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.
