Charity Begins With Wealth Creation

Charity—helping people who have trouble helping themselves—is a good thing two times over. It's good for the beneficiary and good for the donor, too. Stephen Post's fine book, The Hidden Gifts of Helping, reveals that 76 percent of Americans say that helping others is what makes them most happy. Giving money makes us feel good, and helping face-to-face is even better. People say it makes them feel physically healthier. They sleep better.

Private charity is unquestioningly better than government efforts to help people. Government squanders money. Charities sometime squander money, too, but they usually don't.

Proof of the superiority of private over government efforts is everywhere. Catholic charities do a better job educating children than government—for much less money. New York City's government left Central Park a dangerous mess. Then a private charity rescued it. But while charity is important, let's not overlook something more important: Before we can help anyone, we first need something to give. Production precedes donation. Advocates of big government forget this.

We can't give unless we (or someone) first creates. Yet wealth creators are encouraged to feel guilt. "Bill Gates, or any billionaire, for that matter," Yaron Brook, author of Free Market Revolution and president of the Ayn Rand Institute, said on my TV show, "how did they become a billionaire? By creating a product or great service that benefits everybody. And we know it benefits us because we pay for it. We pay less than what it's worth to us. That's why we trade—we get more value than what we give up. So, our lives are better off. Bill Gates improved hundreds of millions of lives around the world. That's how he became a billionaire."

Gates walks in the footprints of earlier creators, like John D. Rockefeller, who got rich by lowering the price of oil products, and Cornelius Vanderbilt, who did the same for transportation. The clueless media called them robber barons, but they were neither robbers nor barons.

They and other creators didn't just give us products to improve our lives, they also employed people. That's charity that keeps on giving, because employees keep working and keep supporting their families. "That's not charity," Brook said. "(It's) another trade. You pay your employees and get something in return. But the employee is better off, and you are better off.

"And when you start thinking about the multiplier effect, $50 billion for Bill Gates? That's nothing compared to the value he added to the world. That is much greater than the value he'll ever add in any kind of charitable activity." Gates now donates billions and applies his critical thinking skills to charity. He tested ideas in education, like small high schools, and dumped them when they didn't work. Good. But if he reinvested his charity money in Microsoft, might he have helped more people? Maybe.

Brook points out that Gates gets credit for his charity, but little credit for having created wealth. "Quite the contrary," Brook said. "We sent the Justice Department to go after him. He's considered greedy, in spite of all the hundreds of millions of people he's helped, because he benefited at the same time. (When) he shifted to charity, suddenly he's a good guy. My complaint is not that he's doing the charity. It's that we as a society value not the creation, not the building, not the accumulation of wealth…. What we value is the charity. Yes, it's going to have good impact, but is that what's important? … Charity is fine, but not the source of virtue. The source of virtue is the creation and the building."

What especially offends Brook, and me, too, is stigmatizing wealth creators. The rich are made to feel guilty about making money. I sometimes attend "lifetime achievement award" ceremonies meant to honor a businessman. Inevitably, his charity work is celebrated much more enthusiastically than his business creation. Sometimes the businessman says he wants to "give back."

Says Brook, "It's wrong for businessmen to feel like they need to 'give back' as if they took something away from anybody."

He's right. They didn't.

If we value benevolence, we must value creation.