BUFFET'S OTHER GIFT

Warren Buffett's enormous donation to philanthropic causes should also impact the way we view vast wealth and social obligation

After giving most of his 54 billion USD fortune to philanthropic causes, Warren Buffett agreed with another generous American donor, Andrew Carnegie, who said that “huge fortunes that flow in large part from society should in large part be returned to society” (from Fortune magazine).

It’s an obvious point to many of us but a radical statement from one of the world’s richest men and it flies in the face of the rampant individualism that prevails in the US and here in Australia.

Most discussion of affluence in the US and Australia focuses on the individual achievement. It’s rare that the far more complex picture that creates vast wealth is painted.

Bill Gates’ wealth is founded largely on the astute appropriation of the ideas of others, the successful marketing of these ideas and an extraordinary and brutally created and maintained near monopoly in computer software. These are feats of brilliance. But they do not necessarily represent the highest in human values.

That other computer icon Steve Jobs has a reputation for being the more ethical of the two players. I’m not convinced. The biography “Icon” by Jeff Young and William Simon suggests Jobs’ greatest skill has been catalyzing others’ ideas into marketable products. Jobs’ creative achievements are in strategy and identifying opportunities. The real credit behind Apple’s wonderful product range for the most part goes to others. Jobs has exercised Gatesesque single mindedness, brutality and determination to obtain market dominance through control. This is most vividly demonstrated in the Itunes Ipod tie up that shuts out competing players.

The roles of Gates and Jobs have been vital in the success of their businesses. Their talents need not be diminished but the talents of those around them deserve plenty of acknowledgement as well.

Gates and Jobs have provided commercial acumen and raw determination more than creative talent. It’s not surprising and not to be condemned. But nor should we look at people like Gates and Jobs as individual creators of wealth. The contributors to their success are usually very close behind in terms of importance but a long way behind in terms of wealth (Microsoft cofounder Paul Allen is perhaps an exception).

The only point here is that the gap between the celebrated leaders and those who have contributed immensely to their success is usually not so great. The wealth gap from those key contributors tends to be very substantial however. As in all things, luck plays a key role in wealth creation as well.

Similarly, the wealth gap between the very wealthy and the regular worker in no way corresponds with their relative contributions to wealth and society.

There’s nothing wrong with wealth creation and rewards for innovation and commercial savvy. There may be a point where the gap becomes excessive however. Do the actions of Messrs Gates and Buffett not also represent a view that the wealth gap is too wide?

As the gap between the very very wealthy and the rest of the population grows ever greater, the acknowledgement of society’s contribution to wealth creation is a big deal. I don’t ever remember Australia’s previous wealthiest man, Kerry Packer, acknowledging society’s role in his wealth creation. The only social comment I can recall from Packer was when he “marveled” that people paid tax given the way politicians waste public money. Politicians may waste public monies but Kerry seemed not to have noticed that ordinary people’s taxes (I understand he didn’t pay much) paid for the roads he drove on, the education and health systems that provided him with a quality labour force and the legal system that protected his empire.

For all their generosity, Messrs Buffett and Gates still retain many billions. As gestures of generosity, giving away billions and retaining a few, may not be wholly remarkable. It is wonderful however to have those resources being applied to some of the world’s most pressing health and education problems. The acknowledgement of a debt to society by two of the world’s richest men increases the obligation of all of the wealthiest to recognise the same.