Muchas gracias, crew, for demonstrating vividly that I can be at least as dense as the next racist, homophobic, intolerant, Neanderthal, semi-literate redneck. (I am always fascinated by how quickly the Uber Left can come up with attacks that all good Statists adopt immediately, baying for what we thought was our 100% American red blood over what we consider traditional values.)

The cream of the jest is that Little Mrs. “I’m So Prepared” missed what we call “a real sitter” in the professional (Duplicate) Bridge world, something so “obvious” that a tyro shouldn’t overlook it. This is very good for my character, and not only am I ‘fessing up to the entire readership but I am truly grateful for the very kind correction. Real friends tell us when we’re wrong or have overlooked an important factor, and I sure was and did.

Let us get into the twenty-first century and consider the issue of when to begin drawing Social Security. I’m not making an excuse, but I had to make my decision in 2004, prior to the time when I realized the economy was going off the rails pretty permanently. I was thinking in terms of relative stability, low interest rates, and a very bad example set me by my mother, who took it into her head after her third bout with cancer that she was going to die young and was determined to recover some of what she had paid into the Social Security “trust fund.” Mother worked before we were born and Daddy was in the Navy and gone a lot, but other than that she worked only on contract after we were grown. At 62, Mother signed up at a time when she had no need for the money. In due course my father died, leaving Mother quite well off, but she made some spectacularly bad decisions, and the time came when she regretted bitterly what she had done. She lived to be eighty, and for the last several years even an additional $700/month would have been very comforting.

If we look at it in classic terms of amortizing, my decision was an excellent one at the time. (I really do feel so dumb!) I worked the figures out, and if I lived ten more years, until 2014, I would be far better off to take twenty-one hundred dollars two years later than fifteen hundred at the time. That was a good wager actuarially in ’04, but that, as we frequently say, was then. This is now, and it is high time to consider the probable future of Social Security, the declining dollar, the near certainty of rampant inflation, and a lot of factors we all expect to change both America and Social Security, probably in no more than the next eighteen months.

Social Security slipped over into the red this winter, six years ahead of schedule, due primarily to the decrease in tax revenues which were down over 17% the last time I looked.

The brouhaha over Obama “care” has brought the nonexistence of a valid Social Security “trust fund” to the attention of far more Americans, along with just how much Medicare and Medicaid are racking up deficits. It is now quite widely-known that the “non-negotiable” IOUs in the putative SS “trust fund” have no value at all, and that the 40 to 1 ratio between those paying taxes and those receiving checks is approaching 2:1 and expected to go negative in this decade. The thousands of dollars you have “invested” in a government pension have been embezzled from the very start, the “fund” is a chimera, and even politicians finally realize that the problem is serious. Consequently, Congress has lascivious eyes turned towards your private pension plans (IRA and 401(K) in particular), planning on looting some twelve trillion dollars–for which they will give you a “Guaranteed Retirement Account” backed by the “full faith and credit” of the US government. Feel free to laugh hysterically–at least, if you are already retired. There are plans for cutting increases, lengthening the time until SS can be initiated, and raising expenses and reducing services for mandatory Medicare. The most outrageous facet of all is the idea of levying an additional tax upon the more successful by “means testing.” The redistribute-the-wealth crowd intends to determine what means are “sufficient” for you and erase any pretense that SS taxes are a way of accumulating value which will be returned to you when you are too old to work. I have a very small pension from the Army which a grateful Congress CUT by 1/3 a couple of years after John died, demonstrating that no government promise is to be relied upon.

What’s the age requirement up to now, for most middle-aged and younger people? 67 1/2, or more? If the COLA increases remain frozen after three years, as they well might, the premiums and surcharges go up, the minimum age is raised, and “means testing” is initiated, no matter what happens to the economy it sounds like an excellent idea to run the numbers for your particular circumstances. One of the more appalling features of Obama “Care” is that it grants the government direct access to your personal bank accounts, and I can envision retroactive taxes or cuts being removed without your permission or even knowledge.

What I think particularly idiotic of me was not considering the value of money now compared to what I anticipate it to be in the future. It seems quite dim-witted to have made a deliberate policy of turning Federal Reserve Notes into items with intrinsic value at flank speed myself, but to have failed to consider that many of you have anticipated income which might well be worth more to you now than it will be in 2015. It would be advisable to consult a financial planner, and my first thought is to ask Gary North, since I have had some interesting experiences with interviewing and engaging financial experts after I was widowed. Those I am acquainted with tend to be a very sanguine bunch when recommending investments and anticipating brilliant success, but at least some of them jump ship without notice after sticking your nest egg in an arrangement that carried a hefty penalty to AIG–which I had never heard of, back then–for early withdrawal. It took me over two weeks to find out where my funds had gone, between two mergers, a sale, and four changes in account managers! (I was a lot more naive in 2004.)

I have yet another sin to atone for. I attributed something to Bill Bonner yesterday that was actually written by Taipan Daily’s Editor Justice Litle, another of my favorites and part of the home team. Justice wrote,

“No Money, No Problem

This reality is brought to mind by three alarming observations:

Many baby boomers (i.e. the bulk of U.S. consumers) have little or no savings.

They do not seem to care about this.

Rather than save, they have decided to spend what little they have left.

Every year, the Employee Benefit Research Institute issues its “Retirement Confidence Survey.” This survey measures the attitudes and financial positions of American workers in relation to retirement.

According to the survey’s findings released earlier this month, “the percentage of American workers with virtually no retirement savings grew for the third straight year.”

A whopping 43% of workers surveyed had less than $10,000 saved for retirement. A full 27% had less than $1,000 put aside.

Ah, but maybe home equity and defined benefit pension plans will save the day? Not when great swathes of homeowners are “underwater” or “upside down” on their mortgages. Not when pension shortfalls, both public and private, are the next multi-trillion-dollar time bomb waiting to explode.”

If you do not read TD I recommend it highly; if you drop an e- to taipan@taipanpublishinggroup.com probably some genial soul will start sending it to you. Justice is wise far beyond his roughly thirty years, as knowledgeable as one would expect of an Editor for Agora, and an excellent writer. He is also, in my opinion, an absolute darling, but that probably doesn’t count as a professional qualification. Forgive me, Justice. Does it help any that I attributed your words to the Big Boss?

Adam Hopkins (who handles getting my articles on W&G) asked me to check my source, and I was doubly humiliated when I discovered my statistics were off, as well, a faux pas in my profession so serious I may not recover for a year…and I have to admit to yet another error. Adam requested that I tell you that “Lights Out” is available to read on the Internet and the author styles himself “HalfFast.” (No comment.) William Forstchen is the author of the superb One Second After, which I wrote as “The Day After.” I have been a big fan of Forstchen’s for years, and think One Second After is an important work…no explanation.

Thanks for keeping me straight, Adam, and I’ll be scrupulously careful from now on instead of relying on my usually good memory for figures and authors.

No excuses, Shooters. You have a right to expect the very best analysis and most punctiliously correct statistics, and I dropped the ball into my idea of the Grand Canyon. I let both of us down, and I am deeply embarrassed and determined not to make another mistake, ever again.

Regards,
Linda Brady Traynham
Whiskey & Gunpowder

April 2, 2010

I Stand Corrected! was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Charitable giving and the concept of charity itself are among the stupidest and most destructive humbugs stalking Americans of good will today. Warren Buffett’s bequest of $31 billion to the Bill and Melinda Gates Foundation provides an excellent opportunity to discuss the harm done in the name of charity and the confusion that surrounds the topic. Better yet, it falls within the purview of this letter, in that if you have the money to invest, you’ll almost certainly die with some assets; maybe a lot. But how should you dispose of them? This is definitely a “hot button” subject, combining aberrations from the very topics that are most susceptible to irrational thought: money, family, politics, and religion.

I wasn’t surprised to hear of Buffett’s bequest. He’s said for years that he would only leave a comparatively token sum to his family. But, in my view, this cements him in the “Idiot Savant” roll call of rich guys (see IS of 1/06), although not as solidly as the intellectually brain dead, ethically vacant and unintentionally comical Ted Turner, he of the billion dollar bequest to the UN. And although I didn’t discuss Bill Gates in the Idiot Savant article, he definitely belongs there for his huge bequest to his own foundation. I’d also like to give him an honorable mention for the spineless way he responded to the U.S. Government’s anti-trust suit against Microsoft back in 1998. If it had been my company, I promise I would have transplanted it to a friendlier clime-and paid for the move with just a couple of years tax savings.

My guess is that despite his intelligence, expertise, and generally affable, self-deprecating manner, Buffett is profoundly misanthropic. Like Gates, Buffett has a classic anti-capitalistic, limousine-liberal mentality towards money, saying imbecilic things like “The market system has not worked in terms of poor people” on a recent Charlie Rose show. That matches Bill’s incredibly hackneyed and politically correct press conference statement: “We really owe it to society to give back.” No, you idiot savant, society-which is largely composed of nonentities who produce no more than they need to survive personally (if that)-owes you a huge debt for your work with computers. I’m just sorry you’re not actually worthy.

Many people of great wealth seem uncomfortable with money, which perhaps underlies their pathological urge to hand it over to the undeserving. Andrew Carnegie was another sufferer, with his statement “A man who dies wealthy, dies disgraced.” Discomfort with wealth is among the many reasons the Orient will overwhelm the West in the next few generations. Buffett’s and Gates’ grandchildren may be working as maids and houseboys for the Chinese. A rich Chinese wouldn’t dream of leaving his money to a charity, to be dissipated by the do-gooders, world-improvers, socialites and socialists who almost invariably infest their boards. A Chinese billionaire in Hong Kong will leave his entire fortune, tax free, to his kids. Unless he plans early and well, an American billionaire will leave his children only half, after taxes. Or much less after our sick giving ethos draws off a large portion to politically correct charity. So the next generation of Chinese will start out with perhaps three or four times the capital of their American counterparts whose parents had the same assets. And, unburdened by either income taxes or idiotic American attitudes towards money, they will make it grow much, much faster.

But it goes far beyond that. Accumulation itself is benefaction. The accumulation of capital, no matter who owns it, adds to the demand for everyone’s labor, and so enriches everyone who can get out of bed. Giving, on the other hand, is a tricky business. It can easily result in waste or in actual harm. From mankind’s point of view, if not from Tiny Tim’s, Scrooge was a more efficient benefactor before the ghostly visits than after.

Buffett says he doesn’t want to reinforce the power of those who are simply “members of the lucky sperm club.” But the solution is not to exclude people from the lucky sperm club by perversely disinheriting them, but to help enrich society by making ever more people members of it.

I deplore Buffett’s intellectual dishonesty. While tax avoidance is one reason he likes to hold investments “forever,” he’s philosophically a great believer in taxes. It’s hard to respect his hypocrisy. But I do respect his ability to recognize his own mortality, that he’s obviously not attached to his wealth, and that he’s actively chosen its recipient. He sees that Bill and Melinda will likely outlive him by 20 years or more, and knows that, at least while they’re alive, his money probably won’t be frittered on the embarrassing and dishonest hornswoggles initiated mainly for the aggrandizement of foundation trustees, the fate of almost all left-to-charity fortunes great and small. Instead, his money will be blown on nonproductive band-aids applied to people who will just get used to having band-aids provided for them.

That’s partly because the Gates Foundation seems to have a concentration in health programs for the Third World-although it really doesn’t matter what they write checks for. On the face of it, who can argue with alleviating disability and disease? But building clinics, training doctors and passing out antibiotics won’t alleviate disability and disease. Spending money that way treats the symptom and neglects the cause. That may relieve the pain of some people, but, laudable as that might be, it does nothing towards solving the problem. The reason these people and millions of others live in chronic misery is solely and exclusively government/politics. In fact, the band-aid money-just like the trillions squandered in “aid” by the West over the last 60 years-serves mostly to sustain the criminal governments ruling the places where most people are poor. And, despite whatever measures Gates may take, his band-aid gifts will hugely fatten the rulers’ offshore bank accounts and add to the army of impoverished mouths to feed. If he showed even a little imagination and economic sense, he’d invest the money as venture capital in the shares of biotech companies. Or, perhaps, follow the excellent example set by Grameen Bank, which provides micro loans to poor people. They give borrowers the capital to earn a decent living with and then get the capital back, with interest, to repeat the process.

It may come as a surprise to these misanthropic philanthropists, but people actually don’t like being the object of someone else’s charity; it’s degrading, and they resent it. It’s much like the comments made by an Iraqi on seeing a GI (who undoubtedly thought he was being a good guy and making friends) passing out candy to the kids in the neighborhood: “These Americans treat our children, and us, like animals in a zoo, throwing sweets to us, to make themselves feel good.”

Confused Phonies Love Charity

Aspen, a town where I spend some time in the Northern Hemisphere’s summer, offers an excellent microcosm of what 98.44% of charity is really about: rich people feeling self-righteous and showing off their wealth with large donations. Almost all the “must go to and be seen at” parties in this town (as with those in New York, LA, and every other center of wealth) are charity fundraisers. Does anybody care a wit about where their money is going? Not really. That’s got nothing to do with why they’re making the donation. Charity is done for the psychological and social benefit of the giver far more than the welfare of the recipient. Will I pony up a few grand for one of these things, feeling as I do? Sure. I view it as a ticket to a spectacle. But there’s a big difference between paying for a party and giving billions to create a bureaucracy that can corrupt society for generations.

I really don’t care if it’s for an efficiently run good cause, either.

Why not? First, most charity injures both the donor and the recipient. The donor, who presumably had the ability to earn the capital, is poorer, and the recipient is degraded by the receipt of an unearned, and likely undeserved, good.

If you really want to make a kind gesture to someone, for some category of people or for mankind in general, charity, even under the best of circumstances, is the least effective approach. Under the worst circumstances, like government welfare programs, it destroys both the giver (through taxation) and especially the recipient (by habituating him to receive stolen goods and lodging him psychologically and economically at the bottom of society). It’s perverse and shameful.

But what’s wrong with, say, giving a community a hospital? Plenty. If you want to see a hospital go up, then by all means build one-with the intention of making a profit. A hospital (or anything else) that is “non-profit” is inevitably a boondoggle that soaks up capital. The project usually depends on further donations to stay above water, partly because the staff who run it have no direct interest in controlling costs, and partly because they have no honest way beyond their salaries to benefit from delivering a good product. Indeed, management usually welcome ballooning expenses because the process builds satrapies that provide good cover for inflated salaries.

A for-profit hospital, on the other hand, breeds more capital-for expansion, improvement, and even dividends-because shareholders will get rid of any management that fails to do so. It’s self-sustaining and gives consumers what they want.

A hospital run like a charity should be closed and sold to the highest bidder. The same is true of non-profit libraries, universities, and research centers: it would make as much sense to have home builders, auto dealers, and department stores run as charities. But if they were, there’d be no capital to give to charities in the first place.

Ethics?

The whole idea of helping the poor-supposedly a major focus of philanthropy-is a slippery slope, usually bottoming in a dismal ethical swamp.

In a rich country, why are poor people poor? Sometimes, it’s true, bad luck can strike, and a person may need help. But that’s what friends and neighbors are for. And if a person doesn’t have any friends, and his neighbors won’t help him, then the chances are he’s not worthy of help. Over a lifetime, most people get what they deserve. The fact is that most people who experience perennial bad luck simply have bad habits. They drink too much, they don’t care for themselves, they’re ignorant, they’re lazy, or they have other vices. In a free society, someone who’s poor almost certainly deserves his fate. To hell with him. And to hell with charities that encourage him to stay that way.

Sometimes, of course, a person may sincerely wish to improve the world because of a generous if unfocused impulse, rather than because it improves his standing with witless people who care about such things. My first suggestion for him would be to make sure he’s not just a busybody. Do the people of Iraq really need democracy? Do the folks in Afghanistan really need to learn about Jesus? Do the natives in the Brazilian jungle really need Western medicine? I don’t know. Do Americans need an Iraqi to tell them why they need an authoritarian ruler to give U.S. citizens direction, purpose, and discipline-things many feel Americans lack? Do the folks in America really need to learn about Mohammed? Should Brazilian natives expel America’s pharmaceutical companies and substitute their herbal remedies, which many believe are sometimes safer and more efficacious? Frankly, sticking your nose into somebody else’s business, even if you think it’s for his own good-something charities and governments specialize in-is generally a very bad idea. And, I’d say, usually unethical.

What should you do with your money if you really want to improve the world? Earn more of it. Money (unless it’s gained through force or fraud) is evidence that its owner has created wealth-and that’s only done by providing other people with things they want. Making money and getting wealthy is therefore the greatest act of benevolence you can provide the world.

And there’s no altruism required. Altruism, viewed as a virtue by Boobus americanus, is actually a debilitating vice. The modern zeitgeist is perverted on the topic of altruism. It sees gifts to the natural objects of affection-family, friends, purposes that excite the giver-as hardly gifts at all. True gifts, in the modern view, are gifts to strangers. Make a gift to a family member and you are subject to gift tax. Make a gift to a 401(c)3 organization that plans to feed Martians if any hungry ones show up and you get a tax deduction. It’s possible that someday Buffett’s or Gates’ children will face a life-or-death problem that could be managed-if they had a billion dollars. If that happens, will Dad look like a charity pervert?

In any event, altruism means sacrificing your own values and welfare for those of someone else, which is always a bad idea. First of all, a sacrifice means giving up a greater for a lesser good-otherwise it wouldn’t be a sacrifice but a price paid for a greater value. So making a sacrifice should be morally repugnant to any self-respecting individual. Don’t confuse concepts like economy, or trading the pleasure of the moment for something better later, with a sacrifice.

One person with a sound view on this was the late Ayn Rand. I remember being in an audience in November 1981, when she gave what I believe was her last speech. A question came up from an unsympathetic audience member. “Miss Rand, what would you do about the poor?” Her answer was, in my view, about the best one liner conceivable: “Make sure you’re not one of them.” What, you might ask, happened to Rand’s not inconsiderable estate when she shed this mortal coil? It appears she left it to one of her acolytes in the obvious hope that he’d continue her work. Regrettably, however, he seems to have been a better sycophant than philosopher, someone you might have thought Rand herself would have seen as a second-hander who’d only sink into deserved obscurity as the figurehead of a minor secular cult. Which proves that there’s risk no matter whom or what you leave your estate to.

What to Do?

This brings us to the problem of whom, exactly, you should leave your money to. And it should be a specific person, not a foundation, committee, or charity of any type. Most people think of their children as the first candidates, which is reasonable and proper. After all, since you brought them up and you’ve known them all their lives, you’d think they’d be ideal recipients. Certainly we’re all genetically predisposed to see our children in the best possible light. Not leaving your money to your children is tantamount to admitting you either brought them up badly, or else that they were just bad raw material. Marcus Aurelius, the most philosophically inclined of Roman emperors, left the empire to his son Commodus-a man who should make Americans see a distant mirror when they watch Baby Bush. Both Marcus and the elder Bush could have done much better had they adopted someone with character and intelligence.

The Romans had a big advantage, in that they typically didn’t put the kind of store we do in genetically related children. Caesar, for instance, adopted Augustus. Adoption for the purpose of inheritance was quite common, and it makes a lot of sense. Why not choose the best person to benefit from your wealth and power, to make them grow, instead of leaving your estate to someone who might have no merit except, as Buffett observed, membership in the lucky sperm club? Leaving a million (or ten, or a hundred) to the right young person or persons might give them a huge head start on turning it into a billion. Which would benefit all mankind, because that billion represents real wealth that, unless it’s frittered away by a charity, a government, or a wastrel-the three enemies of prosperity-will continue to exist even after the heir dies.

That being the case, let me re-emphasize that what the good Buffett and Gates have done for humanity lies in creating the capital in question, not in giving it away. Of course, they have a perfect right to convert their assets to $100 bills, throw them in a huge pile, and put a match to their fortune. But that would be stupid, in that since the currency is a liability of the U.S. Government, the government would be the only beneficiary.

I’m sure you’re thinking of lots of objections to what I’ve been saying; philanthropy is accepted as automatically as…shudder…democracy in today’s world for being an unalloyed good thing. The usual straw men beg to be set up: “What about the blind baby that’s thrown into a trash can?” and such. My answer is that most people would want to see the baby rescued. And the richer the world is, the more likely it is that people will try to do so. In poor countries babies in trashcans are hardly noted; they make headlines here simply because they’re so exceptional. Are we more moral than poor Third Worlders? No. We’re just richer.

What would I do with Buffett’s billions? With that kind of money one could literally buy a country. The place could be made devoid of taxes, regulations, and legislatures. It could make the progress of places like Hong Kong and Dubai seem retarded by comparison. And it would actually, and sustainably, accomplish what the lame-brained Gates Foundation says it hopes to do.

Do I give to charity now? Sure, but strictly on a person-to-person basis. Not withstanding my reservations, it would seem humans are almost programmed to do it. But I’m extremely discriminating, even if somewhat mercurial and eclectic.

What will I do with my money at some point in the future? I think I’ve spelled out the theory and the alternatives. One thing I can promise is that a charity won’t see any of it. Nor, hopefully, any wastrels. Nor, absolutely, any government.

Regards,
Doug Casey
July 28, 2006

Charity? No, Humbug was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.