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Zara Billionaire’s “Cheap” Philanthropy: $360 Million For Cancer Treatment

By The Foundation for Economic Education. Originally published at ValueWalk.

Amancio Ortega, founder of Inditex and top 5 on Forbes list of The World’s Billionaires, was recently involved in a controversy on account of a donation that his foundation made to the public health care system in Spain. The donation, which amounts to $360 million, was aimed at acquiring new equipment for diagnosis and treatment of cancer in public hospitals. Unfortunately, this anti-philanthropic stance is not rare.

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As soon as the donation was announced, numerous organizations and politicians publicly censured Amancio Ortega.

A spokesman from the Federation of Associations in Defense of Public Health Care (FADSP) stated that “it is not necessary to draw on, accept or thank the generosity or charity of any person or entity since we aspire to an adequate financing of health care via progressive fiscal policies”.

In a statement to the media, the FADSP claimed that this was just “a penetration of neoliberalism in the utilization of medical technology.” Similarly, an elected officer from Podemos, the populist party founded by several ex-advisors to the Venezuelan government, labeled the donation as “cheap philanthropy”, appealing to the hackneyed concept of fiscal justice and accusing Inditex of alleged tax evasion.

Chastising Charitable Giving

Unfortunately, this anti-philanthropic stance is not rare. Philanthropy is viewed with suspicion by a substantial part of the Spanish population. What’s behind this prejudice? Why would somebody oppose a donation that can save or improve the lives of thousands of people, especially those with little resources?

From this perspective, philanthropy is an insult.

One reason is class hatred: a systematic bias against wealthy people resulting from the profoundly-mistaken idea that the economy is a zero-sum game, and the rich can only get richer at the expense of lower classes.

Consequently, any excessive accumulation of wealth (whatever this means) must, in principle, be illegitimate and the well-off must be deprived of their capital via taxation in order to redistribute it among the rest of the population. From this perspective, philanthropy is an insult: multinationals and rich businessmen must pay their fair share (a euphemism for “what you pay will never be enough”) and cease making useless altruistic donations.

The problem with this account is that it does not match reality, especially in the case of Amancio Ortega. First, the founder of Inditex is a self-made millionaire that started from scratch. He became rich not by means of rent-seeking or impoverishing others, but by satisfying consumer needs, creating thousands of jobs all over the world and contributing to improving living standards in developing countries like Cambodia, which has experienced spectacular economic growth and improving living standards in the last years thanks in part to the increasing weight of the garment industry in its economy (it represents 70% of all exports).

In addition, Inditex did not only not evade taxes between 2011-2015 as suggested by Podemos and the proponents of the fair-tax euphemism, but it actually paid an effective corporate tax rate 1 to 3 percentage points higher than the average of the EU over that period.

The Politics of Opposing Philanthropy

The concept of philanthropy has a poorer image in societies that look to the State to solve problems.

However, there is a deeper reason that explains this cultural rejection towards philanthropy: the political dichotomy between markets and the State, or in philosophical terms, between voluntary cooperation and coercion.

Philanthropy is highly-regarded is those societies that celebrate the economic and non-economic benefits of markets and voluntary cooperation. Meanwhile the concept of philanthropy has a poorer image in those societies that tend to look to the State to solve problems.

It is no coincidence that, in the period between 1995 and 2002, (the latest comparative numbers available) the US spent almost 4% of GDP a year on private philanthropy, among the top 3 countries in the world. By contrast, Spain, a strongly statist society, spent little more than 2% of its GDP on private philanthropy.

Criticisms voiced against Amancio Ortega are grounded on a mix of ignorance, class hatred, and a poor understanding of what the concept of solidarity really means.

As one of the cancer patients that will potentially benefit from Ortega’s donation put it:

I have been fighting against cancer for ten years. I support public health care, but I’m totally opposed to despise someone, whether rich or poor, who wants to contribute to us overcoming our disease.”

Adam Smith was right when he wrote about the empathetic nature of human beings. Philantrophy is just one of its many manifestations. Why are there still people that refuse to accept this?

Luis Pablo de la Horra

Luis Pablo de la Horra

Luis Pablo De La Horra holds a Bachelor’s in English and a Master’s in Finance. He writes for FEE, the Institute of Economic Affairs and Speakfreely.today.

This article was originally published on FEE.org. Read the original article.

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