It is with great reluctance that we must disagree with Warren Buffett, a man we admire and whose opinions we respect. But, one of the things we like about him is that he admits that he is not infallible.

He recently said that wealthy people like him should pay higher taxes. A group of the European “super-rich” said the same thing.

The obvious response is to say that, if they feel they are not paying enough, no one is stopping them making a voluntary contribution to the state. There is a precedent: the British Conservative MP, and later Prime Minister, Stanley Baldwin once donated a considerable portion of his own wealth to reduce the national debt in the hope that others would follow his example. Few did. There is no record of a similar gesture in the nine decades since then.

A more considered response is to acknowledge that Buffett made at least one good point: it is indeed absurd that our complex tax systems allow the “super-rich” to pay lower marginal rates than middle- or lower-earners. The solution, however, is not higher taxes on the rich but a flat rate tax system, ideally one integrated with the benefits system.

It must also be acknowledged that, although many “champagne socialists” are hypocritical in calling for higher taxes while paying as little as they can, no one can accuse Mr Buffett of such hypocrisy, because he is a great philanthropist.

Indeed, the correct response to Buffett is to appeal to his patriotism: “Mr Buffett, who is more likely to invest your money efficiently, you, with your track record of sensible investment over decades which earned that money in the first place, or the spendthrift US government, which is so incompetent with money that it just lost its credit rating?”

If America is to recover, it must invest in viable businesses. Private sector investment is almost invariably more efficient than public. The pool of surplus wealth held by the “super-rich” is therefore a more effective engine of recovery than the government. Some of this wealth may be wasted through personal extravagance, but very few wealthy individuals waste as much of their own money as our governments waste of ours.

For this reason – as well as for the incentive to generate more wealth – a group of British economists are right to suggest that a cut in higher rate tax would benefit the economy. That said, an even more efficient way of boosting productivity would be to cut taxes that increase the costs of doing business, such as payroll taxes and business property taxes, rather than taxes on the profits of business. President Obama is therefore right to emphasise cutting payroll taxes as the best short cut to new jobs – subject, of course, to the reminder that the debt crisis is still with us.

A book about the 1920s written in the 1970s is again oddly topical.

Adam Fergusson’s When Money Dies analyses the hyperinflation that wrecked the German economy under the Weimar Republic. It has become something of an underground classic since being recommended by Warren Buffett in the wake of the 2008 crisis.

It seems particularly relevant in the light of the latest British inflation figures. They are nothing like the old Weimar levels, nor is there any serious prospect of them reaching those levels, but the danger of inflation is precisely that it seems so innocuous at first.

It operates on the same basis as drug addiction. At first, taken in small quantities, the drug makes the future addict feel good and seems to do no harm. In the same way, inflation gives the illusion that more wealth is circulating, which makes everyone feel better: order books are full, business has access to cheap capital, unemployment is reduced, and a depreciating currency helps exports. So it seems a little more will do no harm... then a little more... then a little more...

Soon the situation is out of control. The decision to take another fix is revealed as less and less of a free choice, as the addiction takes on a momentum of its own. Kicking the habit will involve pain and suffering. That thought is enough to postpone it – but the longer it is postponed, the greater the pain and suffering will have to be. That thought prompts further postponement.

Finally, the inevitable crisis forces a choice, or takes all choice away – as the patient collapses, or comes under the control of an external authority: the drug addict is committed or imprisoned; the inflationary state is forced to hand control of its economy over to the IMF.

Inflation is, in effect, a country borrowing from its own future – and at a high rate of interest. An old fashioned view of economics has inflation as an alternative to unemployment, but inflation is at best a postponement of unemployment. Sooner or later, the underlying weaknesses of an economy must be addressed – and the later one leaves it, the harder that process will be.

This is a good time of year to reflect on charitable giving. Contrary to the stereotype of the hard hearted capitalist, most businesses and businessmen like to “put something back”. The huge donations of the wealthy, the Gates and the Buffetts, are well publicised, but rare is the entrepreneur who has never put his hand in his pocket for someone worse off than himself.

America’s philanthropic tradition is more developed than Europe’s. Research shows that this is due to America’s religious culture, but even irreligious Americans, like Gates and Buffett, are more likely to see charity as a duty.

There is another difference between American and European, or British, thinking. Toby Ord, a British researcher on a fixed income, has pledged himself to give a million pounds to charity over his lifetime by living frugally.

Commendable, certainly, but an American would probably do things differently. Given the task of giving a million to charity, an American would probably identify Ord’s fixed salary as the real problem. Instead of working for someone else for a pittance, an American Ord would set up his own business. If things went reasonably well, the business might yield a few million in the course of a decade, sufficient for the million– and more – to charity, with enough left over for a comfortable lifestyle.

This way of doing things has two advantages, in addition to the probability of a greater yield for charity. First, it adds value to the economy, while living off a fixed salary subsidised by the taxpayer does not. Second, a reasonably comfortable lifestyle – so long as it is not excessively self-indulgent – is more likely to increase your productivity than grim frugality. Even saints are motivated by the prospect of reward.

Of course, all this misses the point. Most of us do not set ourselves the arbitrary objective of donating a specific sum. Charity is about giving according to one’s means, whether it be the widow’s mite or the loudly trumpeted benefactions of a Gates or a Buffett. The poor are always with us and we can do good to them whenever we want.

Charity – from the Greek word for “love” – is not just a matter of giving from our surplus income. It is about how we treat people generally. It is the complete opposite of charity to behave unscrupulously in business and then hope that a large public donation to a good cause out of ill-gotten gains will put everything right. Honesty and decency – and sometimes, when the opportunity is given, a little compassion – in our everyday business and personal lives would do more good than a million to charity.