By Dr. Nayyer Ali

Buffett and His Billions

Warren Buffett, the CEO of Berkshire Hathaway, and the second-richest man alive, announced last week that he is donating 37 billion dollars to charity. Don’t feel too bad for him, this still leaves him 13 billion dollars to struggle on. Not only has he chosen to donate this vast sum, but he is giving it to the Bill and Melinda Gates Foundation, thereby boosting its asset base to 60 billion dollars when the transfer is completed (which will actually take several years, and Buffet is only moving about two billion dollars to start). Bill Gates is the richest man alive, and was made so by the success of his company Microsoft, a name the reader may be well familiar with.
Gates is actually stepping down as President of Microsoft in the next two years so he can concentrate on the activities of his charitable foundation. He has set the ambitious goal of conquering the major diseases that afflict the poor around the world. The Gates Foundation has played a huge role in childhood vaccination programs, TB and AIDS programs, and is the single-biggest source of funding on malaria vaccine research. Gates also has done tremendous work on education programs around the world.
Gates is able to actually spend almost two billion dollars per year. Compare that to the annual budget of the UN which is 14 billion, or the annual foreign aid budget of the US which is 15 billion dollars. With Buffett’s money, the Gates Foundation could up spending into the four billion dollar range annually. Unlike the US and the UN, whose aid programs are eaten up by bureaucracy and political considerations, the Gates Foundation is able to act decisively on real problems. For example, the biggest chunks of US aid money goes to Israel, Egypt, and Pakistan, and these recipients are chosen for political reasons, not on the basis of serving the greatest need. In addition, UN and US money often gets spent on administration, expensive consultants, and poorly designed and run projects. Accountability is often lacking. In many ways, the Gates Foundation exerts as much useful impact on the lives of the very poor than does the official aid spending of the US or the UN programs do.
What is startling to think about is not how unusual Gates is, but how sad it is that there are not many more like him. In fact the amount of wealth that is available to fund charity is staggering. The most recent Federal Reserve Bank data on the US economy calculated that the net worth of all US households now exceeded 55 trillion dollars. That’s right, 55 trillion, not billion. If people spared just 1% of this wealth pile per year for the poor, it would mean 550 billion dollars being generated just by Americans, not to mention the wealthy across the globe.
Now one might object that not all that wealth is readily available. Some of that represents the equity in people’s homes, and some is the value of pension assets. This is true, but even if we subtracted those elements, we would still have over 30 trillion dollars in accessible wealth.
Islam requires that the wealthy do in fact pay out from this. If all Americans had to pay zakat, which is a 2.5% tax on net worth not including personal residence and effects, the US would generate over 600 billion dollars per year for the impoverished. Even in Pakistan, where household wealth is about 500 billion dollars, full payment of zakat should generate at least 6-10 billion dollars per year (up to 600 billion rupees per year).
Zakat, if actually practiced by Muslims, would end extreme poverty. The fact that it persists indicates that many Muslims who are obligated do not in fact fully pay their zakat. What Gates and Buffett are doing is an excellent example of what would happen on a massive scale if Muslims actually did fulfill the third, and socially critical, pillar of Islam. Comments can reach me at Nali@socal.rr.com.

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