somnath wrote:So if Warren Buffet earns (say) 1 billion dollars every year from his equity in Berkshire, he can either buy more stock of the company with that, or invest in other businesses, or buy real estate in Manhatton or islands off Monaco, or give it away to Bill Gates Foundation...the perspective of people like Buffet is that his company, Berkshire will anyway take advantage of any emerging investment opportunity that he sees..therefore, his personal money need not be restricted to be used in his "vision", but can be used for a larger cause...Its a perspective, and there are no right or wrong answers...
Your argument can be used when investment rate in the country is good enough through other sources. In fact one can take the state of the US economy today itself as an example. Clearly there is immense whining (reflected in other BRF threads) on the state of the US economy - & high unemployment rates. Growth rate is low - investment is not picking up even as interest rates are near zero - QE2 has not resulted in credit pickup.
One could argue that American billionaires are not doing enough to invest in their own economy, and most are chasing growth in emerging markets. UHNWs in the US might be holding as much as 5 Trillion $ in assets - lets assume they divert 10% of the total wealth to employment generating investment in the US - that would result in an additional $500 Bn as investment. Assuming this is leveraged 2 times, we are talking of hiking the investment rate by 10% of US GDP. This could potentially grow the US economy by an additional 2 - 2.5%, and bring down unemployment by 1% or more.
Similar calculations may be even more valid in the case of developing countries like India and China. But yes, health and social indicators like eradicating malaria, primary education etc are better addressed through non-profits.