by Doug Casey, International Man:

International Man: Let’s start by defining our terms. The Merriam-Webster Dictionary defines philanthropist as “one who makes an active effort to promote human welfare.”

What do you make of this concept?

Doug Casey: Who can possibly be against philanthropy based on that definition?

The problem is that most philanthropists don’t actually care so much about their fellow man. They care about building their own reputation—their so-called legacy—and seeming like a good guy. They give money to organizations that, in turn, are supposed to “do good” with it. In fact, most philanthropy is irresponsible; some is outright destructive.

Everybody in the public eye wants to look like a philanthropist. However, I think the whole concept has been perverted and turned on its head. A little later in this interview I’d like to talk about what a real philanthropist should do.

Most people claiming to be philanthropists are just guilt-ridden. They’re unhappy with what they’ve done with their own lives, or done to other people, and are trying to make up for it by dispensing money.

I have no problem with somebody who wants to build a museum, a library, or a stadium with their name on it. Those things may or may not be the most productive use of capital, but they certainly do no harm. I know a number of wealthy philanthropists; I consider them decent human beings—otherwise I wouldn’t associate with them. That said, most are misguided in this regard.

The problem is that most philanthropy goes to charities that are supposed to help the poor. I don’t like them for several reasons. In brief, they’re often counterproductive toward those they’re supposed to help, they often help the wrong people, they send the wrong ethical message, and they’re shockingly wasteful.

First, and least important, they typically have giant overheads. They typically allocate anywhere from 10 to 50% or more of donations to fees—commissions—for raising money. Then they have huge administrative overheads on what’s left. Top executives are sometimes paid millions of dollars per year. They put themselves up in lavish office buildings.

Public charities are basically bureaucracies. When you look at their income statements and balance sheets, which are usually quite obfuscating, you find very little of the money actually goes to the supposed beneficiaries.

And even after some finally arrives “on the ground,” much of it is wasted. It’s disgusting to see the hotshot yuppies self-righteously driving around the African bush in new Land Rovers, pretending they’re eliminating poverty. In fact most of the money goes to showing off, virtue signaling, self-justification, writing worthless reports, high living, and more overhead.

Worse, some of these charities are actually destructive to the people they’re supposed to help.

When money is given away by NGOs, it’s almost as bad as government welfare. It makes it unnecessary for the recipient to produce and that tends to cement him to his current station in life. The very act of making an urgent situation non-urgent takes away the incentive, the urgency, to improve.

But it’s even worse than that. Even when people are starving through no fault of their own. Feeding the poor and clothing the naked may sound good in theory, but it’s usually a bad idea in practice.

Charities and NGOs tend to destroy the local economy when they give food to a starving region. I can understand the impulse if there’s a temporary disaster, like a flood or an earthquake. But most disasters are manufactured by a local government. Then outsiders come in and turn a temporary problem into a permanent condition.

How do they do that?

When free food hits the local market, it typically drives the price of food down so low that the local farmers can’t produce profitably.

What happens when you drive the local farmers out of business? They stop planting and move to the cities to take advantage of the handouts. Then there’s no crop the next year, and the shortage of food becomes even worse. And permanent. The very act of these charities trying to help people in famine-stricken areas prolongs the famine. And creates lots of social and political distortions in the bargain.

The same thing is true of clothing.

Backward countries all had clothing industries before the arrival of Western charities. Believe it or not, the natives weren’t all running around naked. But when you import shiploads of cheap used clothes, local artisans and manufacturers are bankrupted, and their workers unemployed. It’s tough to compete with free stuff. The recipients also look like beggars and street people from the US.

Charities corrupt the recipients. Giving money away usually puts it in the hands of people who don’t deserve it. That sends the wrong moral message. People should have, or get, things because they deserve them. And you deserve things because you earn them, by exchange of value for value. In other words, wealth should be a consequence of doing things that improve the state of the world. Endowing groups or individuals because they happen to have had some bad luck or are perpetual losers is actually immoral.

Charities and NGOs in Third World countries are like the US government putting people on welfare. And just as destructive. The givers feel like big shots and feel good about themselves. The recipients are degraded. They’re transformed from simply being poor into mooches and beggars. That makes charities largely counterproductive. The main beneficiaries of charitable giving aren’t the intended recipients, but the givers. They get some tax benefits, of course, but they mainly get the holy high of do-goodism. Frankly, the idea of charity itself is corrupting to both parties in the transaction.

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