MacKenzie Bezos, now-ex-wife of Amazon founder Jeff Bezos, made headlines when she got $36 billion as her divorce settlement, and then promptly made more headlines when she joined the Giving Pledge, an initiative whereby the world’s wealthiest promise to give a chunk of their wealth to charity.

Sounds nice, and in MacKenzie Bezos’ case, there might even be some utility too doing so.

Billionaires like Jeff Bezos, Bill Gates, Larry Ellison et al, are very smart people who’ve shown themselves to be very good at creating wealth. In their amassing of their fortunes, they’ve created countless thousands of jobs, and invented products that have made the lives of countless millions, perhaps even billions, of people better. They may have started out with small amounts of saved or borrowed cash, but along the way they took what they earned, reinvested it, and grew their companies to the point where those companies could go public. Then, they took the monies from those initial public offerings, and e expanded their businesses even more. In other words, they’re really good at turning money into more money, which means jobs, goods, services, and cascading benefits across many chains (and taxes. Oh, yes, taxes. Paid by every job, every good, every service).

A well-invested dollar grows, and in growing, benefits the economy.

What happens, however, if that dollar is given to someone who doesn’t invest it? Sure, that someone might use it for a useful consumer good, perhaps something as basic as food, clothing, or shelter. Or, that someone might use it for entertainment of some form (food, drink, a movie, a game console, a book, a magazine, etc). All of these uses pay into someone else’s pocket, of course. BUT, this dollar given in charity is a dollar that doesn’t get used productively by someone who is really good at using money productively.

There certainly can be good utility and productive benefit from the charitable dollar. Countless people have suffered setbacks and times of economic hardship, and the charity of strangers has served to get them back on their feet, after which they can return to productivity. But, again, is the best source of that charity someone who can create even more productivity with it if he invests it as only a small fraction of the populace knows how?

Yes, there’s something touchy-feely about billionaires “giving back,” despite the false implication that society “gave” their wealth to them. In a free market, those who bought their products benefited as much as they did by selling those products. That’s the win-win, positive-sum of capitalism. There’s something in us that makes us feel good in helping others, and in seeing acts of charity and kindness. But, assessed in terms of best utility, in what actually benefits society more, the wealth creator who gives away a billion dollars does society a disservice when he could, instead, have used that billion dollars to create many thousands of jobs, which would make many thousands of people into wealth creators. Give a man a fish, he eats for a day. Hire a man to fish, teach him how, provide him with equipment and infrastructure, many eat for decades.

There can come a time when a billionaire’s ability to create wealth starts to diminish. He may start running out of ideas, or he may grow tired of working. That’s when the utility mathematics can change, and a well-directed charitable giving may indeed be a better use of his dollar. Getting people over rough patches and back on their feet does benefit society and the economy, after all (but, lest someone translate that into an endorsement of government largesse – just stop right there. It’s not charity when you give away someone else’s money at the business end of a gun).

Back to MacKenzie Bezos. Without knowing anything about her business acumen, it’s not out of bounds to ponder that she may not be the visionary that Jeff has proven to be. So, it may very well be that there’s greater utility in her pledging a chunk of her $36B to charity (provided the charities actually do good work – a legitimate “if”). But, as a general principle, the idea of billionaires forking over their billions because it’s “giving back” and the better thing to do doesn’t stand up to scrutiny and doesn’t assure that society will be better off for it. It’s important that we judge such matters with the head, and not with the heart.

One final note. If billionaires felt that the government would be as good at providing to benefit to others as they or their selected charities are, there’d be no need for donating. They could simply let the government take it all, via estate taxation, upon their death. Or, they could cut giant checks to the government. That they don’t, that they all set up charitable trusts (which, conveniently, keep the government’s hands off their money), is FAR more telling than anything they tell the rest of us about paying more in taxes.

Peter Venetoklis

About Peter Venetoklis

I am twice-retired, a former rocket engineer and a former small business owner. At the very least, it makes for interesting party conversation. I'm also a life-long libertarian, I engage in an expanse of entertainments, and I squabble for sport.

Nowadays, I spend a good bit of my time arguing politics and editing this website.


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