If I Had a Billion Dollars… (Part Two)

28 10 2010

Since Bill Gates and Warren Buffett issued their “billionaires challenge” earlier this year, it has received almost unanimous acclaim in the United States.  Editorials, pundits, and other observers have praised Gates and Buffett for urging billionaires to give away at least half of their money to charitable causes.  Even the comic strip Doonesbury has gotten into the act, with a poignant series where Warren Buffett tries to convince greedy billionaires to be more philanthropic.

To my surprise, I learned recently that the billionaires challenge has received a much less positive reception in Europe.  Several European commentators have criticized not Gates and Buffett, but the United States.  In short, the writers feel that the U.S. tax structure is insufficiently progressive.  They argue that allowing billionaires to select their favorite charities is undemocratic, and that it is better to have a democratically-elected government making these major resource allocations.

Are the critics right?  Should we raise taxes in the United States so that government can do more?  As Renée Loth from the Boston Globe has observed, “Charity is…not a substitute for government…Charity will not build roads column pick up the garbage, or inspect hamburger meat.  It will not do enough to support unpopular groups like prisoners or drug addicts.”

To those who argue that raising taxes will destroy our economy, it might be noted that when Ronald Reagan became President, the income tax rate for the highest brackets was 70% – twice what it is today – and our economy did not collapse.

Despite these arguments, I personally believe that the critics are wrong and that our democratic government and capitalistic economy are the best possible structures.  Winston Churchill once noted that, “Democracy is the worst form of government – except for all those others that have been tried.”  The same might be said for capitalism.

After decades of attempting a different model, the Soviet Union self-destructed in the 1980s.  Even one of the last holdouts for alternative political and economic structures, Fidel Castro, recently conceded that the communist government and controlled economy system doesn’t work.  Cuba is laying off 500,000 of its 3 million government workers and urging them to find jobs in the private sector.

It seems clear that giving people political and economic freedoms is the best way to stimulate innovation and a strong economy.

So, I for one, choose the American system of government and economics.  It’s great that these systems have created more billionaires than anywhere else in the world.  It’s also great that many of these billionaires are joining Bill Gates and Warren Buffett in giving at least half of their money to charitable causes.

Just like all human beings, America is far from perfect.  We need taxes and government intervention to rectify problems and address issues that the free market doesn’t solve.  But, overall, a free-market democracy is the by far the best way to grow the economic pie so there is more for everyone.

David Miller, President and CEO, The Denver Foundation

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