Deep Thoughts: on philanthropy

The welfare state is waning. Bring on the philanthropists
The 19th century was the age of capitalism, the 20th the age of socialism. It seems that the 21st will be the age of charity
By Simon Jenkins

When the world's second-richest man gives most of his money to the world's richest man we do well to count our spoons. Warren Buffett has given $31bn to Bill Gates to add to his $29bn foundation. Gates replied with a quote from Adam Smith on the virtue of philanthropy. He omitted another quote from the great man, that merchants "seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public". What is going on?

The 19th century was the age of capitalism, the 20th the age of socialism. The 21st is to be the age of charity, or so we are given to hope. But as Margaret Thatcher said in her sermon on the Good Samaritan, "Remember, he had to earn his money first." Greed is back, but it is greed with acquired nobility.

Truly large fortunes are fiendishly difficult to dispose of. Men have bought property, built mansions, blown everything on casinos, horses and women. They have given money to their children to do likewise. Peerages, yachts, football teams, opera houses, ranches in Latin America have come and usually gone. Even the wildest imagination is eventually exhausted. Buffett claims to believe in meritocracy and is thus forcing his children to rub along on a billion each. Since leaving cash in a bank sticks in the entrepreneurial craw, the rest must go somewhere. In desperation Buffett sought help from the Gateses.

On Monday at the New York Sheraton Buffett joined Bill and Melinda Gates to reveal what they might do with their conjoined fortune. Merely supplementing the welfare state with cash for schools and hospitals seemed beneath the dignity of these global tycoons. As CNN's Ted Turner once gave $1bn to the United Nations, so the Gates team are to alleviate world poverty and disease, and improve access to technology. "Millions of people round the world are facing health problems," revealed Buffett, while Mrs Gates added that malaria medicines "are hard to take if people have insufficient food to swallow".

When asked why they were not giving their estimated $3bn a year to government for state aid, Buffett treated the question as absurd: "Bill and Melinda will do a better job than ... the federal treasury." He declared that philanthropists "should seek out talent to distribute their money just as they sought out talent to acquire it". A similar approach is taken by Turner, George Soros and Sandy Weill of Citigroup. Those who have tired of making money are finding new challenges in their philanthropage.

Such private giving is still insignificant compared with what governments do. Next year Britain's international aid will be twice as much as that of the new Gates foundation. But in the 19th century few would have predicted that the state would supplant private charity. The movement from voluntary to compulsory welfare began with a shift in moral imagination. I see no reason why that shift should not be reversed.

In Britain it is still far off. Apart from a few names such as Sainsbury, Weston and Rausing, private giving is nowhere near the American league. This is despite the dramatic shift in tax generosity during the 80s, when marginal income tax fell from over 80% to 40%, leading to a stark widening in the gap between very rich and middling poor. What was significant was that Labour's Tony Blair and Gordon Brown accepted this shift and have promoted it in power.

The trend under Tories and Labour to discredit the "public-service ethos" has been marked. In the mouths of ministers, public = bad, private = good is axiomatic. Hence the slump in morale that envelops every arm of government, evidenced in the churning of "ongoing reform" to health, education and law and order. Not a government department seems "fit for purpose" - not schools, the NHS, the Home Office, agriculture, social security, even defence. To Blair government is invariably defective and in need of change, which can only come from the private sector. A new breed of parastatal tycoons has duly emerged, offering financial, legal and managerial advice at stupefying fees. Eager to play nanny over the nation's dinner time yesterday, the government turned to Sainsbury's for help.

As a result the British public sector has lost the moral supremacy it enjoyed under socialism in the 20th century. This is not because people have retreated from welfarism or social action but because government has come to seem an introverted monopolist, unworthy of the trust once placed in it. Power has drifted away from contact with people, and public service has been contracted out to the private sector.

America's large private fortunes grew on the back of what in Britain were mostly public industries, such as utilities, coal, steel and later cars and computers. It was the second and third generations that turned to philanthropy. Britain has yet to see the philanthropic urge reach American proportions. Its capitalists have yet to be made vulnerable to shame. But I have no doubt that the inability of the NHS to sustain local hospitals and doctors will mean a revival of private health charity, as is happening in America through the churches.

This trend is already noticeable in international government. Any distressed world city these days is occupied by the pampered expatriates of the UN, IMF, World Bank and EU, inflating rents, filling restaurants and crowding streets with Land Cruisers. These agents of the new supranational imperium have access to unlimited resources and barely accountable power. They recruit the cream of cosmopolitan talent, as once did domestic civil services. But they have subsidised too many dictators and undermined too many economies for comfort. As their moral standing dwindles in the wreckage of Africa and the Middle East, they will be supplanted by the ad hoc charity of the private sector.

The geeks of the internet and high finance may be very rich, but the 21st century appears to have given them a conscience. These children of the 60s have taken many a short cut at the margin, but they preach freedom and love and are choosing to give back to society rather than to their heirs. They mean well. But they share one enemy - modern government in all its forms. In Buffett's words, only a fool gives his money to a treasury. What would once have seemed a slander now seems a platitude.

Whether such people will run a better planet, who knows? But they clearly mean to try.

(simon.jenkins@guardian.co.uk)