From Traditional Indian Philanthropy To The Gates-Buffet model- A Natural Progression or a Paradigm Shift ?

Knowledge results in humility. With humility, one acquires ability. With abilities one can earn money. With money, one can indulge in philanthropic activities and attain happiness  ~ Translation of a Sanskrit Shloka

From the above Sanskrit Shloka that belongs to the traditional Indian society, we see that the person who earns money is expected to spend his/her wealth on philanthropy. It is said that the person derives happiness through philanthropy. In a similar way, Christianity and Islam also encourage philanthropy among its followers. Many mainstream religions have given some sort of importance and sanctity to the act of giving.

Philanthropy in Traditional India

In traditional India, the king collected  taxes in exchange for providng administration and security to his subjects. There was no compulsion on part of the common people to donate over and above the taxes paid. The responsibility of feeding poor people and students was taken by the society voluntarily. We often come across the  poor Brahmin begging on the streets in Panchatantra tales.

In addition to that , we don’t come across evidence to suggest that traditional society had billionaires like Buffet and Gates. The degree of accumulation of wealth these days is not comparable to the past. Compassion for human life and a sense of dharma’ was the main factor that motivated people to donate/share their wealth. Concepts like ‘Athithi Devobhava’ ( the guest is a form of god) is also a facet of philanthropy in traditional India. These were acts of kindness that were done without expecting anything in return.

Gates – Buffet Model – A Paradigm Shift

Ravi_Varma-Lady_Giving_Alms_at_the_Temple

There is a paradigm shift in the Gates- Buffet model of philanthropy. This is because enormous amount of wealth accumulated by the super rich enables them to wield lots of power in modern society. Top 1% of society in many country owns about 50 -60% of the national wealth !

The origins of super rich might be humble. They might have put in a lot of hard work and creativity to earn their fortune. Some sort of luck might have aided them in their initial days. However, the steeper climb to the top of the economic pyramid would involve much more than just hard work, creativity and luck.

The accumulation of enormous wealth is through systematic gaming of modern economic and political systems. Using this wealth and power they continue to grow and accumulate more wealth. For example, they can fund politicians who promise to implement low taxes for companies or specific industries. Government policy often results in multiplication of the wealth of super-rich.

A situation where few individuals , that too businessmen having disproportionate amount of influence in society had never been encountered in any part of the globe in traditional societies, including India. Philanthropy instead of being a moral act inspired by religion is now a part of strategy to hold on to the accumulated wealth.

Taxation and Philanthropy, are they different ?

In modern democratic systems where votes , voices and aspirations of every citizen matters, it is quite impossible to reconcile enormous disparities in wealth. We have entered an era where the super rich can spend thousands of rupees on a single drink, but millions are unable to afford two meals per day.

The principles of governance require the state to tax the ones with surplus wealth and help out the ones who are poor. This principle is called progressive taxation. People who earn more than a particular limit have to forgo a part of their wealth as tax. Non-compliance will result in legal action by the state.

If tax laws were to be applied to the super rich, a portion of their wealth can be taken over by the state to alleviate poverty, provide education and healthcare. But that doesn’t happen in most democracies. Tax laws applicable to common citizens are often dodged by the super rich in a variety of ways. Tax havens like Cayman Islands, Mauritius and Switzerland are used to evade taxes. If tax laws were applied to the super rich by governments, they wouldn’t really bother to set up philanthropic foundations.

According to media reports Bill Gates has given out 20% of his total fortune (approximately $ 81 billion) to charitable causes so far in his career. Some reports say that Warren Buffet has given 70% of his total wealth ( approximately $ 73 billion) in his career. They have pledged to give away 99% of their wealth before they die. There is no assurance that they will fulfill their promise. Also, the magnitude of wealth might be under reported by media. We can’t be sure.

In India those earning more than 10 lakh rupees per year have to pay 30% income tax to the government ! If one were to consider percent of wealth given away to society as a measure of philanthropy, we must consider the middle class tax payer as the more generous philanthropist. If tax money spent for public services and welfare schemes was an ocean, philanthropic donation is a tiny lake.

Gates- Buffet Philanthropic model – A PR exercise ?

Modern philanthropy conducted with much fanfare and poor verification of claims can be suspected to be PR exercises. The aim of PR exercises is to show benign face of ruthless capitalists and avoid Robin Hood kind of legislation . As distribution of wealth in society becomes skewed in favor of rich and powerful, philanthropy comes across as a benign instrument to show that they are actually giving away wealth on their own.

But there is no way to confirm whether these billionaires have actually spent the money they claim to have given away to philanthropy. At least government expenditure can be verified by independent agencies like CAG in India. There is no such agency that can verify philanthropic foundations.

In nuclear warfare, there is a concept called pre-emptive attack . The nuclear weapon state launches a decisive attack on an enemy state to incapacitate it to an extent where it loses any capacity to attack in future. Similarly, philanthropy of super rich is a pre-emptive attack on future Robin Hood legislation. Their acts are printed in media with much fanfare. But the ground reality might be totally different.

Conclusion

Gates-Buffet model is in stark contrast to the charity that was practiced in traditional India. Peasants whose income was just above subsistence level gave food to strangers and travelers in ancient times. Their charity was without any hidden motive or desire for public applause. The people who gave food , shelter and any other monetary help did so with a sense of duty and compassion. Gates- Buffet model is not a progressive extension of traditional Indian philanthropy. It is a major paradigm shift which is a result of modern political, social and economic scenario.

 

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