Gareth Morgan is wrong to give his money away. Here's why.There are some people who are so productive they almost can't help creating wealth. These aren't just wealth creators, they're walking machines of production, able to turn a dollar into ten, into a hundred, into a thousand, into seven hundred million... purely on the basis of a good idea, a lot of hard work, and an understanding of the way the world works.
Sam Morgan is such a man - his zero to seven-hundred million in just five years attests to that. Steve Jobs is such a person, as are TJ Rodgers, Mary Kay Ash, Doug Myers, Richard & Christopher Chandler, Stephen Tindall, Graeme Hart, Fred Smith, Tom Watson, Warren Buffett, Ted Turner, Jack Welch, Bill Gates, Sam Walton. There's clearly more to wealth creation than the few traits I describe above; if it was that easy we'd all be rolling in our own cash -- author Edwin Locke outlines some of the traits needed in his book 'Prime Movers' -- but there's clearly a great benefit to us in letting them be free to create wealth: with every new innovation, new product, and cheaper line, we're all better off for the jobs they've created, and the new choice their creation and production has made available to us.
In fact, if the great wealth creators really do wish to 'help others', then the best thing they can do is not to give their money away, but to keep right on producing more. The more of it they have, the more they have to produce with; when we're talking about some of these walking engines of productivity, that's very productive indeed.
But isn't it better to give rather than receive? "No," says philosopher David Kelley in an interview with ABC's John Stossel, "it's better to create."
Kelley: Why do we think that giving away money is better than making money? Giving away money is a lot easier than building a new business or a new industry, where you've created something that didn't exist before. I have a lot more respect for Ted Turner for building CNN, at a time when no one thought it was possible, than I have for any possible good he could do as a philanthropist.Gareth Morgan is not in the league of these other wealth creators -- although he's certainly no slouch -- and it's clearly his own money to do with what he wishes -- but if he really does want to help others the most, he'd keep it and invest it just as wisely and as well as he's done so in the past, and use it to create even more value. But that's his choice.Stossel: It's kinder to give money away.
Kelley: Is it kinder to give money away than to create something that enriches all of us? To create new jobs? If you create a job, you are giving someone the means to support himself. If you give money away, you're not helping him to be self-supporting.
Stossel: Who did more for the world? Michael Milken or Mother Teresa?
Kelley: Michael Milken. No question. . . . Now, people look at the two and they say, "That's absurd. Mother Teresa was a moral hero and he was a criminal." Because they're looking at motives. Michael Milken didn't suffer. He didn't go into the slums. She went into the slums and she suffered. But I say: What's so good about suffering? I look at the value that people create.
CLARIFICATION: As I said, it's his money, and his choice. He doesn't owe anybody even one minute of his productive ability if he doesn't wish to make it available. My point is that is if he does wish to help others, then producing new wealth is the way to do it.
UPDATE: Link added to David Kelly's excellent article 'Is it nobler to give than to create?', discussing the merits of Ted Turner giving away his money. Kelly concludes:
If Ted Turner wants to give his money away, that's fine. It's his money. If he wants to raise money for the causes he believes in, that's fine, too. But giving away his money is easy compared with the heroic effort it took to make it. And nothing his philanthropy will accomplish will compare with the value he has created as a media entrepreneur.LINKS: NZ man to donate website windfall - BBC NewsPerhaps it is nobler to give than to receive. But in my book it's nobler still to create.
Rich rotter Gareth Morgan [Profile by Michelle Hewitson] - NZ Herald
'Prime movers': Traits of the great wealth creators, by Edwin Locke - EdwinLocke.Com
Greed - ABC 20/20 Special with John Stossell - excerpts - The Objectivist Center
Greed - ABC 20/20 Special with John Stossell - full transcript
When is greed good? - John Stossel, ABC News
Good side of greed - Video - John Stossel, ABC News
The John Stossel web page - ABC
Is it nobler to give than to create? - David Kelly, Objectivist Center
TAGS: Economics, Ethics, New Zealand
11 comments:
Peter, as a capitalist myself, I understand what you mean.
But you ignore the power of emotion in this equation - and yes, it *is* powerful for some, while certainly not, or less so, for others.
If an individual is driven to help people by donating his wealth, then he truly is 'receiving' (as in personal satisfaction) via the gift. He may not receive the same satisfaction by setting up another business, even if that business did go on to create wealth and jobs.
Do you see the point I'm making? I bang on about the power of emotion ad nauseum for a reason (!) - and that's because it is extremely powerful. More powerful than reason, as any good salesman knows. And yes, I can see you Objectivists throwing up, but c'est la vie! Like I've ever given a shit, anyway! :)
Besides, who's to say that the beneficiaries of Gareth Morgan's largesse won't go on to create wealth themselves with the windfall?
Many variables at work here. I don't think it's black and white at all.
Agree with Sus here (drum roll!?).
And who is to say he is going to "give it away" to anyone? The article that I read said that he was talking through his options with some people who knew more about this sort of thing. He may end up using that money to create a charitable business... or as Sus says, it may be used by the receiver to create further wealth.
I don't get it. When it comes to a question of 'giving a helping hand to the needy,' the traditional Libertarian reply is 'Well, if no one was robbed of their income with taxation, we'd have the wealth to be charitable! And we'd do it too!'
Notwithstanding the immediate recoil I experience at the idea that everyone in the world would naturally be inclined to 'do the right thing' should they suddenly be largely free of 'statist control,' how is it that the same blogger who wrote in 'As Cold As Charity' that '...it's this genuine kindness freely offered that represents real charity' can wheel 180 degrees with a tirade AGAINST charitable action by someone who has access to great wealth.
I can't reconcile these two differing viewpoints you offer, putting aside my own extreme distance from them politically, and I challenge you to offer a cogent model of who SHOULD offer 'charity' in a libertarian paradigm.
That's hardly a "tirade" against charitable action, Den, simply a call for readers to think about the nature of wealth and wealth creation, and about the questionable 'virtue' of altruism -- which colours all comments and interpretations of his action. Perhaps also a call to rethink the difference between politics and ethics, and the virtue that supposedly inheres in giving money away. And no contradiction with that earlier piece, as I'm sure you'll see if you reflect. (And BTW I don't think there's anything wrong with talking about what Gareth should do with his money -- the idea that he gives a rat's arse for our opinion is one I'm sure he would robustly reject.)
I'll write more on this tomorrow after some debate here today, but one clue to your answer, Den is to think about that word "SHOULD" in your last sentence. 'Should,' I note, is an ethical term.
But let me signal a historic moment: the agreement of Sus and Yalnikim. Unfortunately, you're both wrong. :-) Sure, we don't yet know what Gareth's doing with his money , and he may well choose to practice his charity through some kind of 'Tear Fund' arrangement -- and let me stress once again that whatever he chooses is his right to choose -- but few investors are likely to be as productive in their investments as he was himself.
As he says, investment is a full-time job and if he can't be bothered doing it any more that's up to him. That's his selfish right, which I don't challenge at all. The irony is that if his reported views are correct then he's showing his selfishness by giving money away; but by keeping his own money and reinvesting it he would be doing everyone a favour except himself. :-)
WTF??
More than a few have used his charity choice as an opportunity to bag the govt - the govt doesn't encourage business per se, so he's giving it away. Actually your view is rather socialistic, as has been argued elsewhere...once you have what you consider enough material wealth and you can stop "working" then you do exactly that.Fair enough on an individual basis, but not so good from a societal point of view. Right?? If overachievers were obliged to produce for the "good of society", giving up their own utility and ability to choose, no-one would choose to be an overachiever. That idea goes against the very argument you're trying to make...
And furthermore I disagree with your mercantilist kind of approach to the whole argument.
Plus it sure doesn't look like YOU keep producing, if I may say so...operas...movies...jaunts around the country. Production is there in order to create utility - is it not? The decision to choose leisure, or charity, or whatever takes the individual's fancy.
PKB syndrome??
Everyone disagrees with PC! This is great!
ps emotion trumps reason!?!? Jeeze Louise.
Did he gift it all? Maybe he would just like the challenge of doing it all again with another idea. In the meantime he has allowed the means for others to get up and have a go.
His charity is none of our damned business. This blog just proved the adage that 'no good deed goes unpunished'
It used to be a virtue to mind your own bloody business. Evans was probably successful because he did just that.
Got on with it.
Lesson there.
PC: 'But few investors are likely to be as productive with their investments as he (GM) was'.
Entirely subjective, PC, Likely, perhaps, but there's no proof.
Rick: 'Emotion trumps reason? Jeez Louise'.
Indeed. Scary, eh. But I never said 'trumps' as in being 'more important', because it's not.
I said that it was 'more powerful' - because it is. People invariably base decisions upon emotion - and then use logic in justification, as I noted all good salesmen know. (Men, in particular, hate to hear that, but too bad!)
Just look at the govts we routinely vote in, Rick. Not a lot of 'reasoning' going on there ...
ps: Lordy, Yal! Wonders will never cease! Maybe I should buy a Lotto ticket and if it wins the big one, we'll split it - 75/25.
Well, I am a capitalist! :)
"Everyone disagrees with PC!" I'm not sure 'everyone' does, since I don't actually recognise in my post or my clarification the criticisms being made. But I'm used to criticism in any case. That's what you get for trying to incite thinking by being provocative.
There's an underlying assumption with all my critics that I'm demanding a right to dispose of Gareth's money myself. What nonsense -- of course I'm not. What I have a right to is to make my own judgements about somebody else's actions and to comment on them, just as you do. And as I said, if Gareth really and truly wants to help others, he can best do so by applying his all-fired and proven investment skills to make that middle-sized wealth into much more wealth. Doesn't mean I'm saying he has to do that, just that if that's the outcome he wants, then that's what he should do.
There's another underlying assumption being made, which is that I'm demanding Gareth keep working: that because he is so good at producing wealth that he sacrifice his own interests for the sake of ours. No, I'm not. The taxman aside, Gareth is free to do what he wishes. He doesn't owe us anything, and nor did I say he does. As I said above, the irony is that if his reported views are correct then he's showing his 'selfishness' by giving money away; but by keeping his own money and reinvesting it he would be doing everyone a favour except himself, which is what he says he wants to do by giving it all away! :-) There's irony for you, but it doesn't change the nature of wealth creation, nor the fact that he's good at it and his recipients won't be as good.
There's another underlying assumption being made with all the comments, which is that in giving his money away he's performing a virtuous act. He's not. There is no special virtue that inheres in giving; there is virtue that inheres in creating -- there is virtue that inheres in recognising value and acting accordingly; there is virtue in benevolence, but in order to be benevolent one must first have something to be benevolent with. The major virtue inheres with the production of wealth, not with the distribution. And the idea that the producer somehow owes something to others, that he needs to 'give back to the community' (which, thankfully, hasn't yet been heard in this case) is clearly nonsense. The debt, if there is one, is all one way; if there is gratitude to be shown, it's a debt of gratitude to the producers, and not the other way around.
PC: 'All my critics' ..
No, *I* never said you have demanded 'a right to dispose of GM's money.'
No, *I* never said that you have demanded that 'Gareth keep working'. Since when do true libertarians 'demand'?
Nor have I said that GM 'owes' anybody, anything.
I continue to dispute your last point though, that there is 'no virtue' in giving.
That may be the case for you, or another individual, PC, which is fine, of course.
But that is not the case for *me*, or, as it has been reported, Gareth Morgan.
I repeat: there are many variables here - and I don't believe this is black and white.
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