Tuesday, July 05, 2005

Whose money is it, anyway?

Many of our readers are well ahead of me in their daily perusal of newspapers. They have already read Mark Steyn's hilarious analysis of rock star economics as practised by them as opposed to preached.

Nevertheless, there is some sense in going through the article and adding a comment or two.

I must admit that there was a good deal of information in it that was new to me. I did not know, because I never really cared to find out, that Linda McCartney set up a "qualified domestic marital trust" in the State of New York before she died, although she had not lived there for several decades. As a result, her family paid no death duties on her considerable fortune, which would have brought £60 million to the Exchequer.

That reminded me of the fact Steyn does not mention: "Sir" Bob Geldof, though resident in this country, pays taxes in Ireland, not for any nationalistic reasons but for cold, hard-headed, pragmatic ones: taxes are lower there. And I bet he has managed to tie up as much as possible of his money in trusts that would involve no taxes at all.

As Steyn says:
Don't get me wrong. I love old rockers - not for the songs, which are awful,but for their business affairs, which so totally rock. In 1997, David Bowie became the first pop star to hold a bond offering himself. How about that? Fifty-five million dollars' worth of Bowie "class A royalty-backed notes" were snapped up in minutes after Moody's in New York gave them their coveted triple-A rating.

Once upon a time, rock stars weren't rated by Moody, they were moody - they self-destructed, they choked to death in their own vomit, they hoped to die before they got old. Instead, judging from Sir Pete Townshend on Saturday, they got older than anyone's ever been. Today, Paul McCartney is a businessman: he owns the publishing rights to Annie and Guys & Dolls. These faux revolutionaries are capitalists red in tooth and claw.
I agree with his sentiments. The money you earn is your own and as much as possible should stay in your hands, if for no other reason than the obvious one that money individuals or private organizations spend are more likely to achieve something than money spent by governments with no need to account for it to anyone.

However, I cannot help objecting very strenuously when I am told that my taxes should, if necessary, be put up in order to send some more gadzillions over to the people who have already wrecked Africa's economy possibly beyond redemption, while those who do the telling make very sure that their money stays in their own clammy little (or not so little) hands. But then, they can afford good tax lawyers.

Mark Steyn has done us all a favour by quoting some choice snippets from the "faux revolutionaries". Who could be so heartless as not to snigger at Madonna rushing from her expensive country home to stand up in Hyde Park to urge us all, or maybe just the people of Africa, "to start a revolution"?

Revolution is the one commodity Africa has had a surfeit of in the last forty years and there seems to be no end to it. Well, Madonna is not likely to know that.

Or there is Dave Gilmour of Pink Floyd (whose reassembling I salute, as long as I do not have to listen to the outcome). His great contribution to the debate was:

Setting aside the well-proven point that aid has not only not helped anyone in the Third World but has been actively harmful, one cannot help asking, who is Dave Gilmour to demand that governments flush large amounts of taxpayers' money down the political lavatory? Not someone who knows what words mean, obviously, or he would not use a meaningless phrase like "starving nations".

How much of his own money has Dave Gilmour given to any cause whatsoever? How much have any of the other aged rockers?

Which brings me to another interesting point. An article in this Sunday's Business referred back to several reports that showed how much private money is given in aid by Americans. Not the government, that gives away other people's money, but private individuals, churches, charities, trusts, businesses.

Paying your taxes and hoping that someone else will be generous with them is not generosity; not paying them à la McCartney or Geldor or paying them somewhere else is even less generous.

US Church collections, philanthropic donations and company giving amounted to $22bn (£12bn, €18bn) a year, according to a study by the Hudson Institute think-tank, easily more than the total $16.2bn in overseas aid sent by the US government. American churches, synagogues and mosques alone gave $7.5bn in 2003 – a figure which exceeds the government totals for France ($7.2bn) and Britain ($6.3bn), according to OECD numbers for official development aid.
How much of that private money came from Linda McCartney's estate, one wonders.

The relevant EU figure was $1.5bn from the private sector.

As the article points out, the benchmark for state aid is the UN figure of 0.7 per cent of GNP to be donated as government aid to developing countries. Apart from the obvious point that government to government aid is about the worst possible kind of aid, one must ask how does the UN envisage the money being transferred.

There has been no real explanation of the plans in question but the assumption is that it will flow through the various UN structures that will have to be enlarged enormously to cope with the extra work.

In other words, if the plan ever goes through, the UN will acquire its own income that will be independent of separate contributions given by member countries. And we all know how good the UN is at running such grand schemes. The words "food" and "oil" spring to mind.

Let us take our eyes off "Sir" Bob, Sir Paul, Madonna and others of that ilk and look at another extremely rich man, who also made his own money.

Here is a quick summary of what the Bill and Melinda Gates Foundation are doing:

The Grand Challenges in Global Health initiative, a major effort to achieve scientific breakthroughs against diseases that kill millions of people each year in the world's poorest countries, today offered 43 grants totaling $436.6 million for a broad range of innovative research projects involving scientists in 33 countries. The ultimate goal of the initiative is to create "deliverable technologies" - health tools that are not only effective, but also inexpensive to produce, easy to distribute, and simple to use in developing countries.
Other Institutes and Foundations from various countries are adding money in support and work has already started.

I have no desire to be pollyannaish on the subject (it would not suit my carefully acquired reputation) but I cannot help feeling that a well researched and targeted effort is more likely to produce some result than endless largesse from the reluctant taxpayer through NGOs including the grandest of them all the UN, all of whom will take off a huge slice and will ensure that certain political dues are paid before anyone can benefit.

And the final question has to be: if Bill Gates can set up a trust and put his money where his mouth is, why cannot "Sir" Bob or Sir Paul or Bono or Madonna?