Advocating “Giving Back” Is Selfish and Greedy
An oft repeated meme, at least here in the USA, is the notion that rich people should “give back” to the community. If they don’t choose to do so, instead opting to keep all of the wealth they “derived from the community”, they are painted as selfish and greedy. Nothing could be further from the truth; in fact, the truth is exactly the opposite. To advocate that wealthy entrepreneurs “give back” is a glaring defiance of reality. So much so that the meme can only arise out of either sheer ignorance or cold-hearted selfishness and greed, or worse – an ugly desire to destroy innocent values.
The latest high-profile propagation of that selfish meme comes in the form of a smug one-liner carelessly dropped by Yale law professor Bruce Ackerman, in a recent article published in the Los Angeles Times. In response to Facebook co-founder Eduardo Saverin’s renunciation of US citizenship in favor of Singapore’s more entrepreneur friendly environment, Ackerman quips: “Rather than paying back, he is moving on.”
It is easy to understand how an unthinking individual falls prey to this meme. (After all, if the fallacy were obvious, the meme would cease to propagate.) The meme is best supported by the following rationale: “If someone is rich, those riches had to be gotten from the community (or country, in Saverin’s case). Since the rich person has more money than the average person in the community in which he enriched himself, it follows that he took more from the community than he gave. Therefore, to be fair to those poor folks he skimmed off of, he should return a portion of it.”
This rationale is faulty, because it conveniently overlooks how the rich person “got” his riches from “the community”. There is a specific mechanism, or procedure, through which this occurred. It is a mistake to skip over this, and jump straight to the conclusion that the riches are somehow unearned.
Even more simpleminded rationales supporting this meme include: “The community enabled him to get rich, so it is only fair that he show appreciation by giving back” (this rationale was alluded to by Ackerman; in the article, he speaks of “the country that made their success possible”). “The rich got lucky, and ought to share with those less fortunate”. And an especially presumptuous and unapologetic rationale, presented to me once by a former coworker, “No one needs that much money”.
There are several things fundamentally wrong with each of these rationales. But let’s get straight to the bottom of why the meme itself not only relies on a suspension of reality, but is grossly unfair, inhumane, selfish, and greedy.
In order for an entrepreneur to become wealthy, he or she has to do several things first – including putting personal hard earned savings or valuable credit rating on the line (what if the venture fails; most do, in fact), put in long hours with little or no initial reward, apply hard mental effort (work smart), be self-motivated and highly disciplined, etc.
All of this giving occurs before the entrepreneur even gets a product or service on the market. If he fails, he has nothing to show for all that he gave. (A point worth noting here is that virtually none of those who advocate “giving back” would even get past this stage – precisely because they are unwilling to give so much with no guarantee of getting anything back.) For the few who succeed in their efforts, and manage to become wealthy, they acquire every single dollar of that wealth by giving a product or service in order to receive that dollar. How, then, is there any duty to “give back”? How is such a concept even remotely fair? Simple: It is not.
The wealthy entrepreneur got that much richer than others in the community because he gave so much more than they did. Eduardo Saverin may have billions of dollars; but because of him, billions of his fellow human beings have Facebook, which is of such value to many of them that they would not want to go back to doing without. This is a voluntary, fair and equitable exchange. There simply is nothing for either party to “give back”. It is a done deal.
Here is an idea: When you go to the local farmers market to stock up on fresh, organically grown fruits and vegetables (which are essentially luxury items), do you give a portion of your purchases back to the market after paying for them? Why not? It is exactly the same concept. To say that entrepreneurs who earned their wealth by providing value to the community’s inhabitants through voluntary exchange, should then “give back” to the community, is exactly the same as saying one should “give back” a portion of one’s purchases to the farmers market, after paying for them.
There is fundamentally no difference whatsoever between the two scenarios.
Note that those who advocate “giving back”, never specify who the actual individuals are who were “taken from”, and thus should be “given back” to. No, it is a purely collectivist idea: Give back to “the community”, or “the country”, etc. This is why the analogy of the farmers market is only accurate if one envisions buying from individual vendors, but then “giving back” a portion of the purchases to “the market” – not individual vendors. Either way, the notion of “giving back” that which one has received through giving in the first place is beyond absurd.
In a purely capitalist exchange, there is always a give for every take, a win-win for all. The exchange cannot take place unless each party sees personal value in the exchange. Why would anyone wish to introduce an imbalance where such a fine balance exists? When the implications of the “give back” meme are followed through to the logical conclusion, it becomes clear that it is rooted in the most contemptible of human desires: Selfishness, greed, and above all – envy.
Regards,
Menno Troyer
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Reminds me of some commentary put up by Thomas Sowell in one of his more recent books–damned if I can remember which one–wherein he scrutinizes the thought processes (more appropriately, the lack thereof) of those who are always pontificating about how wealth should be “distributed.” Sowell points out that in order to be distributed, wealth must first be CREATED, and that wealth creation will simply cease to occur if wealth is immediately appropriated for public use by those who occupy their days theorizing about how it should be distributed. You can’t distribute something that doesn’t exist, and the unspoken premise of the distributionists that wealth simply “is”–that it is a given–is the economic equivalent of mysticism. Such naked ignorance plays far too great a role in our various public policy debates.
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“if the fallacy were obvious, the meme would cease to propagate” Or–perhaps, if there no truth to it, it would cease to propogate. No one person gets rich all by him or herself—he or she has help. Take for example the corporation which used to own the company I’ve worked for for 17 years now. They laid off a third of our workforce, put the extra work onto everyone else, and THEN fired the CEO–who had been with the company for 7 months–with a 2 MILLION DOLLAR SEVERANCE PACKAGE.
I have a memo written by this joker. There is no way in hell that person did anything productive for our company in the 7 months he was there. He never even showed up on the premises. Then a year later, the company wrote us another long memo about how we all had to sacrifice so the company could pull through the recession. We all got our pay cut. Then a little over a year after that, they sold us.
I have been through the revenue figures and my company makes over a hundred million a year in revenues with nowhere near that amount in costs. The people who are on the ground working every day are getting screwed. We are the ones creating the wealth and we would never see a severance package of the sort that went to the short-term CEO.
So, basically, I think this post ignores the reality of who exactly creates wealth.
But I really loved your post on Andrew Wordes, so much so that I printed it out; and the name of your blog is great.
Sir,
Please throw away your “Newspeak” dictionary and stop using the vague, socially cool term “meme”. It clouds the mind and muddies your argument. Think of it this way; it would double plus good. Thank you for the article.
“The whole literature of the past will have been destroyed.” – George Orwell – 1984
Jeremy
They do give back: They just don’t give back to the state as much as the state wants
that does not mean they don’t give back
Sorry Burkey,
You still missed the bottom line point. If the company was not there to begin with you would not be working there enjoying any paycheck, no matter at what level.
The pay you are willing to accept is a marketplace driven commodity. So if you do not think you are being paid adequately then you can move along to another position that does pay you what you think is a “fair” price. Enough people do that the company either amends its ways, or goes out of business. If however, you move along and the company is able to replace you then your worth was adequately compensated. The company owes you nothing more, nor anything less. It is truly a two way street and the company has no obligation to pay you more than market wages. If you want more than market wages, you have to acquire more risk. For in risk is where the true rewards are, and obviously the losses too.
Now the word I used above, “company”, means what exactly? It is not the CEO, Board of Directors, or any such thing. It is the risk takers, the actual owners of the business. They are the ones expecting a certain level of return, if it is not adequate, again the company goes out of business since the stock will become worthless and the company will lose access to capital. All the “risk” of the company is born by these individuals (which may even be you in a 401K or profit sharing plan). So you would and should expect a certain level of return for that risk, and each business is different on what that level is expected to be.
The company is also “giving back” to the community in other ways, your pay is a prime example. Yes they sell a product that a consumer wants and demands to be provided at a certain price. But they also employee you and buy other materials that go into the makeup of that product every day. Thereby “giving back” to the community. Which is of course made up by the members of the community that might work there already.
Sorry you are so bitter about your perceived injustices, but get past it and realize that this is only in your control. No one else owes you more money, or higher education, or a severance package, or anything. Just so you can be handed more money. You were paid a fair exchange for your labor already.
You are paid only on your perceived future benefit to the corporation. And in the case of your previous CEO it was perceived that the company could do better with a different CEO at a better cost even after paying the severance costs. Trust me, the Board did not want to pay that severance out, they had to weigh the cost of keeping them compared to the cost of replacing them.
So move along, and make yourself more valuable (or at least be perceived to be more valuable for a short term gain fro yourself), or take some risks…
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Testify, TomW!
The power to tax is the power to destroy, not provide some fabulous, unbeatable–let alone unavailable in the private sector–service for helping successful people pay anything back–or forward (corporate welfare notwithstanding).
I agree with the premise that when there is an exchange between a party that creates something and a party that pays for it the transaction is complete. After that, the exchange is done, hopefully at a fair trade. The creator of something of value does not owe anything to anyone after the trade is complete. However, I do believe in charity (absolutely not welfare or redistribution of wealth via the feds). Im a pianist and an avid arts lover. If it were left to the valuation of the market, and no donations were made, ticket prices to the symphony would be in the hundreds of dollars. The market does not deem that a fair value for the concert. So should all symphonies just cease to exist? Should all pianist just give up? Without charitable contributions, our society as a whole would not be as enriched as it is with them. I certainly believe in the right to keep your earnings, but my personal opinion is that it is a bit selfish to not give back.
“This rationale is faulty, because it conveniently overlooks how the rich person “got” his riches from “the community”. There is a specific mechanism, or procedure, through which this occurred. It is a mistake to skip over this, and jump straight to the conclusion that the riches are somehow unearned.”
The most egregious part of this kind of social sniping is that it is the biggest proponents of this thought process who are its most deserving recipients… the limousine liberals. With family trust funds in the millions and hundreds of millions of dollars and being ever ready to squander OTHER PEOPLE’S MONEY rather than their own, these people desperately need to get a job and have a real life of their own and not be fastened to the teat of their father’s or grand-father’s genius and hard work.
As to the Yale Law School professor, one could ask what part of his generous salary is ear-marked for funding the educations of students who cannot afford to attend Yale without a substantial stipend.
My wife and I both have our favorite charities and we fund them to the extent that we can without impoverishing our own family. No one makes us do this or even suggests that we do. We do it because life has been good to us and we want to freely share some of that with others who are less fortunate. To us, this is simply the right thing to do. Whether or not others choose to do this is up to them and none of our business. In no case would we ever denigrate others for making the choice that best fits their family and financial situations.
As to the Facebook founder who moved to Singapore, good for him! The US government has made so many idiotic laws, rules, and regulations that many of our best companies were forced to move overseas and take their production jobs with them if they were to remain profitable. Many of our fellow citizens lost their jobs because of this and it was called “out-sourcing”. OK, fine, that was a business decision that was made in response to the lousy business conditions created by the never-ending and insatiable government requirements of business. When an individual says “ENOUGH!” and moves elsewhere, just consider that a form of out-sourcing too. What’s fair for all is also fair for one. I predict that this will become common among our best and brightest until the government wakes up one of these days and at long last understands how truly noncompetitive they have made this country.