16 March, 2009Issue 8.8AfricaEconomicsPhilosophyPolitics & SocietySocial PolicyWorld Politics

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Strange Bedfellows of Philanthropy

Daniel Hemel

singerPeter Singer
The Life You Can Save: Acting Now to End World Poverty
Picador, 2009
214 pages
ISBN 978-0330454582



Peter Singer and Jimmy Cayne are not natural allies. Singer is an Oxford-educated philosopher, a vocal vegetarian and an anti-poverty crusader. Cayne is a high school dropout who, until recently, feasted on bacon, salmon and red wine before beginning his workday as CEO of Bear Stearns. Yet in Singer’s new book, The Life You Can Save: Acting Now to End World Poverty, Cayne makes a cameo appearance—not as a villain, but as a good corporate citizen.

Singer heaps praise upon Cayne’s company: “Bear Stearns—before its sale to JPMorgan Chase during the 2008 crisis—made sure that neither apathy nor selfishness prevented its leaders from doing the right thing.” Such a pronouncement would be considered lavish praise for any corporation—but especially for Bear Stearns. When the investment bank collapsed in March 2008, one industry insider called it “payback” for a “firm that seemed to be overly selfish and overly interested in their own gains”. But for Singer, Bear is a beau ideal of benevolence. The firm required all of its senior managing directors to donate 4 percent of their salaries and bonuses to charity, and it checked their tax returns to make sure they complied. In 2006, according to Cayne, the firm’s senior managing directors donated more than $45 million (¬£32 million) combined. “As far as I know, we are the only company that has this type of policy,” Cayne said.

To be sure, Singer and Cayne do not entirely see eye-to-eye on all matters of philanthropy. Cayne’s charitable giving goes to museums and private prep schools, among other causes. By contrast, Singer believes that “philanthropy for the arts or for cultural activities is, in a world like this one, morally dubious”. He chastises the Metropolitan Museum of Art for paying $45 million for a single Duccio panel painting when the same amount of money could have funded 900,000 cataract operations for people in developing countries “who can’t see anything at all, let alone a painting”. Singer donates 25% of his income to anti-poverty groups each year. (All royalties from The Life You Can Save will go to Oxfam.) Comparatively, Cayne is much less generous: in 2006, his charitable trust gave gifts amounting to 7 percent of his CEO compensation. By Singer’s personal standards, Cayne is still a scrooge.

Nevertheless, Singer sees enormous potential in the Bear Stearns model of employee giving—albeit, with important modifications. Singer suggests that employers withhold 1 percent of every employee’s paycheck, which would then go to an anti-poverty organisation of the employee’s choice. Workers could opt out of the program, but the default would be to donate (and, specifically, to donate to an organisation that fights global poverty rather than a posh prep school, ornate opera house or other “dubious” cause). If major corporations, universities, and other employers adopted Singer’s suggestions, it “would yield billions more for combating poverty”.

For those who are familiar with Singer’s philosophy, the employee giving proposal will stand out as one of the more innovative elements of The Life You Can Save. To a large extent, the book rehashes arguments that Singer has already made elsewhere—starting with his 1972 essay “Famine, Affluence, and Morality“. Singer argued then—as he does now—that from a financial perspective, it is relatively easy to save a life in the developing world. He cites a statistic from William Easterly—a New York University economist who is famously skeptical about the effectiveness of third-world aid. Easterly acknowledges that the World Health Organization’s efforts against malaria, diarrhea, respiratory infections and measles save approximately one child’s life for every $300 (¬£210) spent. That is roughly the price of a new wool single-breasted suit from Marks and Spencer, or dinner for two with a fine champagne at Brasserie Blanc. When we spend our money on fine clothes or fine food, Singer says, we are valuing frivolous fun above the lives of real human beings.

Yet if every ¬£210 suit is another child’s life, then every ¬£21 hardcover book is a tenth of a child’s life and every ¬£2.10 latte is one-hundredth. Does Singer’s argument imply that all luxury spending is problematic? Yes, but he does not ask us to become bare-bones ascetics. Rather, he sets out specific standards for charitable giving based on income level, and he asks his readers to abide by them. Everyone should strive to donate at least 1 percent of their income to anti-poverty efforts, he says, but someone like Jimmy Cayne should be giving close to 30 percent. (The full set of standards is posted online here.)

More than one thousand people, from China to Chile, have logged onto Singer’s website and pledged to abide by his percentage-of-income standards. Tim Harford—the Financial Times columnist who once penned an “economic case against philanthropy”—now says that Singer’s book has motivated him to donate to Oxfam. William Easterly, writing in the Wall Street Journal, is less persuaded. According to Easterly, “Mr. Singer argues from a small number of… examples that it is relatively easy to do good things for the poor,” even though much aid is wasted due to corruption and incompetence.

But Singer only needs “a small number of examples” to prove his point. Even Easterly would have to acknowledge that some aid organisations are effective. For example, the Addis Ababa Fistula Hospital treats women who suffered debilitating injuries in childbirth that cause them to leak urine and feces continuously; for as little as ¬£100 per surgery, the hospital can cure the condition with a 93 percent success rate. (Singer’s Australian publisher is giving 5 percent of its proceeds to the hospital.) As long as well-run organisations like this exist, and until they are fully funded, donors can be reasonably confident that their charitable donations are going to good use.

Granted, this is not a message that many will want to hear during a deep economic recession. As reviewer Katha Pollitt wrote in the Nation, “the gods of publishing must have had a good laugh” when they arranged for Singer’s book to come out when “so many are broke”. Yet in some sense, The Life You Can Save has appeared at the perfect moment. As a result of the financial crisis, the world has a rare opportunity to put Singer’s ideas into action.

Barack Obama has already imposed a $500,000 (¬£360,000) compensation cap on bank executives who receive bailout money. Gordon Brown is calling for a global code on bankers’ pay. The public is demanding some sort of change in the way that top executives are remunerated. But as one executive compensation consultant told the Los Angeles Times recently, people in his industry are “pretty damn smart” and will come up with ways to skirt the caps. Companies will compensate their CEOs with restricted shares instead of providing stock options or cash bonuses. They will offer their CEOs new perquisites that do not count toward the $500,000 cap. CEOs might be breakfasting on red wine, bacon, and salmon once again—this time, on their companies’ tabs.

Imagine, however, if Obama and Brown—instead of imposing quixotic compensation caps—forced banks to adopt Bear Stearns-style policies for top executives. Banks might implement an “opt-out” 1 percent plan for the rest of their employees. Unlike compensation caps, bankers might actually embrace such an approach. (Cayne says that most executives found that charitable giving was “incredibly gratifying”.) And unlike compensation caps, society might actually benefit as a result.

Inevitably, some senior executives will object to Singer’s stipulation that their donations go to anti-poverty efforts. They will fight for the right to donate to museums, musical groups and other organisations that Singer deems “dubious”. And whereas Singer believes that developing-world aid is almost always more cost-effective (from a life-saving perspective) than domestic aid, an argument he makes forcefully in One World (2002), it seems unlikely that Singer’s suggestion will garner support unless it allows for gifts to local causes. Even so, a plan that raises the quantity of charitable giving—regardless of which charity—is preferable to a plan that raises the quality of the executive dining room menu, and Singer’s proposal would do more than that. The ¬£32 million from Bear executives alone in 2006 could have funded, by one estimate, 45 million meningitis or measles vaccinations in the world’s poorest places.

Of course, there still is one problem with the “Bear Stearns Plan”: there are few brands that are as associated with ignominy (though “Bernard L. Madoff Securities LLC “and “Stanford Financial Group” give “Bear Stearns” a run for its money). We might call it the “one percent doctrine “, except that Dick Cheney has already dragged that moniker through the mud. The Bear Stearns Plan is an idea whose time has come—but whose name has yet to arrive.

Daniel Hemel, an MPhil candidate in International Relations at New College, Oxford, is writing a thesis on global financial regulation. He is a Senior Editor of the Oxonian Review.