Charity

WSJ: The Charity Revolt. Liberals oppose a tax hike on rich donors.

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You knew it would happen. While I certainly don’t give just to get tax breaks, I certainly don’t want to double it by giving through taxes and then again outside of them. Obama has no clue about charity, after all, he’s never been to Sunday School, or perhaps if he did he was too busy scheming how to game the teacher into giving him special treatment for all of his “struggles”.

Among those shocked by President Obama’s 2010 budget, the most surprising are the true-blue liberals who run most of America’s nonprofits, universities and charities. How dare he limit tax deductions for charitable giving! They’re afraid they’ll get fewer donations, but they should be more concerned that Mr. Obama’s policies will shove them aside in favor of the New Charity State.

And to keep the record straight. All evidence has made clear that, though the liberals run most of the non-religious charities, and seem to do a lot of very visible charity work (to get praise and honor), the conservatives are by far the biggest charity donors in all aspects, and most of it is done anonymously. Who really cares about people, a visible credit seeker or a private citizen donating quietly and anonymously? But anyway, back to the story.

What did these nonprofit liberals expect, anyway? Mr. Obama is proposing a vast expansion of the entitlement state, and he has to find some way to pay for it. So logically enough, one of his ideas for funding public welfare is to reduce the tax benefit for private charity. His budget proposes to raise the top personal income tax rate to 39.6% in 2011 from 35%, and the 33% rate to 36% while reducing the tax benefit from itemized deductions for the top two brackets to 28% from 35% and 33%, respectively. The White House estimates the deduction reduction will yield $318 billion in revenue over 10 years.

From the Ivy League to the United Jewish Appeal, petitions and manifestos are in the works. The Independent Sector, otherwise eager to praise the Obama budget, worries the tax change “could be a disincentive to some donors.” According to the Center on Philanthropy at Indiana University, total itemized contributions from the highest income households would have dropped 4.8% — or $3.87 billion — in 2006 if the Obama policy had been in place. That year, Americans gave $186.6 billion to charity, more than 40% from those in the highest tax bracket. A back of the envelope calculation by the Tax Policy Center, a left-of-center think tank, estimates the Obama plan will reduce annual giving by 2%, or some $9 billion.

…Mr. Orszag revealed the real agenda at work when he pointed out that the money taken from the “rich” would be used to fund such Obama state-run charities as universal health care. The argument is that any potential declines in private gifts, whether to universities or foundations, will be balanced by increases in government grants paid with higher taxes — redistribution by another means. This is how Europe’s welfare state works: Taxes are so high that private citizens have come to believe it is only the state’s duty to support cultural institutions and public welfare. The ambit for private giving shrinks.

Told you this would happen. My brother once said Obama wants to create a country of human cattle that need to be tended and manipulated without choice, only the state matters. He’s dead on. Obama’s a nightmare to free agency and freedom in general.

America has always operated on a different philosophy, going back to Tocqueville’s discovery of thousands of private associations that sustained communities without a commanding state. We doubt that a tax benefit is what drives most giving even today. The exception may be the confiscatory death tax that drives many of the superrich to form foundations to avoid the tax. But we suspect that without the death tax the wealthy would give even more of their income away.

Americans of all income levels have long given generously, notably in the 1980s as income tax rates fell and the economy boomed. Over the last five decades, American giving overall has hardly deviated from 2% of personal income, according to the Tax Foundation. In an ideal world, the U.S. would eliminate most tax deductions, including the one for charity, in return for a simpler, flatter tax that would help create more wealth to give away. With his many new income-limited tax credits and deduction phase-outs, however, Mr. Obama is sprinting in the opposite direction.

Meanwhile, the White House may have underestimated the power of the liberal nonprofit lobby. The charity deduction cut is the only one of the President’s many tax increases that Democrats on Capitol Hill have publicly criticized. Politics hath no fury like a rich liberal scorned.

Read the full article here.

Video: Escaped The Plantation, Voting McCain

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Perhaps the best speech given during this entire campaign cycle.

The O-Team
More genius by ZO. See more great clips here

McCain Proves Superior At Saddleback

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I hope everyone had a chance  watch the forum with McCain and Barry Oblivious. If not, please do so below. While Obama was struggling to begin half of his responses with uhhh, ummm, I, I, I think…, McCain had clear ideas with conviction in them and his whole presence was much more impressive than I expected. It’s good to see the relatively unscripted side of these two (though of course they both have somewhat memorized positions on all of these issues).

Obama

Part 1 – Part 2 – Part 3 – Part 4 – Part 5 – Part 6

McCain

Part 1 – Part 2 – Part 3 – Part 4 – Part 5

Related articles…

Barack Obama, Abortion Extremist by Rich Lowry

Who Really Cares, Right vs. Left in Charity & Service…

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In “Who Really Cares: America’s Charity Divide – Who Gives, Who Doesn’t, and Why It Matters”, Arthur C. Brooks uses hard data to prove that, when it comes to charitable giving, conservatives – especially religious conservatives – are far more generous than liberals, who seem to believe that “compassion” begins and ends with voting for government handouts.

  • Conservative households in America donate 30% more money to charity each year than liberal households, even in spite of lower average incomes
  • Conservatives are also more generous in other ways, such as blood donations, and volunteer work. In fact, if liberals gave blood like conservatives do, the blood supply in the U.S. would jump by about 45%
  • People who mistrust big government give more than those who rely on the government to take care of the poor. This includes giving and volunteering even to traditionally “progressive causes” such as the arts and the environment
  • Conservative “red” states give away far more of their incomes than liberal “blue” states do
  • Religious people give away four times more money each year than secularists. This is not just because of giving to churches – religious people are 10 percent more likely than secularists to give money to explicitly nonreligious charities
  • Religious people are far more generous than secularists with their time. For instance, a religious person is 57% more likely than a secularist to help a homeless person
  • Religious people are also more generous in informal ways, such as giving money to family members, and behaving honestly
  • A working poor family without welfare support gives, on average, more than three times as much money to charity each year as a family with the same total income that receives welfare support. In other words, poverty does not discourage charity in America — but welfare does
  • People raised in intact and religious families are more charitable than those who are not. For instance, married parents are 9 percentage points more likely to give money than divorced parents, and 29 points more likely than never-married parents
  • Charitable giving spurs the economy: at the national level, a $1 increase in giving per person stimulates a $19 increase in GDP per capita
  • Americans give far more money and are far more likely to volunteer their time than citizens of any European country. For example, the average American family gives three and a half times as much as a French family, seven times as much as a German family, and 14 times as much as an Italian family
  • Charitable giving and volunteering improve physical health and happiness, and lead to better citizenship — whereheas many government policies that discourage private charitable behavior have negative effects

While Politicklish.com takes no money from sales or interest in this book, and is certainly not trying to sling the book for the author (who we don’t know from anyone), we’re always in favor of exposing data to the public, and this book’s full of data. Read for yourself if you like.

Kenyan Economist: Stop The Aid To Africa!

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There’s a incredibly insightful article in Spiegel about the damage foreign aid brings to third world countries in very plain language. These are things I and others have been saying for years, but when you have an economist from Kenya saying the same, maybe people will believe it now.

The Kenyan economics expert James Shikwati, 35, says that aid to Africa does more harm than good. The avid proponent of globalization spoke with SPIEGEL about the disastrous effects of Western development policy in Africa, corrupt rulers, and the tendency to overstate the AIDS problem.

SPIEGEL:

Mr. Shikwati, the G8 summit at Gleneagles is about to beef up the development aid for Africa…

Shikwati: … for God’s sake, please just stop.

SPIEGEL: Stop? The industrialized nations of the West want to eliminate hunger and poverty.

Shikwati: Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor.

SPIEGEL: Do you have an explanation for this paradox?

Shikwati: Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound: Development aid is one of the reasons for Africa’s problems. If the West were to cancel these payments, normal Africans wouldn’t even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.

SPIEGEL: Even in a country like Kenya, people are starving to death each year. Someone has got to help them.

Shikwati: But it has to be the Kenyans themselves who help these people. When there’s a drought in a region of Kenya, our corrupt politicians reflexively cry out for more help. This call then reaches the United Nations World Food Program — which is a massive agency of apparatchiks who are in the absurd situation of, on the one hand, being dedicated to the fight against hunger while, on the other hand, being faced with unemployment were hunger actually eliminated. It’s only natural that they willingly accept the plea for more help. And it’s not uncommon that they demand a little more money than the respective African government originally requested. They then forward that request to their headquarters, and before long, several thousands tons of corn are shipped to Africa …

SPIEGEL: … corn that predominantly comes from highly-subsidized European and American farmers …

Shikwati: … and at some point, this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unsrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the UN’s World Food Program. And because the farmers go under in the face of this pressure, Kenya would have no reserves to draw on if there actually were a famine next year. It’s a simple but fatal cycle.

SPIEGEL: If the World Food Program didn’t do anything, the people would starve.

Shikwati: I don’t think so. In such a case, the Kenyans, for a change, would be forced to initiate trade relations with Uganda or Tanzania, and buy their food there. This type of trade is vital for Africa. It would force us to improve our own infrastructure, while making national borders — drawn by the Europeans by the way — more permeable. It would also force us to establish laws favoring market economy.

SPIEGEL: Would Africa actually be able to solve these problems on its own?

Shikwati: Of course. Hunger should not be a problem in most of the countries south of the Sahara. In addition, there are vast natural resources: oil, gold, diamonds. Africa is always only portrayed as a continent of suffering, but most figures are vastly exaggerated. In the industrial nations, there’s a sense that Africa would go under without development aid. But believe me, Africa existed before you Europeans came along. And we didn’t do all that poorly either.

SPIEGEL: But AIDS didn’t exist at that time.

Shikwati: If one were to believe all the horrorifying reports, then all Kenyans should actually be dead by now. But now, tests are being carried out everywhere, and it turns out that the figures were vastly exaggerated. It’s not three million Kenyans that are infected. All of the sudden, it’s only about one million. Malaria is just as much of a problem, but people rarely talk about that.

SPIEGEL: And why’s that?

Shikwati: AIDS is big business, maybe Africa’s biggest business. There’s nothing else that can generate as much aid money as shocking figures on AIDS. AIDS is a political disease here, and we should be very skeptical.

SPIEGEL: The Americans and Europeans have frozen funds previously pledged to Kenya. The country is too corrupt, they say.

Shikwati: I am afraid, though, that the money will still be transfered before long. After all, it has to go somewhere. Unfortunately, the Europeans’ devastating urge to do good can no longer be countered with reason. It makes no sense whatsoever that directly after the new Kenyan government was elected — a leadership change that ended the dictatorship of Daniel arap Mois — the faucets were suddenly opened and streams of money poured into the country.

SPIEGEL: Such aid is usually earmarked for a specific objective, though.

Shikwati: That doesn’t change anything. Millions of dollars earmarked for the fight against AIDS are still stashed away in Kenyan bank accounts and have not been spent. Our politicians were overwhelmed with money, and they try to siphon off as much as possible. The late tyrant of the Central African Republic, Jean Bedel Bokassa, cynically summed it up by saying: “The French government pays for everything in our country. We ask the French for money. We get it, and then we waste it.”

SPIEGEL: In the West, there are many compassionate citizens wanting to help Africa. Each year, they donate money and pack their old clothes into collection bags …

Shikwati: … and they flood our markets with that stuff. We can buy these donated clothes cheaply at our so-called Mitumba markets. There are Germans who spend a few dollars to get used Bayern Munich or Werder Bremen jerseys, in other words, clothes that that some German kids sent to Africa for a good cause. After buying these jerseys, they auction them off at Ebay and send them back to Germany — for three times the price. That’s insanity …

SPIEGEL: … and hopefully an exception.

Shikwati: Why do we get these mountains of clothes? No one is freezing here. Instead, our tailors lose their livlihoods. They’re in the same position as our farmers. No one in the low-wage world of Africa can be cost-efficient enough to keep pace with donated products. In 1997, 137,000 workers were employed in Nigeria’s textile industry. By 2003, the figure had dropped to 57,000. The results are the same in all other areas where overwhelming helpfulness and fragile African markets collide.

SPIEGEL: Following World War II, Germany only managed to get back on its feet because the Americans poured money into the country through the Marshall Plan. Wouldn’t that qualify as successful development aid?Shikwati: In Germany’s case, only the destroyed infrastructure had to be repaired. Despite the economic crisis of the Weimar Republic, Germany was a highly- industrialized country before the war. The damages created by the tsunami in Thailand can also be fixed with a little money and some reconstruction aid. Africa, however, must take the first steps into modernity on its own. There must be a change in mentality. We have to stop perceiving ourselves as beggars. These days, Africans only perceive themselves as victims. On the other hand, no one can really picture an African as a businessman. In order to change the current situation, it would be helpful if the aid organizations were to pull out.

Shikwati: … jobs that were created artificially in the first place and that distort reality. Jobs with foreign aid organizations are, of course, quite popular, and they can be very selective in choosing the best people. When an aid organization needs a driver, dozens apply for the job. And because it’s unacceptable that the aid worker’s chauffeur only speaks his own tribal language, an applicant is needed who also speaks English fluently — and, ideally, one who is also well mannered. So you end up with some African biochemist driving an aid worker around, distributing European food, and forcing local farmers out of their jobs. That’s just crazy!

SPIEGEL: The German government takes pride in precisely monitoring the recipients of its funds.

Shikwati: And what’s the result? A disaster. The German government threw money right at Rwanda’s president Paul Kagame. This is a man who has the deaths of a million people on his conscience — people that his army killed in the neighboring country of Congo.

SPIEGEL: What are the Germans supposed to do?

Shikwati: If they really want to fight poverty, they should completely halt development aid and give Africa the opportunity to ensure its own survival. Currently, Africa is like a child that immediately cries for its babysitter when something goes wrong. Africa should stand on its own two feet.

Interview conducted by Thilo Thielke

Translated from the German by Patrick Kessler

READ IT HERE

SPIEGEL: If they did that, many jobs would be immediately lost …

Keeping The Down Down: “Charities” Try To Corner The Market on The Meek

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There’s an opinion piece in the Wall Street Journal (online.wsj.com) on the recent development of microloans and other economic stimulus to poor countries, in this case Mexico, which has caused some outcry among non-profits and so called “social innovators”. The apparently self-interested non-profits are claiming that these microlenders are earning too much profit providing loans to micro-entrepeneurs.

In his “reflections” on “microfinance interest rates and profits,” Mr. Rosenberg writes that “overcharg[ing]” clients under a nonprofit model is OK because it is done for the sake of future borrowers. But when profits go to providers of capital through dividends, then there is a “conflict between the welfare of clients and the welfare of investors.” It’s not the commercialization of the lending, we’re told, but the “size” of the profits that must be scrutinized.

What seems to elude Mr. Rosenberg is the fact that there is no way for him to know whether there is “overcharg[ing]” or by how much. That information can be delivered only by the market, when innovative new entrants see they can provide services at a better price. This has been happening since for-profit microfinance began to emerge, and the result has been greater competition. Rates have been coming down even as the demand for and availability of services have gone up.

Now, no one wants lenders to take advantage, and I don’t believe they are, but from where I sit a little capitalism is just what is needed in these areas and as more lending takes place, and more businesses rise, the miracle of the free market will level and lower any issues there might be, while the tide lifts all dinghies in this case. In the mean time, money is being pumped into places that desperately need it and into pockets that never would have access otherwise. Read the article and decide for yourself. Being a microlender myself, I’m encouraged by what I’ve seen.