Nicholas Kristof has a soft spot for people who want to get rich while helping the poor. He devoted his column to the question of whether people running charities should be very highly paid. Part of his story is that such salaries are necessary to get good people. While I'm sure that there are good people who earn high salaries, I've never been fortunate enough to meet such a person. But that point aside, there is a basic logical problem in Kristof's discussion. Let's assume that the population is prepared to commit a more or less fixed percentage of its income to charity. While in principle, this can be expanded, it is unlikely that even the most charismatic salesperson will have too much impact. This means that the heroes of Kristof's world, the folks who get half million dollar salaries to run their charities, are not really increasing the take for the poor of the world in total. Rather, they are diverting money away from other charities to their own. While this is no doubt good for their pocketbook in the short-term and their resume in the longer term, it is not necessarily good for the poor. If Kristof's heroes take a larger portion of their contributions in salary than their competitors, and use a larger portion for advertising than their competitors, then their main impact on the charitable world will be to divert money that might have otherwise gone to helping the poor to salaries and advertising. That's not a pretty picture in my book. Of course if Kristof's stars really do increase the total take that goes to charity, then it would be a different story, but does he have any evidence that this is the case? My guess is that the six-figure charity boys have pretty much the same impact as the seven, eight, and nine figure Wall Street boys. They are very effective at making themselves rich while destroying everything around them.
--Dean Baker
