Posner Response to Comments on Charitable Foundations (with a Brief Note on Drunken Driving as Well)
There were many interesting comments, as usual. Several remind that the Gates Foundation gives extensively to education as well as to health needs of people in poor countries. Here too there is a public relations aspect--and more when the gifts to education are for computer software--and that does raise the question why the taxpayer should be chipping in by virtue of the favored tax treatment of charity. (One comment calls me a skeptic of the free market for questioning charitable foundations. A tax exemption for charity-cum-PR is not an obvious example of the operation of a free market. Another thinks I'm a Scrooge for questioning the altruistic motives of billionaires! So Gates and Buffett have succeeded in seducing liberalis, or at least one liberal.)
I am accused of heartlessness in failing to express enthusiasm for donations intended to improve health in the Third World. The questions I raise about such donations are twofold, apart from the tax-break issue just mentioned. The first is whether wealthy individuals should be permitted to have as it were their own foreign policy. The second is whether direct expenditures on health are efficient means of improving the lot of Third World peoples. We know that health is far more a function of education and income than of medical treatment, and I would therefore give priority to efforts to increase education and income in these countries, recognizing too that their poverty is in major part a result of a lack of a good legal and political infrastructure. If these problems aren't fixed, health expenditures aren't likely to do much long-term good, especially if they result in a population increase in nations already severely overpopulated.
It strikes me as also quite possible that Gates and Buffett and the other multibillionaires would do more good for the world simply by ijnvesting their accumulated personal wealth in commercial enterprises, increasing the worldwide pool of capital, resulting in lower interest rates and more investment, including investment in new drugs!
I would finally like to acknowledge belatedly the very interesting article by David Pozen forthcoming in the Yale Law Journal, entitled "Tax Expenditures as Foreign Aid"--my point exactly, but he made it first, though I was not aware of his paper when I wrote my original post.
Regarding drunk driving, I thank Professor James Leitzel for referring me to a report which finds that only 2 percent of drunk drivers are arrested. www.aaafoundation.org/pdf/DrunkDriving-SeekingAdditionalSolutions.pdf. (He also cites an earlier article which finds that only one-half of one percent are arrested. http://vicesquad.blogspot.com/2007_01_01_vicesquad_archive.htm#1167718722584.) This reinforces my suggestion that ex ante regulation probably has little deterrent effect, and that it might be more efficient to rely on ex post regulation--severe punishment for a drunk driver who actually injures someone other than himself and (possibly) his adult passengers.