Mandatory Donations—is that a good idea?

Posted by Tara Greco

Did you see the latest story about Goldman Sachs bonuses?

GS is considering an expansion of an existing program that requires top executives to give a certain portion of their income to charity.

While I applaud the intention, I’m not sure that this is the best way to instill a sense of benevolence within their employee base.

But I’m not an expert in the psychology of Wall Street.

This story does remind me of an anecdote from President Obama’s book The Audacity of Hope, in which he is discussing taxes with Warren Buffett. And I do think Mr. Buffet knows a lot about the psychology of Wall Street…so I think he’s probably on the right track.

“The free market’s the best mechanism ever designed to put resources to their most efficient and productive use. The government isn’t particularly good at that. Bu the market isn’t so good at making sure that the wealth that’s produced is being distributed fairly or wisely. Some of that wealth needs to be plowed back into education, so that the next generation has a fair chance, and to maintain our infrastructure, and provide some sort of safety net for those who lose out in a market economy. And it just makes sense that those of us who have benefitted from the market should pay a bigger share.” (p. 190)

Maybe the GS people are listening to him too.