Show Me the Money
Why Philanthropy Matters: How the Wealthy Give, and What It Means for Our Economic Well-Being
by Zoltan J. Acs. Princeton University Press, 2013.
Philanthropy and charity are not the same, Zoltan Acs argues. Philanthropy is investing in something and entails reciprocity—something in return from the recipient—while charity is giving money away. This is not a book about good works. This is a book about why philanthropy is an integral part of American-style capitalism, part of the cycle of innovation that makes American business more vibrant than commerce in other countries. Philanthropy is part of who we are as a nation, argues the author, a professor at George Mason University.
Philanthropy was essential to the “creative destruction” that resulted from the Industrial Revolution because it “releases the concentration of wealth at the top of society while building institutions that support opportunity for future Americans.” American philanthropists tended to be entrepreneurs. Those who earned “at least half their fortunes by starting businesses are the most generous with their money,” Acs quotes a study by Indiana University’s Center on Philanthropy. Today’s leading philanthropists didn’t inherit their money, they made it—think Bill Gates and Warren Buffett—and they are big proponents of what is called “venture philanthropy.” They see the money they give as an investment, and they expect ROI.
All of this is interesting, a totally different take on what makes America special than you will read in the library-sized collection of recent hand-wringing about what is wrong with us. Unfortunately, Acs’ thesis is undermined by the book’s several failings.
For one, it is totally dependent on Acs’ own background and expertise. He spent years researching entrepreneurship, is the director of the Center for Entrepreneurship and Public Policy at George Mason and co-author of Entrepreneurship, Geography, and American Economic Growth. He is an academic and virtually all of his examples of philanthropy involve institutions of higher learning. He has worked at most of those he cites. And while he wanders into things he knows a lot about—like entrepreneurship—he fails to make enough of a connection between those and philanthropy. The book also suffers from a very weak ending, a rather half-hearted appeal for repeal of the estate tax.
What he’s trying to say is worth thinking about. Unfortunately, he does not say it very well.
Pound Foolish: Exposing the Dark Side of the Personal Finance Industry
by Helaine Olen. Portfolio Penguin, 2012.
“What’s keeping you from being rich?” That’s what Suze Orman would like to know. She and the rest of the financial services industry, especially its “financial therapy” arm, will tell you that the only thing keeping you from being rich is you. If you were smarter about your money, invested it more wisely, saved it more judiciously, wealth—not to mention happiness—would follow suit.
Helaine Olen, author of the Los Angeles Times’ wildly popular “Money Makeover” series in the mid-1990s, sees the worm in that particular golden apple. Regardless of what you do, the market will not always go up. The money you had planned on having—a salary, a pension, Social Security, investment returns—could disappear overnight. “The vast majority of us are not messing up deliberately,” Olen writes. We aren’t all spendthrifts. A lot of us believe the financial advice we get, act on it and then watch as none of it works.
We have been sold a bill of goods by the financial advice industry and, good markets or bad, we keep buying it. Olen skewers Orman for her contradictory advice and blatant conflicts of interest. She isn’t genuinely concerned about our lack of retirement preparedness, says Olen, she’s promoting her Money Navigator product. Olen points out how out of touch with everyday reality a lot of financial writers and advisers are.
Most of the supposed gurus and experts say they’re “saving one financial life at a time,” as Olen quotes Jane Bryant Quinn. But that means they’re solving the wrong problem, according to Olen. The real problem is income inequality—macroeconomics, not micro.
The real reason more of us don’t get rich is “not a dysfunctional relationship with money,” writes Olen, “but a dysfunctional relationship with class.” Of those who are born into the bottom or top two-fifths of family income, more than 60% stay there. “Income inequality, stagnating salaries, high unemployment and … financially disordered behaviors” are the real reason most of the rapt attendees at one of Suze Orman’s seminars can’t and won’t get rich.
The point of this well-written, readable book is that we have to solve our collective national economic problems before a lot of individuals’ problems can even be addressed.
by Charles Wheelan. W.W. Norton & Co. 2013.
When I was in the fourth grade, I had a very bad case of the mumps. I missed weeks of school and the introduction to long division. My teacher, whose slapdash approach to grading papers was much like her approach to teaching, gave me a check mark on each assignment, showing that it was complete.
But when I got my report card, I was failing math. When my irate mother asked a weeping me how this was possible when my homework had been so impeccable, I admitted that I made up the answers. I knew what a long division problem looked like and, very neatly, I filled in the appropriate number of digits. I had to be tutored for the rest of the year, and eventually developed a lifelong horror of math.
This is why Charles Wheelan wrote Naked Statistics. Most of us pretend to comprehend economics and statistics and skate along feigning an understanding of CPI, debt to GDP ratios and the difference between average and median. As Charles Seife wrote in Proofiness: The Dark Arts of Mathematical Deception (Shelflife, January/February, 2011), we swallow totally bogus data in the news and in our businesses, sometimes with disastrous consequences.
Statistics are “a handy tool for collapsing complex information into a single number,” Wheelan writes. It is not the single right answer, not even the complete answer, but it provides “meaningful information in an easily accessible way.” If you don’t understand what it says and what it doesn’t, if you don’t know what it includes and what it omits, that single number doesn’t tell you anything.
Wheelan, now a visiting professor of public policy and economics at Dartmouth College, makes all of those lectures you slept through in college interesting, even funny. Starting with the cheeky cover, this book strips down statistics to what they mean and how they can be used. You don’t have to do the math, but you do have to understand when it makes sense and when it doesn’t.
Or, you can just read the juicy bits. Yes, it’s a book about statistics, and there are juicy bits:
- How often do Americans have sex and with whom?
- Who was the greatest baseball player of all time?
- Why did Green Bay beat Chicago in the 2012 playoffs?
- What happens when Bill Gates walks into a bar carrying a talking parrot?
I have now read two books about statistics: this one and the one that inspired it, How to Lie with Statistics (W.W. Norton & Co., 1993), and enjoyed both of them. I still can’t do long division, however.