The second-richest man in the world has pledged the bulk of his fortune to the custody of the richest man in the world:
June 26 (Bloomberg) — Warren Buffett, the chairman and chief executive officer of Berkshire Hathaway Inc., will give most of his $44 billion in Berkshire stock to the Bill & Melinda Gates Foundation, entrusting his philanthropic legacy to the only person richer than him.
Buffett will donate the shares in stages, beginning in July, according to a letter to Gates and his wife posted on Berkshire’s Web site yesterday. The pledge, valued at $30.7 billion based on Berkshire’s June 23 share price, is the largest charitable commitment in history, data compiled by the Chronicle of Philanthropy show. He pledged stock worth another $6.3 billion to Buffett family foundations. Buffett, 75, is the world’s second- richest man after his friend Gates, the chairman of Microsoft Corp.
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Buffett’s gift came with three conditions for the Gates foundation: Bill or Melinda Gates must be alive and active in its administration; it must continue to qualify as a charity; and each year it must give away an amount equal to the previous year’s Berkshire gift, plus another 5 percent of net assets. Buffett gave the foundation two years to abide by the third requirement.
“It’s the opposite of how big billionaire egos really function,” said Armstrong of Buffett’s decision. “Most of these guys want a foundation with their names on it for vanity reasons,” he said. “I think he genuinely believes that Bill and Melinda are far more skilled than he at philanthropy.”
The Gates Foundation thanked Buffett in a statement on its Web site. “The impact of Warren’s generosity will not be fully understood for decades,” the statement said.
I suppose I should rejoice at the prospect of such vast sums being dedicated to research on alleviating suffering but I have some concerns that unless it’s very prudently managed an infusion of cash into medical research may paradoxically reduce the amount and variety of medical research being done.
The notion that an increase in the amount of money available for medical research will increase the amount of medical research being conducted presupposes either that there’s a demand bottleneck in medical research or that current researchers are less productive than they might be.
I don’t think there’s a great deal of evidence for a demand bottleneck. As counter-evidence for this I’ve pointed out before that pharmaceutical company research budgets vary with inflation rather than with profits. But I think there’s quite a bit of evidence for a supply bottleneck caused in large part by regulation and the operation of monopolies and cartels. For supporting evidence on this see my posts on patents, medical education, and creating a cartel in health care.
Will the productivity of individual researchers increase? Why? I suspect that productivity is conditioned more by the job than the individual.
In that sort of environment a sudden infusion of cash might tend, marginally, to drive current researchers into the narrow areas of research favored by the new grants and away from their current researches. Net medical research the same. In the present state of science I have my doubts about the portability of credentialing among narrow specialties. In the near term the additional monies would do little to create new researchers.
Consequently, with more money chasing the same supply of researchers it seems to me that the net effect might be a raise for current medical researchers in the areas to which Foundation grants are directed.
UPDATE: CNN has also reported on this story. James Joyner of Outside the Beltway comments and provides additional links.
The Gates’ have contacts in the international medical community, and would not hesitate to finance research–even build new research institutes–in China, India, Europe, or anywhere else they felt the funding would bring results. In other words, they can break the bottleneck, or make more bottles.
I am concerned that they may not be as hardheaded in the spending of this money as Bill was in building the Microsoft empire. That would be bad. There are far too many poor, sick, uneducated and uneducable people in the world. If the couple does not take a realistic attitude to their funds disbursement, they could easily create a lot more miserable wretches, unwittingly.
Bad politics is the world’s biggest problem–much bigger a problem than hunger, poverty, disease, terrorism, “overpopulation”, “global warming”, pollution, or lack of education. If the Gates’ do not reckon with bad politics they may do more harm than good, no matter how much money they give out. A soft heart combined with a soft head can be deadly to innocent bystanders, particularly when well endowed with throwaway funds.