. And as wealthy people’s personal spending needs become more and more trivial compared to their capital, their positive global influence just keeps increasing, where their own personal declining marginal utility engenders rising utility for the world’s poorest people.

Because of declining marginal utility, one single billionaire is likely to do more good across the world than one thousand millionaires, because a single billionaire has more concentrated resources, which can enable very large-scale projects that the single millionaires would not likely facilitate on their own (most single millionaires would have invested a significant chunk of their million in a decent home).

Junk Food, Junk Theory

Statistics often provoke incredulity. For example, The London School of Tropical Medicine sent out a report that says the surplus (stress, that's surplus) food consumed by all the obese people in the world is enough to feed 1 billion of the world's poorest people. You don't need to be a genius to predict what many will say when they tap away on their keyboards by way of a response:

"Ah, so if the over-eaters consumed normal amounts, we could give all that food to those billion people".

Not quite. That's a bit like saying that if we gave some of Europe's rainfall to Africa, there would be less barren land in Africa. True, but not possible. The same goes with food - obese people consuming less does not mean that we could feed the billon poorest people, because what makes them hungry isn’t just lack of food, it is lack of many of the other things that may otherwise result in enough food.

 

All that said, it would certainly be useful if we were all more careful with our food consumption. Perhaps the most useful and practical measures we can take would be to take the lead of the supermarkets that voluntarily donate their surplus food and drink to good domestic causes - either by spending money on the food donation schemes they run, or by adding some extra items to your shopping basket that you can donate to food banks.

On a happy note to end, well done to the Co-op for being the first major retailer to voluntarily sell food on a large scale at a reduced price after its 'best before' date, in an effort to simultaneously cut its losses and reduce its food waste too. What I like most about it is that it's an entirely voluntary decision - no enforcement, no pressure from regulatory bodies - just a straightforward sensible decision that mutually benefits sellers and buyers.

The Super Rich Entrepreneurs Are The Heroes Not The Villains

Two things caught my eye recently, both of which should help give a little perspective to those anti-capitalists that are constantly bemoaning how unequal the world is and how the super rich make life a lot less fair. Even if we ignore the most obvious point they're missing - which is that to generate wealth you need to get people to part with their money voluntarily by providing them with something they want or need, which means creating value in society - there are two other important things to consider.

In the first place, as this article points out nicely - far from being the ugly fat cats that keep millions of people poor, entrepreneurs are actually the real saving graces. We are told we need 600 million new jobs in the next decade to fully employ the world’s eligible workforce, and entrepreneurs and big businesses are the top creators of new jobs, providing 70% of all new jobs in the world, and up to 90% in some emerging economies. Entrepreneurs may be very wealthy, but they are the main drivers of economic growth and the most important players in increasing global prosperity.

In the second place, as this article points out nicely - entrepreneurs do an awful lot with the money they make in terms of generous donations to noble causes. Just the top 5 of the world's most generous charitable donors (Bill Gates, Warren Buffett, George Soros, Azim Premji, and Charles Feeney) have donated over $70 billion thus far, with doubtless much more to come.

So the next time you read that the super rich are the selfish wealth hoarders that need to be brought down, and that entrepreneurs are the ones having a damaging effect on poorer countries' economic growth, the reality that they are the primary job creators and the most generous benefactors might hopefully serve you well in re-examining your perception of them, and of the market in general, if you are one of those to whom that applies.

Heck, If European Leaders Can't Help In This Humanitarian Crisis Then What Exactly Are They Fit For?

The dreadfully upsetting crisis involving families leaving war torn countries to seek help in Europe is something to which we all desperately need to react - but it goes even deeper than that. I've never been a fan of this big EU super project, and goodness knows they have ballsed up the monetary system thus far - but for heaven's sake - if such an agglomeration of nations into a so-called cohesive European project is to be good for anything at all, then surely it is now, in crises like these, that we really need to see that demonstrated, and see them show their humanitarian mettle, don't you think? That is to say, it is precisely in tragic and precarious situations like this that the very qualities a union like the EU ought to possess can come to the fore in helping so many desperate human beings that need our help.

Families are trying to enter Europe largely on three fronts - people entering by land from Central Asia, people fleeing from Middle Eastern strife and entering through Greece, and people leaving Africa and coming through Italy. If our European leaders are to respond to this in anything like the right way, they must work out a conscientious and humane plan of action that will result in an agreement that these desperate people can be taken in and cared for, proportionally to each country's capacity.

The big problem with this crisis, of course, is that the better Europe becomes at providing refuge to people escaping their plight in Africa and the Middle East, the more migration it will encourage, which sadly will involve many more deaths in the process.

European leaders - and not just European leaders, world leaders too - have a mammoth task on their hands: they have to provide refuge for desperate people, whilst simultaneously doing plenty more in the blighted nations to tackle those crises and stop many more desperate people getting washed up in the Mediterranean or dying through starvation along the way.

As I said at the start, this is precisely the kind of crisis where nations chewing on the cud of this European project really need to come into their own and demonstrate how collectively they can respond to this multi-continental tragedy in a way that shows what can be achieved with a continent united.

But what can we individuals do - those of us ordinary citizens who don't have the same kind of clout as national leaders? There are two things primarily: one is donate to a good cause that will help - here is an excellent list of very good places to donate to - please share this blog as widely as you can if, if nothing else, it spreads around this link. And secondly, here's the other big thing that can be done - we must keep challenging anyone and everyone who talks of these people merely in terms of 'refugees' 'asylum seekers', and 'migrants', or who thinks of them as pests and nuisances - because fundamentally they are people: they are human beings who are hurt, terrified, vulnerable, and in desperate need of love and compassion and kindness from people much better off than them.

 

So it'll be great to donate what we can - but let's not just donate money - let's bestow a wealth of human kindness in speaking out against all those who forget the basic notion that everyone is a human being, and that when human beings desperately need help, the need to respond in a way that shows us at our most loving is a desperate need as well.

Making Supermarkets Hand Over All Unsold Food Doesn't Seem Like The Answer To Me

It's Bank Holiday Monday, I was just about to cook some lunch before going out, and then right now this article just landed in my inbox - it's a campaign for David Cameron to make supermarkets hand over all unsold food to charities.

This is as a result of what's happening in France, where a group of French MPs have tabled a draft law to make it compulsory for supermarkets to hand over to charity all unsold food still fit for consumption.

It's a noble idea, surely? I mean, if there is one thing the State can be good for it is in gently nudging socially desirable preferences in the right direction, right? I can go along with that: I do actually want much more to be done for good causes, and a nudge that compels big supermarket corporations to do more for charities is no bad thing in principle, and full of good intentions.

However, in practice this is problematical, because when you legally compel businesses to behave a certain way over and above what they are in business for you then impose extra costs on them, such as extra labour and extra resources to collect, store and administer the goods - and those costs end up filtrating into other areas of society. Such enforcement will have spillover costs that are, at present, invisible to the government officials enforcing this.

Will the governments that enforce this law contribute towards all these extra costs, plus the additional costs of refrigeration for both the charities and the supermarkets? But perhaps even more disconcerting is the likelihood that with this potentially oppressive legislation the State then has the power to penalise shops who don't give their quota to charity, meaning threats of fines will affect supermarkets' buying habits (buying artificially low, keeping stocks at a minimum to avoid wastage, etc) which then has a knock on effect of lower prices, which hurts employees, manufactures, delivery drivers, and maybe even farmers too.

It may even be the case that in not enforcing a supermarket food-donation system that will only increase the supply of free food we avoid creating an unhelpful dependency food welfare, rather like how in not giving money to beggars we do more good for them in the long run.

All that said, it is easy to see why such a campaign is growing in popularity (over 100,000 signatures at the time of writing) - tonnes of perfectly edible food is literally being thrown out on a weekly basis across the country, and this needs to change. I once heard a manager of a supermarket say that the main reason they didn't give thrown out food to the homeless is that they were afraid of being sued in the event of someone getting ill. Would a government that passed this food-donation law allow an 'eat at your own risk' mandate to stand for those consuming the leftover food? I seriously doubt it. It's all very well politicians having these noble ideas, but so often they aren't thought through properly, and I suspect here is another fine example of that.

There definitely is a square hole problem of food shortage in this country, and a square peg solution of lots of thrown away food in supermarkets available to be consumed, but I'm not sure this proposed government law is the solution. What we need is more innovation in getting people to give generously, more awareness raised, and more government-led investment that can help the poorest and vulnerable in society get back on their feet and find work.  

Let's Have Social Beneficence With A Big “S” & State With A Small ‘s’

Oh ah, a day after my blog post on the recent issues surrounding charity, the church and the State, we have The Guardian’s Zoe Williams perpetuating the leftist complaints that food banks are supplied by the Trussell Trust charity and not by a State agency.

Consequently, I feel compelled to add a tiny bit more to this debate, because we have lots of hard-right-leaning folk lamenting food banks as emblematic of a culture of welfare-dependent decadence, and lots of hard-left-leaning folk calling their very existence a national disgrace and emblematic of a failing State. Underpinning this is the hard-right view that welfare-dependent people are mostly useless wasters, and the hard-left view that the State should automatically be the custodians of everyone's skills, wages, vocations and social well-being. To me, both sides clearly are wide of the mark.

The State has a responsibility to its citizens, and should apply it better to our welfare needs, particularly those not in work. For me, finding the right balance is about seeing that both the State and we as individuals have a role. It's easy to delegate responsibility to the State to such an extent that we absolve ourselves of our responsibility to each other. In fact, I'd argue that we have been so accustomed to the State's role in our lives that we've forgotten just how much of our past, present and future relies on our own social beneficence (let's call it social beneficence for simplicity's sake). By 'social beneficence' I mean our necessity to help one another, show love, grace and kindness, and to generally demonstrate mindfulness for each other's well-being. We already do this all the time, of course - for friends, family, neighbours, work colleagues and people in our social groups - but the Christian message is that everyone is to be included in that mandate. 

As studies in evolutionary biology in the past few decades have shown, this mindfulness of our fellow humans in implicit in our mental hardware - and was an instinctive part of our evolution long before we developed sovereign States and trading. That is to say, we couldn't have arrived at those progressions without an up and running mindfulness of our fellow humans and developing empathy towards their needs. So while the Smithian notion of a free market of self-serving interested parties demonstrably engenders major social and cultural progress, the financial economy is obviously not the be all and end all of our social well-being - our social beneficence underpins a great deal of it.

It's strange to hear so many people automatically deferring problems to either the State or the market, without recourse to the most powerful of all human qualities - the freedom and ability to be socially beneficent to one another. The work of the Trussell Trust Christian charity represents the best of social beneficence, and serves to remind us of how much better society would be with even more beneficence on top of that. Yes of course the State needs to sort out its own bureaucratic house and ensure that people's welfare entitlements are paid, but I fancy that many modern humans of today may have become so accustomed to the State sovereignty and its involvement in our affairs that they've been habitually primed to give too little regard to our own individual responsibilities to each other. If you recall, the Christ-influenced acts of grace, love and kindness that spread through the societies in the New Testament portion of history were not bootstrapped by a benevolent, democratically elected sovereign State - they occurred in a society oppressed under a Roman dictatorship, with no welfare state or global free market. The solution, I think, is to have Social Beneficence with a big “S”, to enable us to have State with a small ‘s’.

The Church of England & The State Should Play To Their Strengths

The Church of England has some confused views about economics. In my mind there are too many church spokespeople calling for us to move away from capitalism and give increased power to the State to intervene and tackle all the so-called injustices that occur in a free market economy. Even if we ignore the fact that for all intents and purposes it's impossible to 'move away from capitalism', the church is still doing itself no favours on this issue.

For several reasons the Church of England would have more social credibility and greater societal relevance if it argued for less State intervention, and departed from its erroneous view that the general mechanism of the free market is lacking in ethics. As I've argued before, the free market is not this illusory moral vacuum devoid of ethicality - its success depends on moral agents being honest, reliable, trustworthy and diligent in their outputs (read this book if you want your doubts quashed).

Try to remember what Christ’s incarnation was like on earth - He vocally opposed the oppressiveness of the theological State and establishment teaching, and He was no friend of the Sanhedrin or the Roman authorities. Whatever the topic - be it religion, economics, politics, or whatever - authoritarian top-down management from the State is not the optimum situation for citizens governed by that State. For the church to obtain more social relevance it should be championing a smaller State not a bigger one. The church is precisely the institution that should be filling in the gaps left by the overarching forces of government and the market. In other words, the places where the State and the market can't reach are the places the church should be most prominent: it already is when it comes to theology and salvation issues - it should be with ethics, charity and social justice too. The church's involvement in food banks and soup kitchens, for example, is exactly the sort of societal influence it should be having, and thankfully is.

The fallacy of enforced generosity

The same can be said of charity - it is the church that always ought to be leading the way here (and again, often is). I remember a couple of years ago hearing David Cameron defending the governmental increase in the foreign aid budget on the basis that 'Britons are generous people'. No, this is wrong. Somebody should give the Prime Minister a dictionary and get him to look up the word 'generous'. He'll see that being generous means giving away something of your own accord. It doesn't mean being forced to give away something over which you have no control. If I draw out my life savings and bail out Harty's Diner then I have been generous (wisely or foolishly) - but I have been generous because I wanted to bail out Harty's Diner. If the government taxes me with the threat of imprisonment and bails out Harty's Diner (wisely or foolishly) on my behalf then I have not been generous, because I had no say in the matter.

Now I'm all for increasing in the foreign aid budget and helping the world's neediest, but David Cameron had his reasoning backwards there. The governmental increase in the foreign aid budget must have been necessary because too many Britons are not that generous of their own volition. Giving to the world's neediest of your own accord is more generous than the government giving to them on your behalf after taxing it from you. If Britons were increasingly generous people it would lessen the need for governmental foreign aid not increase it.

As I argued here, when the church leaders and spokespeople advocate a bigger State and more substantial governmental redistributive policies they go against their own fundamental Christian theology. Further, we should never forget how Christianity is so often worse off once political influences are infused and soaked into its material, and how Jesus’ teaching regarding His Kingdom being 'not of this world' confers onto the message a marked boundary line that is likely to be burred when Christianity and State become excessively commingled.

As usual The Guardian has got the wrong end of the stick about food banks, but alas so has the Archbishop of Canterbury Justin Welby, as he asserts that the government should get more involved with them, and that the very fact that people need food banks is a national disgrace. Naturally a lot of people who fancy themselves as leftist revolutionaries have the same idea.

In this blog I explained why a rise in food bank users doesn’t necessarily mean a rise in poverty. Let’s broaden it out a little. Apparently according to The Guardian article 60% of food bank users received only one sanction, which basically means they were one time users, probably due to temporary hardship. From what I can gather from looking into it a bit further, many of these cases are due to missing appointments, penalties for misuse of the system, and various bureaucratic issues that delay benefit payments for a week or so.

But even if we make allowances for these cases, it is true that many people in the UK are suffering genuine economic hardship. And when that happens people are quick to play the blame game, with the first target for opprobrium usually being the government. In my view this is lazy-thinking. Sure, the government makes mistakes, and it has some counterproductive policies, but should anyone really be satisfied with blaming politicians when in doing so it exculpates people from the decisions they make in life? It's not as though the British government is making a total mess of things - the recovery is stronger than it might have been, and healthy compared with the rest of Europe. As well, unemployment has continued to fall, inflation remains low, interest rates are falling, and the pound is fairly strong. And also the government has finally cottoned on to the necessity of a rise in the threshold at which low earners pay income tax.

For many struggling people, the cost of living exceeds their income, but I'm not sure why the government gets the blame for this, as politicians don't control wages in the private sector, nor do they control prices of goods and services (except for this caveat: by often making them artificially high due to subsidies, tariffs and other regulatory measures). We have to face facts, there are a lot of things that go on that are not the fault of the government. People make life choices - some good some bad - and Christianity, if it insists on one thing about our life circumstances, it is that there is a good deal of reaping what one is sowing (Galatians 6:7).

Now the job of the Christian (and, as it happens, the compassionate citizen of any belief too, but particularly the Christian) is to show mindfulness and understanding when we see people in difficulty, even those whose difficulty is largely their own doing. To deny that reaping is causally linked to sowing is to not help anyone.

Myths and generalisations

And one thing is clear on this; blanket generalisations won't add any intellectual gravitas to the discussions. Let me give you an example to show what I mean. The other day in his Guardian column Owen Jones was complaining that wages are too low for people to make ends meet, and that this apparent Dickensian misery that plagues the UK at present is down to low paid workers being treated unfairly. The obvious thing wrong with his claim is the same thing that's usually wrong in his reasoning - he only thinks in hasty generalisations and he fails to ask the right questions about causality. So yes, it's true that a lot of people have a wage that is low enough to make them feel the struggles of daily life, but there are many reasons why people are on low wages, and most of them are not down to government measures.

There is no denying that most people would like more pay for the work they do, but that's not to be confused with the so-called 'injustice' of low pay. There are reasons many people are in low paid work, and it is alarming that these reasons are never mentioned in articles written from the hard left. Let's start with the general pattern; low pay is a price signal that indicates an abundance of agents able to sell their skills or labour at that price; and high pay is a price signal that indicates a scarcity of agents able to sell their skills or labour at that price. To use a particular example, that's why there are more people ready to stack shelves at Sainsbury's than there are people ready to be the Chief Executive. If there is a plethora of people in the lower end market it would suggest that many people are not receiving the training or education needed for the demands of the market.

But moving away from the general onto particulars, there are a multitude of reasons why people start and remain in low paid jobs, other than the fact that they don't have the skill sets to do the higher paid jobs. Many people are in low paid jobs because they want to be. It's easy to imagine why - for many people the trade off between higher paid jobs that entail further training, more responsibility, better people skills, unsociable hours, more pressure, greater risk, and so forth, leaves them favouring the lower paid positions with less responsibility, less pressure and a safer day to day working life. This is a fact I see on a weekly basis in local authority - a promotional position will come up with the majority of employees being uninterested in applying for it. Many are older people in the latter years of their working lives, some are mothers for whom it wouldn't pay to earn more or increase their hours; some simply don't have the ingenuity to try to further themselves; some are intermittent workers; and some are happy having a comfortable 9 to 5 job and focusing more on their extra curricular talents and interests.

We’ve digressed, but it has been to make an important point – that general criticisms are faulty when people don’t get to the finer details of causal links. Just as not everyone on low pay is the victim of injustice, similarly not every incidence of charitable help is due to injustice either. As I said in the blog link above, rather than food banks always being an indication of injustice or increased economic hardship, they most likely are a demonstration of our increased ability to respond to economic hardship with donations of food for those that need it.

Or to put it another way, food banks are a great achievement of the Trussell Trust  - a private Christian charity, because they provide help and retain a social relevance highly consistent with the church’s ethos. As things like the food bank scheme and soup kitchens become better known and grow in efficiency, it's quite understandable that more people will use them. Government involvement in this would be a bad idea - it will come on a wagon train of bureaucracy, as well as increased inefficiency, and it will discourage much of the voluntary beneficence that motivates people’s giving.

The Guardian writers often complain that food price rises are exceeding people's living capacity, but these are just as much due to the aforementioned government subsidies and regulations that stop the market forces that would lower food prices.

One irony about many people's biases (both in the church and outside) is that in wanting to make the world a better place by constraining the free market and tempering corporation power they are pulling their own hand away from the problem they are trying to solve. Basic first year economics informs us that a freer market and fewer regulatory protocols is the best solution to corporate power. So what's usually thought of as "the government isn't doing enough" is, in fact, usually the case of "the government is doing too much". State regulations create artificial barriers to entering the market, which stultifies competition, and artificially drives up prices, giving us a rinse-and-repeat cycle that brings people to need to use food banks.

Just as the church embarrasses itself and tarnishes its reputation when it distorts established science in favour of the delusive and counterfactual claims of young earth creationism, so too it embarrasses itself and tarnishes its reputation when it displays ignorance of basic economic principles and loads up that ignorance to unleash misjudged social commentary. The success of food banks is one of the church's greatest achievements in modern society - it gives exhibition to conscientious, caring individuals who want to do their bit to help struggling people. If this isn't the playing out of the instructions given by the writer of Hebrews to "not neglect to do good and share what we have", I don't know what is. The church should be seizing on the momentum already gathered and using it for even greater good by encouraging more and more people to be kind, caring and conscientious citizens, not furtively attempting to compromise this momentum by transferring the emphasis back on the bureaucratic State.

* Photo courtesy of Euronews

Robin Hood Charity or Not Giving A Friar Tuck

You may have heard of a tax called the Robin Hood Tax - it's been getting a lot of attention recently.

The website I linked starts with the words - "A tax on banks..."

First things first, it's not a tax on banks, it's a tax on financial transactions.

And then it goes on - "The Robin Hood Tax is justice. The banks can afford it. The systems are in place to collect it. It won't affect ordinary members of the public, their bank accounts or their savings. It's fair, it's timely, and it's possible."

Ok, before we get to the positives, let's have a reality check - I'm afraid that's just not going to be the case - the cost of this tax will be borne by ordinary members of the public, largely through their pensions and/or their savings. Just about every tax of this kind is filtrated down to end users. If the government suddenly whopped an arbitrary tax on Argos, the result would be a price hike at Argos, and it would probably culminate in Argos going out of business. Similarly, a tax on financial transactions will hit the customer making the transaction, either in their pockets or in prohibiting them from making the transaction.

The big problem with the Robin Hood tax for individual nations is that any government implementing it will put its own nation's financial sector at a disadvantage compared with all the countries that do not implement it. It is potentially terrible for early adopters (as the disastrous outcome of Sweden's adoptions showed, who lost about 60% of their banking trade to the UK as a result of transaction taxes). Here's why it's bad for early adopters.

I said that if the government suddenly whopped an arbitrary tax on Argos, the result would be a price hike in Argos goods, which as a consequence would probably eventuate in no one buying anything at Argos. If the government suddenly whopped an arbitrary Argos-tax on Argos then customers would make a rational decision and switch to every shop that isn't Argos. In the analogy to financial transactions, the world's countries are represented by shops in the UK, with the UK being Argos. The imposition of transaction taxes on UK bank transactions by the government would be equivalent to Argos lobbying the government to impose an Argos-tax on Argos. That is to say, if the UK government introduces a Robin Hood tax on UK financial transactions in its own banking system, then UK financial services will simply relocate to countries without a Robin Hood tax, similar to how Starbucks, Amazon and Google use tax havens to do their accounting.  

For those who don't relocate, the Robin Hood tax would mean increased risks for speculative bankers, and a disincentive for ordinary users to save for the future. The general reason that taxes on banking transactions are unwise is that they have a different true value to their face value. As an analogy, take car insurance. Betty pays £350 car insurance to be insured by Admiral, but she knocks down a man and permanently disables him, costing Admiral £750,000. The true value and the face value differ by £749,650. A 10% tax on Betty's value costs her an extra £35. If Admiral taxes Betty 10% to insure against the full loss it's going to add £75,000 to her premium. This is what will happen in the banking world with transaction tax - it will encourage risk and injudicious spending for the bankers, and it will be an increase that is passed onto the banks' customers.

And as regards the disincentive for ordinary users - to give you an illustration of why a surcharge incentivises imprudence, suppose all banks implemented a 10% service tax every time you used the cash machine. In response people would make fewer withdrawals of larger amounts, and disposable spending would increase as a result.

Now let's look at the positives. The idea that relatively wealthy people can be taxed to give directly to relatively poor people has plenty of mileage - but that is the primary way on which Robin Hood taxes should be capitalised. There is so much need in the world, and in the absence of enough drive to do more, I support this kind of enforced-charity.  But if this is going to work properly, the effort needs to be a collective, with every developed country being co-signatories in this policy. This will guard against the disadvantaging of those who sign up for it.

What will also really help is when banking becomes more advanced, enabling individuals to simply place money directly in other people's accounts - it'd work like the sponsor a child systems work, but much more directly. This has been tried in Kenya with a charity called GiveDirectly - it is a charity that passes donations straight to poor families in Kenya (among other places) - and I believe it has yielded good results.

A similar scheme has been tried in Uganda too. Poor entrepreneurs are given grants by people like you and me, and they manage to achieve a high rate of return. This emerged from a study by Chris Blattman, Nathan Fiala and Sebastian Martinez. They helped the Ugandan government give out $10,000 to young people in various project groups, as well as some random selections. Per person, these donations worked out about twice the annual income of the young people in question. Blattman and his colleagues then tracked their stories over the following four years, and they found that many of the young people set themselves up in a new skilled trade or as budding entrepreneurs who were able to transform their opportunities and help others too.

Naturally in terms of meeting global need, projects like this are part of an incipient process. They are the first signs of what can emerge when the banking system can facilitate more and more personal accounts and easier access to charitable donations. Benefactors can sponsor individuals more directly; they can exchange letters, and play a more intimate part in helping those that that currently can't get themselves on a higher rung of the economic ladder do so.

While it is not without its problems, I'm all for the kind of Robin Hood Tax that helps lift the world's most desperate people out of poverty and into an economic system in which they learn skills and trade self-sufficiently in a country with right of ownership and a stable government enforcing the rule of law.

* Photo courtesy of creative-collaborations

The Logic Of Charitable Giving

If you're feeling charitable at any time throughout the year, by all means give charitably. But here's my advice; don't do what your natural instincts tell you is right by giving to many different charities. The best thing you can do is give all you want to give to one charity. In other words, if you were going to give £20 to Oxfam, £20 to Cancer Research UK and £20 to the RSPCC, you should decide which you think is the worthiest charity and give all of the £60 to that one charity (by 'worthiest' I mean the neediest charity for the most important good in the world).  

Don’t be fooled with the argument that says “I don’t know which is the most worthy, so that is why I diversify and give to multiple charities”, because even with imperfect knowledge you have still made the decision to the best of your ability, so the logic still holds. 

The only caveat I would add is this; if everyone in the country came to the same conclusion - for example, that WaterAid is the worthiest charity - then all the other charities would be notably short of donations. But given the diversity of charitable giving across the nation, I don't expect that would happen.  People do currently give to the charity they think is most worthy – it’s just that for some irrational reason they withhold some of the ‘worthiest’ money by giving some to charities they consider less worthy.

Granted, giving all to one charity must feel counterintuitive – but an extreme case will demonstrate the logic of my argument.  After a Tsunami has hit a nation and there are mass appeals, suppose you work out that you can afford to send £500. I doubt very much whether you’d get the sudden urge to only give the Tsunami appeal £250, because you felt compelled to split the other £250 between Break and the RSPCA.  You are giving all to the Tsunami appeal because you have an intensified notion that that is the most worthy recipient of your beneficence at the present time. 

But although the Tsunami appeal is a heightened case, you’re only doing in the extreme what you are otherwise doing in moderation – you are trying to give to the charity you think needs your money most, except that outside of extremes like emergency appeals, you habitually adopt a proclivity to diversify your giving. 

I think I know why people do this; what is being suggested you do in charitable giving is the opposite of what is suggested in most other walks of life. Over consumption of one product, over-activity in one particular hobby, too much work and not enough play, and all that jazz, is bad for us, so we choose moderation as we try to diversify our time and resources. That, I think, is why people naturally look to diversify when giving to charity. 

But here’s the key difference between the charities and the other activities. When you over-consume in other walks of life, it comes at a cost to your other equally important activities. If you were down the snooker hall every night and all weekends you would become a good snooker player, but your wife and kids would be devoid of your other qualities, and you’d miss out on other interests too. If you only read books by Charles Dickens you would miss out on a wealth of literature.

Yet this very rarely happens in charitable giving. If you decide that providing drinking water to people without it is your top priority, you are never going to over-do the giving to the point that no one else needs drinking water. Once you have decided that providing water to dying people is the neediest cause, then splitting £500 between the clean drinking-water charity and the RSPCA is tantamount to taking £250 out of the hands of (what is to you) the most needy cause and giving it to (what is to you) a less needy cause. 

If you want to give because your concern is 100% for the recipients in need, then I think you would rationally arrive at the conclusion that the neediest charity should have all your charity money. However, if you wanted to give because, at a subliminal level, it feels good to think to yourself 'I frequently give to all those charities – pat on the back for me' (and let’s face it, we are all highly susceptible to self-praise and delusions of grandeur), then your motives may be a little less meritorious than you first hoped. 

That’s not to divert from the fact that all charitable giving is noble, and hugely significant for the charities concerned. But if you think one is more worthy than the others – that is the one to which rationality says you should give all your charity money - and logic is against you if you don't follow it through.