Bill and Melinda Gates and Warren Buffett invited the wealthy to donate to philanthropic causes. I applaud their goals but not the method. There's a better way, and I learned it from Nobel prize-winning economist Milton Friedman.
When I took MP3.com public I pondered how to use resources to improve the world. I called Milton Friedman and he told me that giving to charity has a certain psychological benefit, but economic growth is the path to improve peoples lives. He called charitable giving honorable, but cautioned it wasn't an efficient path.
Charities may have good intentions, but they are no better than government bureaucrats at deciding what is best for other people. History shows this — Africa has seen its GDP decline during 50 years of well-meaning charitable donations. The wealthy should instead put their wealth to work giving others the opportunity to participate in a free enterprise system. This would create the lasting impact The Giving Pledge desires.
--MR
