On allocating resources, why does the undercover economist care more about donations than bank credit?

Sir, I refer to Tim Harford’s “Ice bucket challenge: the cold facts” September 13.

In it he refers to the problem that many very well intended donation drives, for all types of individually very worthy causes, may not, in aggregate, reflect the best use of donations.

Who is to decide? Harford suggests: “GiveWell, an organization that aims to give donors the information they need to make the most effective donations”, a sort of donation effectiveness rating agencies. But, Harford would of course not go to the length of making donors have to heed the opinions of GiveWell, as that would of course give GiveWell a power that, sooner or later, it would be tempted to abuse.

But in banking that happens! Even though banks considered credit ratings and other risk information when deciding to whom to lend and at what rates, the besserwisser risk adverse Basel Committee decided that it had to intervene, and with its credit risk weighted capital requirements, it much favored bank lending to those already favored, “the infallible”, which of course meant that those who already had less access to bank credit, “the risky”, would have that even more restricted.

And so the question that remains is… why would the undercover economist Tim Harford care more about the efficient allocation of donations, than about the efficient allocation of bank credit?

Access to bank credit on especially good terms is also an unfair privilege

Sir, if GillianTett can argument for more equal opportunities for all to access higher education, “Privilege is price for college admission” October 21, why does she refuse to argue in favor of equal access for all to bank credit, by eliminating the regulatory privileges given to those perceived as “The Infallible”?

By the way, one thought that Tett´s article inspires, since donations to universities have tax advantages, as long as nothing “tangible” is received in return, is whether these donations should not be shared, for instance 50 percent to the receiving university and 50 percent with the rest?