Saturday, July 27, 2013

Wherein Warren Buffett's Son Misunderstands the Difference Between Inequality and Poverty

Not sure where to begin in dissecting this opinion piece in the NYT. First, it confuses poverty and inequality:

Because of who my father is, I’ve been able to occupy some seats I never expected to sit in. Inside any important philanthropy meeting, you witness heads of state meeting with investment managers and corporate leaders. All are searching for answers with their right hand to problems that others in the room have created with their left. [...] But this just keeps the existing structure of inequality in place. The rich sleep better at night, while others get just enough to keep the pot from boiling over.
Second, he creates a straw man rejecting ideas of accountability and financial sustainability:
And with more business-minded folks getting into the act, business principles are trumpeted as an important element to add to the philanthropic sector. I now hear people ask, “what’s the R.O.I.?” when it comes to alleviating human suffering, as if return on investment were the only measure of success. Microlending and financial literacy (now I’m going to upset people who are wonderful folks and a few dear friends) — what is this really about? People will certainly learn how to integrate into our system of debt and repayment with interest. People will rise above making $2 a day to enter our world of goods and services so they can buy more. But doesn’t all this just feed the beast?
And finally, I'll highlight is his fuzzy approach to "poverty" and his lack of context:
Nearly every time someone feels better by doing good, on the other side of the world (or street), someone else is further locked into a system that will not allow the true flourishing of his or her nature or the opportunity to live a joyful and fulfilled life. [...] I’m really not calling for an end to capitalism; I’m calling for humanism.
Are the poor on the other side of the world really the same is those across the street? Compare the "poor" in the west who are far more likely to suffer from morbid obesity to those who suffer under oppressive regimes who face starvation - how similar are they? Compare the poor in the west today - often with cellphones, microwaves, access to much greater varieties of food and products from around the world and other conveniences of modernity, to those decades earlier against the metric of "true flourishing of his or her nature or the opportunity to live a joyful and fulfilled life." Have things really gotten worse? Are the problems facing the poor really the same? Heck, even compare the opportunities to entrepreneurs today over decades earlier - has it really gotten worse?

But he does make one useful observation: charities are growing rapidly. While they are growing faster than government and business, they lack accountability and transparency:
According to the Urban Institute, the nonprofit sector has been steadily growing. Between 2001 and 2011, the number of nonprofits increased 25 percent. Their growth rate now exceeds that of both the business and government sectors. It’s a massive business, with approximately $316 billion given away in 2012 in the United States alone and more than 9.4 million employed.

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