A Billionaire’s Self-Defense Misses The Point
Not all charities are democratic. Just ask the big donors.
By chance, I think it was from Hacker News, I learned of a speech given by the daughter of a billionaire, in defense of billionaires like her father. The speech was unexpected and surprised more than a few people in attendance. The speaker, Jennifer Gross, is the daughter of Bill Gross, co-founder of PIMCO, the investment management firm. The incident was covered by Forbes in their article, At A Vatican Conference, A Billionaire’s Daughter Defends The Role Of The Rich.
In that speech, Jennifer Gross defended the roles of billionaires in our economy and said that when we vilify billionaires, we forget all the good that they do. From the article:
In her speech, Gross argued that those who criticize the rich forget all the good that philanthropically minded billionaires like her father do for society. Bill Gross, whose net worth Forbes pegs at $1.5 billion, has donated more than $700 million to charity, and told Forbes that he plans to donate most of his fortune to his foundation when he dies. His daughter emphasized that, virtuous or not, the wealthy are people, too. “I do think we need to treat everyone as human beings,” Gross said at the Vatican. “It has become very popular to bash billionaires. There is no solidarity in that. It creates separation between us and ultimately unhappiness.”
I agree with her point that we do need to treat everyone as human beings. I get that. I find her last point very interesting, that when we bash billionaires, we create separation between us and that breeds unhappiness. She says that we cannot have solidarity while bashing billionaires.
I think at this point, we have to ask ourselves how billionaires come into existence. The assumption we are asked to make is that billionaires earned their money. In 2017, the average American income was about $48,150. $1,000,000 is more than 20 times the average American income. A billion is one thousand million. that means that for someone to just own $1 billion, a lot of assumptions must be made.
For the average person to “earn” $1 billion, he must work 20,000 years. We must assume that a billionaire is at least 20,000 times more productive than the average American worker. We must assume that a billionaire is at least 20,000 times more efficient than the average worker. We must assume that a billionaire is as productive as 20,000 people. Is it possible for any solitary human being to be 20,000 times smarter than the average person? I doubt it. There is only so much space in our craniums. None of us are superhumans.
That separation or lack of solidarity that Jennifer Gross feels, that’s from something else. That sense of separation comes from the outsized influence that billionaires have on public policy. People see that money and when presented with an opportunity to have some of it, become willing to set aside virtue for money. They allow themselves to be corrupted by money. They become willing to trade dignity for money.
In the last few decades, there has been a clear disconnection between productivity and wages. We can see it in this chart here from the Economic Policy Institute:
That pay gap between productivity and wages is not a result of a free market. In a free market, there would be no chance for anyone to accumulate a billion dollars. So there is a gap in pay — pay that doesn’t match the productivity. At the low end, the pay is less than productivity. At the high end, pay overshoots productivity. And all of that is due to public policy decisions and outcomes. And the people who have the greatest influence in public policy decisions and their outcomes are the people with the most money.
In his book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer, Economist Dean Baker provides the details we need to see to understand why billionaires are the subject of so much scorn these days. And it’s not because they’re bad people. It’s because millionaires and billionaires helped to create the public policy conditions that allow a billionaire to exist. In other words, their money drowns out the voices of everyone else in public policy decision-making processes. This is also true of millionaires but to a lesser extent. One only needs to look at the influence of billionaire Donald Trump on public policy outcomes to see this point.
It’s also important to note how foundations such as the Bill and Melinda Gates Foundation have impacted public policy decisions. They are non-profits, so technically, they can’t retain non-profit status and make political contributions. But they do write scientific papers. They do write policy recommendations. Lawmakers read their papers are influenced by them. Wealthy non-profit decision making happens in lofty and expensive venues where we would not expect to see “average Americans”. That’s exclusivity. That’s exclusionary.
The outsized donations made by billionaires carry influence. The tax-exempt status of these non-profits represents a gift from the government at the expense of taxpayers. If I’m a billionaire CEO of a multinational food conglomerate, and I want to maintain or increase my profits, I could very well have influence on what a non-profit scientific organization will publish in their papers. I could use that money to suggest where they might direct their attention. Who would be the wiser?
There is a reason why a true charity doesn't take giant donations: independence. From the Big Book of Alcoholics Anonymous, I learned of their early struggles with money. I read the story of how one recovering alcoholic found his way to great fortunes and how he wanted to give thanks with a very large donation. He talked about building a service center, and from there, a huge fight ensued about what to do with that money.
The membership was small and still sobering up then. But after months of fighting, they realized that if they took that giant donation, they’d lose their independence, for they would feel indebted to a wealthy man with his own ideas of where Alcoholics Anonymous would go. And that is where we stand with most of our so-called “non-profits” created by or supported by billionaires and millionaires. I have to say that I’m a little suspicious of all that giving by Bill Gates, a former chairman of Microsoft when he donates software to a school.
The charity in government serves all. The privately run, billionaire controlled charities serve a very narrow purpose, at the pleasure of the wealthiest among us. And with the influence of big money, I think we can fairly say that charities are not democracies.
So if Jennifer Gross is looking for solidarity, perhaps she could start with how billionaires influence public policy decisions. She might even notice that the rest of us are human beings, too, and that in a democracy, where we vote for someone to represent us, we have a reasonable expectation to be heard. In a democracy, we have a reasonable expectation that we won’t be overruled by a billionaire.
If Jennifer Gross is looking for relief from middle-class resentment, she could start with how her money influences public policy and work from there.