The Ethos of Giving

Charity has been part of the fabric of all Christian societies. This trait goes back to the practice of the old Jewish communities, and is shared with Islam. In the Middle Ages the Catholic Church was the main vehicle for organized charity and education. The reformation reduced or confiscated church endowments. The tithe, however, was often preserved, which allowed for the continuation of ecclesiastic and charitable activities.

But there was no central authority in charge of social affairs, and voluntary organizations had to fill the gap. This development was pronounced in the United States, where the strict separation of church and state put the care of the social fabric squarely on the congregation, the community and in the last instance on individual citizens. The civic society became an indispensable part of democratic self-governance, permeating all aspects of social, economic, political and religious life.

The Europeans by and large, preferred to rely on an expanding welfare state. This solution is now becoming unsustainable. The clumsy public bureaucracies cannot produce adequate value for the tax money absorbed. Outsourcing of government activities is one way to increase the productivity of publicly financed services. Skeleton funding of voluntary organizations is another. Still there is ample room for individual donors to make their mark, leveraging reform and thus averting or alleviating personal and societal disasters.

The politics of most democratic countries is in a sorry state. Longevity, demography and the inexorably rising cost of health care conspire to bankrupt public finances. Meanwhile the dead hand of centralized socialism remains a threat to free people and a free society. We urgently need ethically driven intellectual enterprises – independent think tanks – which can challenge political correctness and short-sighted party politics in a constructive way.

The ethos of giving is now acquiring new dimensions. Those who, after all, are privileged should not give in to the politics of spite and endless state intervention. The task ahead is to show that the civic society in conjunction with the market mechanism is capable of beating government bureaucracy, hands down. But independent thinking combined with responsible action call for independent financing. The alternative is aimless lamentation and pathetic hand-wringing.

The American way

The steel magnate Andrew Carnegie (1835–1919) famously remarked: “The man who dies rich dies disgraced “. After building a gigantic steel conglomerate and amassing arguably the biggest fortune of his time, Carnegie switched from profit-making to charity on a grand scale (mostly for higher education). The oil tycoon John D. Rockefeller (1839–1937) followed in his footsteps and observed wryly, that spending the money was harder work than earning it.

More recently Bill Gates and Warren Buffett have raised the ante to astronomical levels. In their shadow, giving continues in the United States on a massive scale. Annually organizations and individuals donate more than $300 billion to charitable causes, domestic or abroad. This is about 2.1% of GDP.

This tradition of generous giving is much stronger than in Europe. Granted that American tax deductions (and taxation in general) make life easier for the American capitalist. And the habit of naming buildings or even universities by the donor is an additional inducement. The main driver, though, is a many-edged sense of civic responsibility.

Pay-back time

To earn a fortune takes exceptional energy and some personal gifts. Nevertheless many if not most successful people admit that luck played a part. In any case the success was dependent on the work and loyalty of capable men and women. Above all the fortune-maker had the enormous benefit of operating in a free country with stable institutions, which provides marvelous opportunities for talented individuals. When retirement looms it is pay-back time.

It is a time of reckoning, too. Non-action will channel as sizable chunk of your fortune into the bottomless coffers of the government. And the effects of a mountain of money falling down on the shoulders of ill-prepared heirs should make any capitalist shudder. Better to act when you still have the freedom and the wits to make your own arrangements. There are of course many options, but a considerable portion of rich Americans decide to divert at least a minor (and in some cases the major) part of their fortune to the service of the public good.

We should not forget the ideological angle either. For Europeans in general, public matters are the responsibility of the state and are financed by taxation. Any attempt to profoundly affect public affairs is considered presumptuous and a forlorn undertaking. Not so in the United States. The Americans are proud of their country and their liberty but they are very skeptical about government interference. To spend time and /or money on supplanting or changing the system is considered a civic duty, especially for the well-to-do. A plethora of independent think tanks reflect the creativity and diversity of the present intellectual landscape.

The European predicament

The United States is facing severe political and economic challenges. The country is divided but it will recover as it has done before. Europe is in a much sorrier state. The European Union has its bright spots of apparent stability, but overall it has become a backwater, reflecting the bad demographic situation. Especially the southern fringe suffers from lack of innovation, bad public finances, antiquated corporatist structures and lingering socialism.

The self-inflected Greek crisis should be a wake up call. Greece is not exceptional; most European countries are in the long term heading for a sovereign default. Radical change is mandatory, but the crisis awareness among the electorate has so far been wanting. First the necessary reforms must be conceived by a narrow group of intellectuals. Then the new ideas will be disseminated to a wider public and finally they will have a political impetus. It is a long haul, but the British have demonstrated that it can work.

After the war the United Kingdom became mired in socialism and was drifting towards economic ruin. The Institute for Economic Affairs (IEA), the mother of all think tanks, was established in 1957 to expose the socialist follies and fallacies. IEA has been instrumental in turning the tide of political thinking and practice in Britain. The liberal policies of Margaret Thatcher and Anthony Blair would have been literally unthinkable without the ideological and intellectual groundwork of the institute. David Cameron’s new coalition government continues in the same vain.

Wealthy Europeans have in many ways made important contributions to the public weal. But a more proactive stance is needed to defend democracy as we know it. Europe is facing a period of increasing financial distress. The pervasive, inefficient and unaffordable government machinery must be deconstructed to make room for the personalized initiatives of a civic society. Otherwise the risk is imminent, that populist-fanned public opinion will turn its anger on the market economy in general and on the well-off in particular, destroying liberty and public welfare in the process.