The principle that, given perfect competition and complete markets, the productive decision is to be governed solely by the objective market criterion represented by attained wealth–without regard to the individuals’ subjective preferences that enter into their consumptive decisions–will appear repeatedly throughout this study. We will call this principle the Separation Theorem.

This quote is from J. Hirshleifer, Investment, Interest, and Capital, 1970. It’s the textbook that Jack Hirshleifer used in my course on capital at UCLA in the spring of 1973. The point is that it makes sense to choose productive activities to maximize wealth and then use the wealth to maximize your utility, but not to mix the two. And, of course, you can get utility by giving to charity.

Here’s investor Kevin O’Leary making the same point, only more clearly, in a specific context in his interview with Nick Gillespie of Reason. Gillespie asked O’Leary what’s wrong with Whole Foods CEO John Mackey’s idea of “conscious capitalism,” which includes the idea of giving some percentage of corporate profits to charities that the CEO favors.

O’Leary says:

Let me give you an example. Let’s say I can invest in two financial services companies. One of them decides, the CEO decides, that he wants to support a charity. And he wants to give $100 million to that charity across four quarters. Now, it’s not my charity. My family supports multiple charities but none of the ones that I support [are ones] he is supporting. My message to him or to her is: You deliver me my profits; I will decide which charities I want to support; you have no right to do that on my behalf. I don’t agree with you. I don’t care what you like. You should take your portion of the your salary or the stock you own and the dividends you get and you deploy it the way you want. The core of the business is to deliver profits to the shareholders who then will redeploy it in any way they wish.

Drop the statement “you have no right” and this is a beautiful application of the separation theorem.

The whole interview is worth listening to. I found particularly interesting, even if I was not totally persuaded by, O’Leary’s statements about how his businesses even in California are benefiting from Trump’s deregulation. The example he gives about windows [at about the 16:00 point] in a “wine and design” business sounds like a local or state regulation, but he says that it was in part due to a federal regulation that Donald Trump’s administration abolished.