Today, we were greeted with the announcement that Mark Zuckerberg, the cofounder and chief executive of Facebook, and his wife would give 99 percent of their Facebook shares “during our lives”—holdings currently worth more than $45 billion—to their nonprofit foundation, the Chan Zuckerberg Initiative.
Perhaps we should pause before we are swamped by all the gushing admiration for this grand philanthropic gesture.
As Jeff Guo explains,
The private foundation is an especially American style of charitable giving. Non-profits in the United States play a disproportionately large role in public life, in part because American tax laws make it attractive for the rich to donate. Much of their wealth could otherwise be captured by capital gains and estate taxes.
Private spending on social welfare in the United States is four times the average in advanced economies, according to the Organization for Economic Cooperation and Development. The wealthiest countries, like France and Germany, are far more likely to use government resources to promote social good, and far less likely to use private resources.
This gap in national philosophies helps explain why the Giving Pledge has been popular with American billionaires, yet not quite as popular abroad. German shipping magnate Peter Krämer is one of the most vocal detractors of the pledge, and the American tradition of government-sponsored charity. Here’s an excerpt from a 2010 interview with the German paper Der Spiegel, which asked him for his reaction to the plan.
Krämer: I find the US initiative highly problematic. You can write donations off in your taxes to a large degree in the USA. So the rich make a choice: Would I rather donate or pay taxes? The donors are taking the place of the state. That’s unacceptable.
SPIEGEL: But doesn’t the money that is donated serve the common good?
Krämer: 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?
SPIEGEL: It is their money at the end of the day.
Krämer: In this case, 40 superwealthy people want to decide what their money will be used for. That runs counter to the democratically legitimate state. In the end the billionaires are indulging in hobbies that might be in the common good, but are very personal.
In the United States, Zuckerberg and other billionaires get to decide, privately and without any public deliberation, what to do with their wealth—how much or how little they will donate to charity, and what pet projects to sponsor with the amount they decide to give.
One alternative, as Krämer explains, is to let the state decide. Another, of course, is to let those who have produced Zuckerberg’s wealth decide—the people who work for his company (in which, even after his “gift,” he will retain a controlling interest) and the rest of us who are forced to have the freedom to use Facebook to stay in touch with our friends.