Doing good by doing well
There is a lot of talk about 鈥渟ocial entrepreneurship鈥� and 鈥淒oing Well by Doing Good鈥�. What is almost completely ignored, however, is the inherent social function of all entrepreneurship. What people need to become more familiar with is the opposite of the usual phrase; they need to become familiar with the notion of Doing Good by Doing Well. A great primer on the social function of all entrepreneurship is the essay by Mises.
In recent years, those who earn their wealth from regular, 鈥渘on-social鈥� entrepreneurship have been expected to give nearly all of it to charity before they die, under the prodding and the example of billionaires like Bill Gates and Warren Buffet.
Now there鈥檚 nothing anti-liberal about voluntary charitable giving (and certain kinds charitable giving are positively pro-liberty: like, of course, donations to organizations like the and the ). However, much charity of the 鈥渂leeding heart鈥� variety is rife with inherent inefficiencies and negative impacts (some of which are covered in chapter 18 of by Walter Block), especially when compared to the alternative of investing resources in business instead.
One billionaire who, to some extent, realizes this is Carlos Slim.
From a Wall Street Journal :
The Mexican billionaire, who Forbes still lists as the world鈥檚 richest man, said in 2007 that he could do more to help fight poverty by building businesses than by 鈥渂eing a Santa Claus.鈥�
Mr. Slim鈥檚 signature also has been noticeably absent from the Gates-Buffett Giving Pledge. At a conference in Syndey last month, Mr. Slim said that charity accomplishes little.
鈥淭he only way to fight poverty is with employment,鈥� he said.
The man has a point, although he makes the common mistake of thinking it鈥檚 about jobs. Ultimately, it鈥檚 not about jobs; it鈥檚 about consumers鈥� goods and services.
For example, Warren Buffet is obviously an extremely competent investor. Successful investing not only enriches the investor; it directs capital toward enterprises that most abundantly provide consumers鈥� goods and services to the masses. Rather than giving it all away to charity, Buffet鈥檚 billions would probably be directed more efficaciously for society by him personally (or by other gurus commissioned by him) under the guidance of profit/loss signals.
And it鈥檚 not just money. Time, expertise, and judgment all serve humanity most effectively in the market. For example, Microsoft did a lot better under Bill Gates than it has under Steve Ballmer (as you can see from ). So it is arguable that, rather than spending his time on his foundation, Gates would help the needy more by returning to the Microsoft helm, and hopefully improving Microsoft鈥檚 products and the delivery of those products, which in turn could improve global white collar productivity, which in turn could make the world economy run more efficiently, which in turn would free up resources for the production of more consumers鈥� goods and services for the masses.
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