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Thursday, December 10, 2015

Some criticisms of the philanthropy of the wealthiest one percent

Some time ago Bill Gates and Warren Buffett issued an invitation for the very rich to join their Giving Pledge. Some of Germany's super-rich have rejected the invitation.

Some of the critics claim that obligations that are often better provided by the state should not be left to philanthropy and private funding. Peter Krämer, a Hamburg-based shipping magnate and multimillionaire, has emerged as one of the strongest critics of the "Giving Pledge." TheWikipedia entry on the pledge reports:
 April 2012 that "81 billionaires committed to giving at least half of their fortunes to charity".[1] As of August 2015, 137 billionaire or former billionaire individuals or couples have signed the pledge; a significant majority so far are, like Buffett and Gates, US-American citizens.[2]Most of the pledges come from North America but there are a number from Europe and Asia as well.
Peter Hamburg notes that those super-wealthy people who sign on get to decide what their money is used for, not the state or the people. In the end, the super-wealthy indulge in their hobbies that could be in the common good but are quite personal and not decided by representatives of the people. Of course many will claim the money is the property of the rich individuals to use as they wish. I presume Hamburg's point is that a proper tax system would ensure that the rich paid more in the first place in the form of taxes, so that they did not have such large sums of money.Hamburg concludes:It is all just a bad transfer of power from the state to billionaires. So it's not the state that determines what is good for the people, but rather the rich want to decide. That's a development that I find really bad. What legitimacy do these people have to decide where massive sums of money will flow?What gives them the legitimacy and power is that they have the money, in most cases probably legitimately in terms of existing laws. Hamburg also takes a swipe at the US noting that it already has a desolate support system. He said that Gates and Buffet should have given their money to some of the many communities in the US who do not have funds to provide proper public services.
Recently on the birth of their daughter, Mark Zuckenberg a co-founder of Facebook, and his wife Priscilla Chan announced they would donate 99 percent of their worth, mostly Facebook stock valued at $45 billion . However, the couple are not donating directly to charities or even setting up a charitable foundation. Zuckenberg has created a limited liability company, the Chan Zuckenberg Initiative LLC. As Gawker explained: The Chan Zuckerberg Initiative is not even an actual charitable organization, but rather structured as an LLC. Unlike a charitable trust, which is compelled to spend its money on charity, Chan Zuckerberg Initiative, LLC will be able to spend its money on whatever it wants, including private, profit-generating investment.As the New York Times points out the LLC unlike a charitable foundation is not even required to allocate a certain percentage of its assets every year to charity. The LLC will not be subject to such rules or the transparency requirements either.
The LLC can invest in for-profit companies but no doubt described as socially responsible. The LLC can also make political donations and spend money lobbying for changes in the law. Jesse Eisenger in the New York Times says of Zuckenberg's donation: He created a limited liability company, one that has already reaped enormous benefits as public relations coup for himself. His P.R. return-on-investment dwarfs that of his Facebook stock. Mr. Zuckerberg was depicted in breathless, glowing terms for having, in essence, moved money from one pocket to the other.
In spite of these issues, society is no doubt better served by Zuckerberg channeling his money into the LLC rather than spending it in conspicuous and lavish expenditures of the type exhibited by some gulf oil potentates as well as others. One of the reasons Zuckerberg and his wife have a great deal of public appeal is this lack of conspicuous consumption to show that they are rich. However as critic Teju Cole puts it the power of being rich often "supports brutal policies in the morning, founding charities in the afternoon, and receives awards in the evening".

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