The problem with philanthropy . . .

This article at gawker (http://gawker.com/5657220/ivy-league-schools-are-the-worlds-worst-charity) speaks to something that has been bugging me for awhile. This piece questions the wisdom of a $100 million dollar gift to Columbia's Business school (for adding space - not scholarships) as something that is truly worthy of being called philanthropy or charity.

While most of the comments focus on gifts to Ivy League institutions, my thoughts have been more focused on things like Bill Gates and Warren Buffet's "Billionaire's Pledge Club" where billionaires pledge to give more than 50% of their wealth to charity. This has gotten lots of good press and suggests that so much good will inevitably flow from these acts.

I guess I am just a wee bit cynical. While Bill Gates may know how to dominate the operating system market and Buffett may know how to invest money in stocks and bonds, I guess I am less optimistic that they know how to solve complex social and political problems. While choice is generally good, I am not sure why we should be thrilled when people are making choices in areas about which they are fairly ignorant or at least don't have a history of success. As economists have pointed out, consumers make good choices when faced with choices they regularly make (e.g. buying toilet paper) but generally don't do so well when faced with once in a lifetime decisions (e.g. picking a college or picking a heart surgeon). If Philanthropists are dedicated (like Gates), perhaps they become good decision-makers over time. But, it is not clear to me when or who their professionally honed judgment gets transferred to this new realm.

Even if billionaires can train themselves to become good decision-makers in this realm, this leads to the democracy problem. As individuals or their charities gain so much wealth, they gain the power to substituted their judgment for the majority. In other words, philanthropy is profoundly anti-democratic because an individual or relatively small and unaccountable group can determine which social problems, or in the case of Columbia what majors/buildings, will be fixed and improved.

Is philanthropy a good thing? If my arm was twisted, I would probably say it is. However, I guess I am not quite ready to strain myself in congratulating these folks until I am more confident that they are making good choices and folks can hold them accountable for their decisions.