It seems that the last shots in the war over Warren Buffett's charitable donation have not yet been fired. This time General Richard Posner brings in his heavy guns.
The foundation is an inherently inefficient allocative institution because, much like the government, it is not subject to market tests. There is no way to assess the value of the Gates foundation's expenditures because the foundation is not competing in any product or capital market. (Colleges and most other recipients of charitable gifts, in contrast, compete in product markets.) Gates and Buffett are extremely able businessmen but the Gates foundation is engaged in activities, such as fighting Third World diseases, that are remote from their business experience.
Well the war might go on but we're leaving the field of battle for now. It seems like a good time to declare victory and come home. So we're pretty much through with our obsession with contrarian takes on Warren Buffett's donation to the Gates foundation. Really. Or probably.
The Gates Foundation and the Estate Tax--Posner's Comment [The Becker-Posner Blog]