Jeff Bezos and the dark side of big philanthropy
Another year, another CEO of a major mega monopolistic corporation “steps down” to focus on “philanthropic efforts.” This time it’s Jeff Bezos. Inevitably, it’s all a public relations stunt and a smokescreen. Recently, Amazon had to pay a $62 million fine for stealing tips from their delivery drivers. This would have been bigger news, but right as that happened, Jeff Bezos stepped down and announced a bunch of philanthropic measures like the Bezos Earth Fund.
It’s not a new concept for corporations and the wealthy to use philanthropy as a way to rehabilitate their public image following some controversy. But it is effective. The natural response to seeing donations of obscene wealth is always, “Wow isn’t this person doing a lot for society? Good for them. They’re rectifying their errors.”
Of course, reality is often disappointing, and this is one of many cases. While those philanthropic measures may be helpful, their benefits will never be as much as the benefits the donor receives in the form of tax breaks and write-offs. This is also not a new concept. In 2014, the founder of GoPro, Nicholas Woodman, became a billionaire with his company’s initial public offering (IPO). He stuck $500 million in a donor-advised fund (DAF), which allows money to be earmarked for an unspecified, philanthropic purpose and allows the money to sit in there indefinitely. Of course, the money and the DAF, called the Woodman Foundation, are nowhere to be found now, but at least Woodman got a $500 million tax write off.
Now, in order to understand all of this, we need to go back in time to the 1870s. Westward expansion and the U.S. conquest of land was peaking, and the federal government was giving away land grants to prospectors and investors with nearly no oversight or regulation. This ultimately led to massive monopolies forming in every industry from agriculture to railroads to oil to gold. By the 1890s, these monopolists, called robber barons, controlled the entire economic and political fabric of the whole country, and naturally, everyone got angry about it.
In the early 1900s, a certain robber baron by the name of Andrew Carnegie argued in his book, The Gospel of Wealth, that it’s the social responsibility of a wealthy individual to live a modest life because income is unnecessary after a certain point. Instead, that money should be invested back into the community. In fact, towards the end of their lives, many robber barons, such as John Rockefeller and JP Morgan, gave away their wealth. Just like what Jeff Bezos is doing now, the robber barons were using philanthropy to rehabilitate their public image after decades of making the lives of millions worse.
The rehabilitation has worked though. In the modern era, the average person looks back on Andrew Carnegie fondly for his philanthropic spirit. Looking at our own university, there’s very little discussion about Carnegie’s funding of eugenics and much more about the spirit of Carnegie’s “ethics.” It’s tough to approach discussions about historical figures through a modern lens because often the discussion begins and ends with “they were problematic.” However, it is important to dispassionately examine these decisions and their contexts, learn what about it was bad, and understand how we can see or avoid similar trends in the modern era. The problem is that we have spent a lot of time seeing similar trends but failing to avoid them.
For example, we all know Bill Gates for his philanthropic efforts for world health initiatives. But not many people know that he had used his efforts to aggressively push for charter school laws in his home state, Washington. The Washington Supreme Court ruled one law he supported to be unconstitutional. Of course, that didn’t work because Washington Governor Jay Inslee didn’t want to close the schools down because it would have been a politically bad move. Gates then spent more money trying to defeat the Washington Supreme Court justice who ruled the charter school law unconstitutional. This is also discounting the years he spent as CEO of Microsoft making a mockery of federal antitrust laws.
Bill Gates is the best of the rich bunch. Most cases of the wealthy’s influence are significantly worse. There are endless 501(c)(4) groups that allow millionaires and billionaires to donate anonymously, so there’s a lot of dark money in our political system. A lot of the time, the manipulation is clear as day, such as Uber’s and Lyft’s threats to leave California if the state made them reclassify their drivers as employees instead of as independent contractors. Because god forbid that Uber and Lyft have to actually pay their drivers and provide them health benefits. The rideshare giants ended up winning at the end of the day because California passed Proposition 22 which classifies their drivers as independent contractors.
This manipulation, called rent-seeking behavior, is a common practice for corporations and the wealthy. Essentially, this ensures that economic benefits continue to be concentrated in the hands of a few at the expense of everyone else. As for why this happens, there is another important concept called diminishing marginal utility of income. To put it in easy terms, the benefits a low-income worker gets from gaining 2000 dollars is far greater than the benefits gained by a billionaire making an extra couple of million dollars. The idea is that there’s a point to which income is useful because it covers your necessities and the amount of leisure you need to keep yourself sane. Anything beyond that is entirely unnecessary, so in order for you to get any benefit out of making more, you need to make an obscene amount more. That’s one of the reasons you’ll often see how the ultra-wealthy seem to gain wealth at an exponential rate. Unfortunately, wealth is also limited, so really rent-seeking behavior is extractive because wealth that would otherwise be more equitably distributed is instead accrued by the wealthy.
The other reason for these exponential wealth gains by the elite is that propaganda allows them to continue to get away with their undue influence and control over the economy. The most insidious element of Andrew Carnegie’s book is that he argued that the rich ultimately know best about what to do with their money. It’s obviously not true, but since the 1980s in particular, the rich have spread misinformation about this, such as with trickle-down economics. Their rent-seeking behavior sabotages government functions, they pose as saviors with their philanthropic efforts, and then they lobby for tax cuts that will result in less government revenue for comprehensive social programs while claiming those tax cuts will stimulate economic growth.
It has not worked and there’s a lot of evidence that shows that. For example, stock buybacks are a common issue, where shareholders will lay off workers as they anticipate tax cuts and use the extra revenue to buy their own firm’s stock to drive its price up, enriching themselves. So the rich do know what they’re doing with their money. It’s just not for the benefit of the rest of the country.
It’s clear that the benefits of charity are nowhere near the benefits the rich get from rent-seeking behavior. There is nearly half a trillion dollars spent on charity in the U.S., yet inequality is rising and Americans have to crowdfund their healthcare, rent, and education costs. But despite all this, some will still continue to argue that the rich and wealthy deserve their money and that taking away their wealth is unfair. Of course, it makes no economic sense to argue this based on everything I talked about earlier. Adam Smith himself would disagree with this assertion.
But for some, this sentiment is often rooted in a moral argument about working hard and making it, and to be honest, I understand where it comes from. My parents have clawed for 15 years in this country to build a better life for me and my younger sister, and I would argue that, morally, they deserve much, much more money for the insane amount of labor they have done. My mother has worked 60-80 hours per week for the last decade, and my father changed industries entirely, even spending over three years driving back and forth from New Jersey each week for his job. Even with our life of comfort now, I can see the physical and psychological toll it has taken on them even if they themselves can’t. It’s disheartening, and so I get it when people talk about deserving the money they earn for the work they put in.
But just because you work hard and make it to a life of comfort doesn’t mean that those who don’t make it aren’t working hard either. It’s now reaching the point where 77 percent of Americans are working more than 40 hours a week. Not to diminish my parents’ hard work, but there was still a degree of luck involved in achieving their current financial comfort and it is important to be self-aware of that. There is nothing wrong with someone making more money than someone else based on the value of their labor. But it is entirely wrong to assert that some labor is inherently lesser or that people deserve less for not making it.
So as you see Jeff Bezos spend the next few decades trying to rehabilitate his public image, remember that his efforts are a drop in the bucket and will never be as effective as comprehensive policies that address the issue. It’s a sick game being played, and most of us don’t get to be the players. People should be allowed to live with dignity, but this is not a dignified system. I would normally end with some call to action for obvious policy changes that would start to rectify this situation. Unfortunately, I just don’t know anymore when change will happen or if it will be too late when it does happen.