The World-Changing Power of Impatient Optimism

Is being rich a good thing?

According to a long line of philosophers, politicians and religious leaders, the answer is a resounding no.

Karl Marx argued that the rich exploit the working class. Teddy Roosevelt railed against “malefactors of great wealth.” The Book of Isaiah condemns the rich who “crush my people” and “grind the face of the poor.”

Yet American attitudes toward wealth remain largely unchanged, especially among young people. The Pew Research Center polled a large sample of 26- to 40-year-olds and 18- to-25-year-olds, asking them, “What are your generation’s most important goals in life?” Sixty-two percent of 26- to 40-year olds said their highest goal is “to get rich.” Eighty-one percent of 18- to 25-year-olds answered the same way.

Some will say this simply reflects our increasingly materialistic culture. But money is also freedom – the ability to make important choices. And great wealth often leads to something else: radical generosity.

  • Steel magnate Andrew Carnegie established a foundation “to promote the advancement and diffusion of knowledge and understanding.” It has funded public libraries and universities across Scotland and the U.S.
  • Henry Ford left the bulk of his fortune to the Ford Foundation. It grants more than $530 million annually for community and economic development, education, arts and culture, and human rights.
  • The W.K. Kellogg Foundation, funded by the breakfast cereal pioneer, donates hundreds of millions annually to promote education and healthcare for the poor.
  • David Packard, founder of Hewlett-Packard, set up the David and Lucile Packard Foundation to build community hospitals across the nation.
  • Intel founder Gordon Moore has given hundreds of millions to conservation groups and universities. (In 2007, his foundation donated $200 million to Caltech and the University of California for the construction of the world’s largest optical telescope.)
  • Standard Oil founder John Rockefeller gave birth to Rockefeller University – and through his foundation, established the first schools of public health, developed the vaccine for yellow fever and funded agricultural development around the world.

The tradition of radical generosity continues today. Take Microsoft founder Bill Gates, for example. His parents were heartbroken when he dropped out of Harvard his sophomore year to pursue a business opportunity he was convinced would vanish by the time he graduated.

But he could not have been more right. Within just a few years, he licensed his computer operating system to IBM for $80,000 rather than selling it outright. He reckoned that other PC-makers would soon copy IBM’s open architecture and would need to license his system.

It was one of the great business decisions of all time. Collecting royalties from both PC-makers and software developers worldwide, Gates made a fortune for early shareholders and quickly became the world’s richest man with a net worth today of more than $84 billion.

Lately, however, he has turned his attention elsewhere…

In setting up the Bill & Melinda Gates Foundation, Gates wanted – like all philanthropists – to give away his fortune wisely. He explored several avenues. But Gates found his mission when he discovered that, every month, 1 million parents lose a child they will grieve forever to easily preventable diseases like measles, malaria and diarrhea.

Before long, he was reading titles like The Eradication of Infectious Diseases; Mosquitoes, Malaria & Man; and Rats, Lice and History.

After an initial donation to combat the problem, Gates invited a group of doctors, scientists and leaders in the field of immunology to his home one evening to learn more about what could be done.

He was surprised to find that 30 million children a year weren’t receiving vaccines. He challenged his guests to investigate what could be done and at what cost. His parting words of encouragement that night were, “Don’t be afraid to think big.”

Today, the Bill and Melinda Gates Foundation grants generous gifts to a number of worthy causes here and abroad, including education, technology, agriculture, birth control and microfinance. But its primary focus is improving healthcare and reducing extreme poverty in the world’s developing nations.

One major goal is vaccination. Why? When you look at the benefits they provide, vaccines represent the most efficient and cost-effective tool that medicine has. Administering them a few times during a child’s first year dramatically improves mortality rates.

The more than $500 million that the Gates Foundation currently spends each year to fight infectious diseases is roughly the same amount given by the U.S. Agency for International Development – and approaches the annual budget of the U.N.’s World Health Organization, a group receiving donations from 193 nations.

In 2008, Gates gave up his day-to-day role at Microsoft to devote more time to his foundation. His generosity has already saved millions of lives. Yet he’s just getting started. He calls himself “an impatient optimist.”

Gates understands how incredibly fortunate he was to be born in a country that values freedom, education and individual initiative. He also knows his success could never have occurred in a society without adequate healthcare, property rights, free-market incentives and well-developed capital markets. Many are born into this world with no such advantages – indeed, with little chance of surviving their first year.

Gates has taken this problem and embraced it as his own. Indeed, his foundation is so effective that Berkshire Hathaway Chairman Warren Buffett – no slouch himself – has pledged $30 billion of his own fortune to it.

Some will grouse that a poor man sacrifices more when he gives $10 than Gates and Buffett do when they donate $10 billion. And I won’t argue the point.

But these men are doing tremendous good and providing inspiring examples.

It’s one thing to know how to make it. It’s another to know how to give it away.

Carpe Diem,

Alex

 

About the Author

Alexander Green
Chief Investment Strategist

Alexander Green is the Chief Investment Strategist of The Oxford Club. A Wall Street veteran, he has more than 20 years' experience as a research analyst, investment advisor, financial writer and portfolio manager.

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