Honest Altruism

A post at Free Exchange tackles an interesting question on the ethics of capitalism, redistribution, and poverty. Referring to Gates and Buffet, FE says:

Men this fabulously wealthy have little to fear but the resentment of a public that comes to see such vast holdings as dangerous and illegitimate. And they have little left to gain but even more exalted status. The impulse to quell natural egalitarian suspicions and lock down the people's high esteem through impressive displays of altruistic care and self-sacrificing magnanimity must be irresistible to the rich and famous. And given our primate psychology, it is hard to help finding this admirable.

But if our chief concern is human welfare, and especially that of the poor, we should be willing to ask whether we should find this kind of thing so admirable. Our instincts may not always be reliable. Does the altruistic-egalitarian signaling game actually improve welfare or not? If the cultural side-effect of such displays by prominent men is to reinforce that the only legitimate wealth is shared (or partly wasted) wealth, will the supply of motivation to create, to innovate, be diminished? I don't know the answer, but it is a hard question decent people must take seriously.

FE goes on to praise Gates, saying his creative capitalism “can do a great service by helping us better understand the already creative and humanitarian thrust of capitalism, to encourage a culture of energetic entrepreneurship, and to emphasise the importance of establishing in poor countries the well-ordered institutions of capitalism known to produce health and wealth.”

Warren Buffet doesn’t get off so easy though.

In contrast, the Warren Buffet approach, which encourages the false belief that the redistributive functions of the state are the key to well-being, is almost certain to do little good.

It is always refreshing to hear people who are compassionate AND sensible. Thanks FE!