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Chinese philanthropist donates all his fortune (theglobeandmail.com)
69 points by MikeCapone on July 24, 2010 | hide | past | favorite | 60 comments



I think this quote is a nice wake-up call to any potential heir who thinks he/she is entitled to a large inheritance:

“If my children are competent, they don’t need my money,” Mr. Yu explained. “If they’re not, leaving them a lot of money is only doing them harm.”


Bit of a logical play, the dilemmic fallacy to be precise, but, alternatively:

If they're competent, leaving them a lot of money won't do them any harm. If they're not, they need his money.

[edit] here's the classical example of this change in perspective: http://divisbyzero.com/2008/11/30/euathlus-and-protagoras/


But if they're competent, they don't need the money, because they'll be able to work up to the point where they have as much as he did - according to the article, he started off as a "poor street hawker," so his belief that his children could do the same is certainly logical. They probably also have the advantage of his connections, better education, and so forth, meaning that they should be even more capable than he was. Also, if they're competent, lacking money might be good for their moral character, and encourage them to eventually do the same if they gather a lot of money, doing more good for society.

If they're not competent, it's better to give the money to the foundation he started, so that it can help as many people as possible, instead of being squandered. Sure, his children might need it more, but they wouldn't be able to do as much with it which would be useful to society, which is what he is trying to do.


Yeah, I'm not arguing against those points, per se. The dilemmic fallacy is simply a way to show the dilemma is subject to perspective, and therefore not as steely as it may seem.


Incompetence isn't an irreversible trait. A lot of people face barriers that make reversing the condition extremely difficult or impossible, but these typically aren't the children of rich people. Their problem is more likely one of never experiencing true need, and thus not understanding the risk of being incompetent.


Competent people will manage their wealth wisely, while the incompetent simply squander it.


I'm playing with his dilemma more than anything else, but you could also attack his assertion that the competent don't need his wealth. His children could be competent and unlucky, for instance, which could mean they need a lot of money: chronic illnesses, for example.


How about if the children are competent AND they receive the money?

At the risk of having spoiled kids, might this potent combination bring us another Warren Buffet or Bill Gates? Sure it might not be fair, but children who inherit get a nice safety net which allows them to take greater risks to pursue their dreams.

Edit: I didn't realize the extent that Buffet bootstrapped his wealth. Still, there are plenty of good inheritance examples... the Trumps and Kushners?


Warren Buffett made almost all of his money himself.

The problem is that when people get unearned money they usually become wasteful and lose their drive. It's also really hard to keep working on something financial when you've got a large external income; if you're making a million bucks a year in investment income then spending all your waking hours on a business that's making fifty grand a year doesn't seem worthwhile even if it might eventually grow much larger.


Could a will have a matching clause? Every dollar you earn gives you another dollar 5 years down the line. You get 200k seed.


True.

But I'm guessing the children of successful business people also get, besides the money, a great education on business. More importantly, they probably inherit a great worldview of money/business, which drives them to also try and do great things.

This isn't true in every case, but it's probably true in some cases. I'm guessing any child of a person like Bill Gates might be given the kind of education which pushes him/her to great heights. Should probably check some statistics on this issue.


The problem is that success and money are not the same. There might be a parent that made a lot of money taking stupid risk. The education that the child gets from the parent isn't worth anything and he will have to burn through a lot of money to unlearn the things his parent taught him. Therefore he could use the large inheritance.

Even though people are rich doesn't mean they are smart. Survivorship bias


I thought I heard that Buffett wasn't going to leave much to his heirs, and the bulk of his fortune will end up going to the Gates foundation?


Depends on what you mean by "much". In percentage terms, he's promised to give away 99% of his fortune, leaving only 1% to his heirs. But in absolute terms, his fortune is around $50 billion, so the 1% he's leaving is still around $500 million--- so his heirs will still be among the richest people in the U.S.


An interesting documentary around this question was made by an heir to the Johnson and Johnson fortune called "Born Rich"

http://www.youtube.com/watch?v=uKKb7_7qBrk


Its an old adage that's been handed down many generations. I hear it from a lot of the wealthy in Hong Kong.


I would say that by the time he said this, his children already have their own businesses, acquired some good wealth of their own, and have been groomed well to run them (and as well as handle/invest money wisely)


actually the idea of his children resenting this gesture is crucial to endearing himself.


I told my wife "My son will inherit my wealth, only if he is competent." and I made will accordingly. My son is 3 now.


Or the ultimate in Asian parenting...

"What?! You get A- in math?! You not smart enough to get A+? Maybe you not smart enough to inherit fortune..."


Racist much?


So... he's not an evolutionist and thinks being a philanthropist is more fulfilling. Seems self-righteous to me.


To clarify... if his children were competent AND had his money, I'm sure they could make an even greater impact to the world than he did. Instead, he would rather give his money away to charity as some form of personal achievement. ??

Isn't life suppose to evolute in some form, rather than starting from scratch? That is effectively what he's imposing on his children. His comment about "competence" makes no sense to me.


  Isn't life suppose to evolute in some form, [..]
Life is not 'supposed to' do anything. That we evolved is a fact of this universe, not a moral guideline. Arguing otherwise would be pursuing the naturalistic fallacy: something is natural, therefore it is morally good.


Evolution as a natural order. I'm pretty sure evolution trumps de-evolution, otherwise you wouldn't be here my friend. At the core is "knowledge transfer" from one generation to the next.


> In a society where capitalism is just 30 years old

Chinese capitalism is many things, but one thing it's not is young.


The article states that this makes him the first Chinese citizen to donate more than $1 billion to charity.


I believe this is a notable feat due to the ever present communist state that usually steps in on big companies in the Chinese mainland.

Hong Kong is still trailing many western cities in terms of GDP per capita (not by too far mind you), however I rarely hear of this happening in western cities. Surely in richer countries this should be happening far more frequently, but it doesn't.


This brings something from Philip Greenspun's site to mind: http://philip.greenspun.com/materialism/early-retirement/ "The standard tools that rich families use to preserve their wealth down through the centuries include the following: ... * charitable foundations and organizations that are supposed to work for the public benefit, but in fact provide jobs and luxurious vacations ("board meetings") for members of your family for decades to come..."

Although, I do think this guy is doing this for good, his family will still at least have employment from it. It says his sons are on the organisation's board, for example.


I wonder how much influence, if any, Gates/Buffett and their recent push for the wealthiest Americans to give 50% away before death had on him. With Americans potentially giving away more, it makes the rest of the world look worse by contrast.


This idea was planted via inception?


philanthropic donations are only ever patronizing. it shouldn't be possible to accumulate that much wealth to begin with.


philanthropic donations are only ever patronizing

You're wrong. The Gates Foundation has pledged $10 billion to vaccine research and I can't think of how that could be considered "patronizing".

it shouldn't be possible to accumulate that much wealth to begin with.

I disagree. The most productive people in society should be rewarded accordingly, and encouraged to keep producing. If you put a cap on rewards you'll put a cap on productivity.


Actually, a "wealth cap" is not such a ridiculous idea. Essentially, it's simply a progressive income tax with a tax bracket at 100%. If the bracket is high enough, e.g. $200 million, then it doesn't act as a disincentive and helps to balance the imperfectness of the market.

Many would cite John Rawls here, but I have my own criticisms and my philosophical debates (I am a philosophy minor) can run into weeks of time. Instead, I'm going to simply make the argument that wealth over $200 million is meaningless to a single person. That is, from a practical perspective, that is more money than one could ever spend. The only positive use that could come from that amount of money is heavy watched investment and philanthropy. It is not easy to see that $1 billion is enough to move the world. Why should that responsibility fall into a single citizen's hands? In the best circumstances, the citizen hires a flotilla of people to manage that wealth (e.g., Gates and Buffet) and they spend it wisely and do great good. I don't see the fundamental reason why the government couldn't just do the exact same thing. By awarding the money of a government to a single person (Gates and Buffet each had, at the height of their wealth, more money than most of the governments in the world), this simply ensures an entrenched oligarchy of the rich (and therefore powerful) unless they decide to give it away.

Many would argue that this is "their" money so they deserve it. I think this argument is mostly bollocks, though. Bill Gates had over $100 billion at one point. Let's say that a skilled professional makes ~$1 million (gross) over the same time period. That's a 100,000x multiplier. Did Gates really do 100,000x more work? Did he really have 100,000x more insight? I think he just got lucky. He was at the right time at the right place with a good idea. From there he built a company. But the trick is that it's a lot easier to make a lot of money when you already have a whole lot of money.

Anyway, I'm gonna end this here, even though I'm not completely satisfied with my argument because this is becoming ridiculous.

P.S. This is not for those who believe that the government can do nothing right. I'm not sure that it's even worth arguing with those people. Theoretically, there's no satisfying proof that that's the case and practically the only evidence I see is that when those same people set the government up to fall, it falls hard.


That is, from a practical perspective, that is more money than one could ever spend.

There are lots of things which cost more than a billion dollars which makes this statement false. Not individual items, of course, but buying a billion dollar railway is both possible and spending.

I don't think philanthropy (as in, charity) goes far enough. It isn't thinking big enough. Imagine what Buffet could do if he spent his fortune on a Manhatten Project for room temperature superconductors? He could nearly start a lunar colony for that money.

The fundamental reason the government can't do the same thing is because they would be voted out for 'wasting' money on speculative ivory tower wankery.

Anyway, so what if Bill Gates got lucky, this just sounds like sour grapes. Is he not allowed to get more lucky than you approve of? Whether he 'deserves' it is neither here nor there - it's a non question, like does he deserve two feet or to live past 30.

P.S. This is not for those who believe that the government can do nothing right

I'll just note that here in England, our recent government scandal is on what MPs had been taking from taxpayer money for their expenses. It included one MP expensing £1600 (>$2000) on an ornamental floating duck house.

They do a lot right, but just giving them money because they will magically spend it better than any normal person is not something I can go along with.


I'll get downvoted for this, but what the heck.

Comedian Louis CK on Bill Gates: http://www.youtube.com/watch?v=95fNgx8aCS8

"You know what you could do with 85 billion dollars? You could buy every baseball team and have them all wear dresses for only like 3 billion. How do you not do that? I would do that everyday. One day I would go out and buy all the pants in the world and just burn them. Start over with making pants. They're all gone."


  Instead, I'm going to simply make the argument that wealth
  over $200 million is meaningless to a single person.
The problem with this argument is that in hinges on your view of what constitutes 'meaninglessness'. Although the money is legally his, the single person may feel the money is not 'his', but belongs to him, his family, his friends and all their offspring. To all those people combined, a share of the $200 million is not meaningless and a cap at $200 million would be a disincentive.


This is a bad idea. Even if we accept that no individual can reasonably spend more than $200 million non-charitably (which is false), super-rich people tend to care deeply about money for its own sake -- I say this from limited but real personal experience -- and the accumulation of money tends to be a major factor in their motivation to continue to produce and to invest. If you impose a $200 million wealth cap, you are going to substantially reduce the wealth production of some of the most productive members of society and dramatically curb certain kinds of investment.

What do you get in return? Essentially the government receives a bunch of claim checks for wealth (remember that "money" itself has almost no intrinsic value; what we're after, from a macroeconomic viewpoint, is a maximal sustainable production of wealth). Your proposal amounts to reducing overall wealth production in exchange for increasing the government's buying power by a comparatively small amount. Forget ethical arguments against it; except in very extreme economic circumstances, it's absurd from a practical standpoint.


This is assuming that the "super-rich people [who] tend to care deeply about money for its own sake" are actually "productive members of society" engaged in "wealth production", as opposed to merely being very good at rent-seeking (which gets easier as you get larger amounts of capital).


Well you have five points taking a very unconventional stance, thus, I do not think your argument is ridiculous at all.

I would be more interested in the solution however, taking into account the practicalities. I mean, if the government had the billions of Gates, besides using them to pay off their debt, their only option might perhaps be to give it to people on benefit who do nothing with their day whatever, rather than, as Gates has, though a rare occurrence, employ a lot of people for a very worthy cause.

My point I think is that to allow people to make as much as possible, allows the society to benefit from the fundamental ideas of the free market, while, to give it to the government effectively locks this wealth in bureaucracy and grant it to people who might be very stupid and waste it all entirely to no good whatever.


I don't agree with a wealth cap, but:

How do you define productivity, the one who makes the most money?

Theres also this mentality that pretty much anything goes in businesses, which I find a bit interesting. Hence the phrase: it's not personal, it's business. So people are allowed to screw you over and be complete a-holes when it comes to business.

Some businesses (see: credit cards) are most profitable when they siphon billions from the poor, which is then placed in the hands of the rich. Then, after doing so, they are lauded for donating that money to philanthropic causes. I don't know how this can be viewed as anything other than patronizing.


> Theres also this mentality that pretty much anything goes in businesses, which I find a bit interesting. Hence the phrase: it's not personal, it's business. So people are allowed to screw you over and be complete a-holes when it comes to business.

In my experience, this isn't how the vast majority of wealthy people operate. It's how it's portrayed in the movies, but it doesn't really jive with the real world.

People love stories of the evil geniuses so those get spread around, but the vast majority of wealthy people deliver pretty well, keep their promises, work extremely hard, are fair and even-handed, and make the world a better place. Generally speaking, the higher up you go in wealth, the more likely you are to get a fair shake by that person in business. It's hard to get wealthy without people trusting you and building a good reputation as a reliable and effective person.

You're much more likely to have someone try to screw you over if they're poor or middle class - which is why those people remain poor and middle class. It's quite hard to get wealthy if you're leaving a trail of carnage behind you (it's been done, but it makes it a hell of a lot harder).


Are you including how the wealthy people operate when they're running businesses, or just in their personal lives? I've interacted with a number of game companies, for example, and I've found the big ones much more likely to try to screw you over if you don't have lawyers keeping them from doing so, whereas small indie studios will keep their word and try to act in a way that seems ethical, even if the letter of the law would let them screw you. And even within the large companies, it gets worse as you go up the corporate ladder: you can meet some designers who are trustworthy and will even go out of their way to make sure your dealings with them are positive (fighting their own management if necessary), but you always have to be wary if it's a CEO or VP you're talking to, because they'll stab you in the back if an opportunity arises.

Of course, some people get rich by operating those smallish businesses, and lots of them seem upstanding to me. But a lot of people get rich by filling the decision-maker (CEO/VP/etc.) roles at large firms, where they tend to be somewhat ruthless, perhaps because there's something of a disconnect in ethical responsibility (they're just doing their jobs, nothing personal).


Good comment/questions. Thought provoking.

> Are you including how the wealthy people operate when they're running businesses, or just in their personal lives?

Generally speaking, both. Some people do poorly in one direction or the other, but I find successful people to be pretty honorable most of the time.

> I've interacted with a number of game companies, for example, and I've found the big ones much more likely to try to screw you over if you don't have lawyers keeping them from doing so, whereas small indie studios will keep their word and try to act in a way that seems ethical

Care to share some anecdotes about the game industry? That'd be cool to hear.

Gaming seems like an interesting example, I don't have any friends in gaming specifically. I get the impression that indie studios are really in it for the love of it, so you're dealing with people who are working with their passionate love for less money, so that's a good point.

Actually, if anything, the worst gap is when going from a laborer or craftsman (generally pretty honest and good guys) to a middle manager. I think, I hope we're on the path to obsoleting middle managers in general, because its just not a role conducive to good people. Good middle managers get promoted or hired away to be upper level managers, or leave to start their own company pretty quickly. So you get all sorts of bureaucratic flunkeys in that role - no good. I'm surprised to hear you've got to be wary around a CEO of a major company, though. I'm friends with more business owners and skilled professionals (architects, engineers, etc) than high level executives, but the high level executives I've met seem like decent sorts. Can't comment so much - I was thinking more about business owners than high level employees when I commented. I guess that's my bias.

> Of course, some people get rich by operating those smallish businesses, and lots of them seem upstanding to me.

Right, this is mostly my social circle and our acquaintances. Maybe the corporate world is uglier and I was overlooking it... one potential HUGE conflict of interest nobody talks about is when ownership and management are mis-aligned, especially in public companies. I think I'll never, ever buy stock in a public company again unless the top 5 decisionmakers in the organization own like a combine 30-40% of the company at least.

Good question, good comment. I would be interested in hearing about your experiences in gaming if you think you can talk in a way that wouldn't potentially bring heat on you.


I would recommend you read "Barbarians at the Gate: The Fall of RJR Nabisco"

It's an eye-opening book about just how removed upper management of a public company can be. Although I don't have much anecdotal experience to back it up, I think people who start their own companies and grow them are much more likely to be honorable than employees who worked their way up to become CEO. Being upper management of a large corporation is generally a golden ticket. Even if you do a horrible job, you will probably still receive millions in pay and stock options. In fact, because the organization is so large, it will probably take a couple years for people to figure out if you are doing poorly. By that time, you already have your money.

Because of the incentives, I would think that people trying to get into these types of positions would be much more ruthless than people who generated their wealth through their own means.

Like I said, I don't have much experience with this but it is how I imagine things are.


The Bill&Melissa Gates foundation wasted a lot of money on the "Love life" programme. It was essentially a program that was supposed to use advertisements to encourage youths to practice safe sex.

It turned out into more of a sex advertisement and soft money for advertisers and managers (i.e. completely misspent money).

The media did not complain though (since they received a shitload of advertisement money).


> You're wrong.

No actually i'm right.

> and I can't think of how that could be considered "patronizing".

the part where bill gates accumulates wealth through computer technology, and where computer technology depends on minerals mined under slave labor conditions, or devices put together in sweatshops, and then he gets lauded for "donating" what he dispossessed those people of.

that would be one of many patronizing threads to this story, for example.

> The most productive people in society should be rewarded accordingly,

the non-linear returns of capitalist accumulation do not reward people "accordingly".


Who decides how much wealth it is okay to accumulate? (said another way: who decides how economically productive a person can be?)


Why, the Star Fleet Federation of course. ;)

Seriously, even if wealth were capped such that you could only attain a multiple of the median income or some other bench mark it would only serve as a straight jacket for productivity. Distributing those gains back to society directly would only serve inflation as the relative cost of goods and services would seek equilibrium with demand and the existing money supply. The only thing I can imagine is having excess productivity siphoned off via a tax or general fund that reinvests back into society...which is the goal of philanthropic efforts. Instead of giving their children the trust fund, it becomes a resource for society to focus on the things the free market neglects.


You are missing a great and fundamental point. You see Bill Gates was one guy. Clever perhaps, very clever maybe indeed, lucky also let us say for the sake of the argument. But he is only one guy!

He has the wealth of millions of people. How many have gone insane and started feeding pigeons like Telsa, how many have been unable to afford higher education, how many people were denied the opportunity to contribute to the world because they were not born in a middle upper class family as Gates was.

By the way, inflation would not go up, nor as you speculate will things even out and be once more as they are now but Bill be denied of his billions. The world is a zero sum game, it costs that much to produce a certain something and unless people want to make excessive profits like Mr Gates then it would costs just as much.

Maybe I am arguing against the wind, but so too maybe people have forgotten that they could have been born in any environment, that they could be right now starving for food in Africa, that they could be that loony man in the corner of the shop begging for money. We are lucky that we are not, but for how long. People accepted feudalism in the 16th century too. Without acceptance and a legitimate expectation from society that it is acceptable for someone to exploit you to death while they live in luxury feudalism would not be a fact, without the cultural acceptance that it is fine to enslave others and treat them as inferior slavery would not be a fact. What make us think that now it is different, what makes you think or anyone reading this that accumulation of such great wealth for no rational reason whatever is justifiable?


You miss the part where Bill Gates created that wealth. He didn't take wealth that other people had already. Also, Microsoft employees collectively earned many times what Bill Gates did. And Microsoft customers used the software and hardware to generate many, many times more wealth, which went to their employees and customers, etc. Each sale (well, most sales) of the software benefited both Bill Gates and the person/company buying the software. Multiply the benefit by billions of sales, and you've got billions of dollars.

how many have been unable to afford higher education, how many people were denied the opportunity to contribute to the world because they were not born in a middle upper class family as Gates was.

A lot fewer, thanks to Gates & Microsoft.


We, the People!

We decide who to lock up, so why not put a limit on how much wealth one can accumulate, say something like no more than 1000% of the average wage, all other income taxed at 100%, or 90% or 80%.

They only gain this income by exploiting the proletariat so its only fair!


> We, the People!

Which, in practice, means: People who are thirsty enough for power to go into politics (you have to really want power to endure that kind of life), and groups with political clout (farmers, unions, big corps, rent-seekers of all kinds, etc).


Yes, that might be what it means, but in all fairness, those same people decide if you go to jail for killing someone or not. There is nothing technically to prevent the legislature from legalising murder. Or torture as effectively they did during Bush years. So if they are an evil to be endured in such very fundamental matters, why not when it comes to a very serious matter too, the exploitation of people.

These ideas are of course very unconventional, hence why they get downvoted so freely without any counter argument, but does anyone in this website thing seriously that the rich do not have such tight control over the government that they are at liberty to legitimise theft pure and simple.

If not, then does anyone in here possibly think that any person in the rich list is so marvellously superior to any of us to deserve having the wealth of an entire country?

If so, do enlighten me. I will change my opinion entirely that there is a deep flow in our society which is fundamentally unfair and affords much cruelty to many.


If by superior then you mean much smarter, luckier and older -- then yes. I believe that many of them are.


> They only gain this income by exploiting the proletariat so its only fair!

I can't tell if this is serious or parody. Honestly.


I think I was being fairly serious. Do you have any reason to think that the part you quoted was a parody?


Because I thought that of all places, a site dedicated to entrepreneurship would attract people who understand that it isn't true that the only way to make money is to "exploit the proletariat", but rather that the proletariat would be a lot worse off without successful entrepreneurs.


Addendum: Maybe this has something to do with it:

http://lesswrong.com/lw/2gd/fight_zerosum_bias/


Well, if Mr Gates charges me 500 rather than 400 then well his gain is my loss. So too if he pays me 11k rather than 12k, keeping that extra k as profit for himself, his gain is my loss.




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