There is no real explanation for why the pledge is "bad" except for the tired argument that the state is good and private foundations imitating the state are bad. There is no further clarification or explanation; We are supposed to accept this as some sort of given, without pretext or afterthought.
That's not what the article said at all - nor the German billionaire. He said that having a few very wealthy people decide what were the most important causes was bad compared to having the democratically elected government decide. You may disagree with that, but it is quite different from simply saying public good and private bad.
The explanation is that it's the government (or rather the people) that's subsidizing the charitable work of the billionaires via tax breaks, but giving up any say in how the money is used.
It also implies that there are no taxes in the USA i.e. no revenue whatsoever for the government to dedicate to social programs. Total government revenue in the USA (Federal and state) for 2014 was $5.8 Trillion.
The question arises: How would the government be able to "give" Zuckerberg's fortune rather than him giving it himself? Through extremely high taxation for the wealthy that would take away the lion's share of his billions so that the government can put it to work more effectively. So what? 90% tax rate on the megarich?
Government isn't known for it's efficiency in spending or giving. I'm left leaning, but we don't need to give the government new ways to not spend money where it's needed.
Private charities have on average been terribly inefficient in the US. However, in terms of Conspicuous consumption (https://en.wikipedia.org/wiki/Conspicuous_consumption) they are better than building ever larger boats.
There is no real explanation for why the article is "bad" except for the tired argument that private foundations imitating the state are good and the state is bad. There is no further clarification or explanation; We are supposed to accept this as some sort of given, without pretext or afterthought.
Krämer: 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.
...
"There’s nothing necessarily wrong with the American system of tax-subsidized charity, of course."
"The critique is that this system affords too much power to the rich, whose decisions may not align with what’s best for society. This is not to say that the government is a paragon of efficacy either, but it risks a lot to depend on a handful of mega-billionaires to be prudent, effective philanthropists."
"What genre of philanthropy will Chan and Zuckerberg invest in? Possibly anything. Their letter Tuesday set two missions, both ambitiously vague: “advancing human potential” and “promoting equality." They mention curing diseases, improving clean energy, promoting entrepreneurship, fighting poverty and hunger, empowering women and minorities, and so on.
The pair do not have a sterling track record when it comes to effective charity. One of their previous efforts, a high-profile $100 million donation to fix the schools in Newark, N.J., has been widely criticized as a failure.
Chan and Zuckerberg write in their announcement that they have learned from their past experiences with philanthropy. For now, they will start with their own community in San Francisco, focusing on education, health and “connecting people.”
You make it sound like Zuckerberg's donation in Newark happened in a vacuum. It happened in tight collaboration with the school system, who stated needs and approved every step of the process. It's not like Zuckerberg stepped in and said "you shall obey!!!" Course in this case it just turned out that not only could the democratically elected government of Newark magically waste all their tax revenue, they were excellent at wasting donated money.
> 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.
Or flip that around - is Krämer's implied solution not a case of the state taking the place of the individual?
Put another way, if you founded a company, created thousands of jobs for families and individuals, and made a fortune, why should the state be the one who decides what happens with your money? Why should the state have more of a right to decide which causes get your charitable donations than you do?
Because the structure that enabled you to amass that amount of wealth is flawed, and disproportionately rewards "you" over the network that actually did much of the heavy lifting. Nobody is saying they shouldn't be richly rewarded, just that it's gotten fucking ridiculous.
> So the rich make a choice: Would I rather donate or pay taxes?
I don't understand why people confuse this so much. It's not "should I pay this $100 in taxes or donate it?". It's "Should I pay this $100 in taxes or donate the $300 I made that the tax is for?".
Why does everyone make it sound like you can choose whether to pay taxes or donate? It's "pay taxes or donate 3-4x that amount".
501c4s, aka SuperPACs are nonprofit "charitable" organizations.
It's not like the government confiscates 100% of wealthy people's money as soon as they try to do good, it just taxes it like it does for mere mortals, whenever it changes hands. Using a legal construct to avoid personal tax liability, is quite literally depriving the government of funds it would otherwise be entitled to.
I think both sides of this debate have legitimate viewpoints, but I personally have a problem with the excessive opportunities given to the wealthy to avoid contributing to the funding of our shared system of governance and infrastructure.
Historically, they've never had it this good both tax-wise and income-wise, and to cry victim is in poor taste.
No single man should wield so much power. That's part of the foundation of modern democracy -- we don't want any single person having unchecked power to do as he or she wants. Krämer's solution is the state taking the place of the individual, as intended in the democratic model. Otherwise you have an effective monarchy, with the only difference that power isn't only inherited, but can be acquired via mercantile means. I don't want the shape of my country to be decided by the whims of a super-rich elite.
The problem with the American system isn't the culture of direct donations from private individuals. The problem is that too few people have the means to give: it's the distribution of wealth.
A culture where private people donate is really attractive. I know that I get a lot of joy when I help people out - I donate regularly to the causes I feel important (mainly Africa, as a Brit living in Netherlands I figure I owe them). As the article says, it improves social cohesion.
Wouldn't it be nice to live in a society where "everyone" enjoyed the gift of giving?
"Wouldn't it be nice to live in a society where "everyone" enjoyed the gift of giving?"
I fully agree with this, even though I completely disagree with the concept of taxation. If you have to have taxation to somehow collectively pay for the things society supposedly "needs", then have everyone pay for it. We are, after all, in the same boat, so we should all pay for it. And when I say everyone, I really mean everyone that has any income.
Though, to be fair, I live in a society where something close to 90% (the bottom-most earners) don't pay any income-tax at all. And stuff, society and government function. Sort of.
This guy takes it as a given that the Government is well-run and wise. But what's the practical alternative for someone who instead thinks that the current political environment is toxic and insane?
You take it as a given that the private sector is well-run and wise.
Nobody is saying either solution is great. All it's saying is that: wouldn't it be better to have all this power be in the hands of the democratically chosen, versus billionaires who may or may not be making relevant investments?
You mean like the US government which is pouring money and weapons into failed states and the fascists dictatorships that have resulted, might not be the most responsible entity for deciding where your charity goes? It really comes down to a philosophical decision. Do you believe the government will make better use of your neighbors money than they will?
EDIT: I picked the US government, but I doubt many other countries have to look for to see ludicrously immoral and unethical expenditures of their own.
The trade is this: if you made $100 and your marginal tax rate is 20%, you can either (a) let the government spend $20 however it sees fit and you spend $80 however you see fit (which may be an $80 bottle of wine); or (b) you spend $100 on any charitable cause you see fit (which must meet certain requirements).
That doesn't seem like a bad trade to me, especially since rich people have fairly low marginal tax rates.
Anyone who thinks that the federal government will spend money better than a charity is free to give it to the IRS. They accept donation. But no one believes this is a good idea, as evidenced by the fact that such donations are many orders of magnitude less than Americans donate to charity.
This is a really important point to make. The government may be democratically elected, but that doesn't mean that much, because of how the political system works. When people have the choice directly, they don't vote for the government. Also, comparing track records, the government has a really bad one when it comes to actually helping the poor, not just giving them enough money not to die.
Perhaps the German government can make good decisions about where to spend money, since I know they put lots of money into science and culture, but I wouldn't trust the US Congress to do the same.
The US federal government is far more likely blow it all on the military weapons systems or funding tax cuts that benefit the wealthy rather than funding guinea worm eradication or anti-malaria initiatives in Africa. The typical US congressman is unwilling to spend money altruistically on things that aren't perceived as directly benefiting the United States.
Sure, billionaires aren't saints either, but I think it's far more likely that they'll donate to causes that are geared toward having a positive long-term impact on humanity as a whole.
50 billion dollars is about 1/2 the budget of the State of California for a year. It's really not that much in terms of government expenditures. However, If used creatively, it could have a huge impact on the world, but that takes vision. Money without creativity and vision does nothing except raise the price of everything.
Precisely. The article hasn't been justifying the claim that large charitable donations are bad; it has being justifying the claim that not taxing charitable donations is bad.
But I'm not inclined to believe that, since I can reasonably believe that the increase in charitable giving from not having the tax is more significant than the gain from having the government control 20% or so of it.
Someone recently suggested this book [1] to me. I'm still reading it, but enjoying the ride so far.
The 'shift of power away from the government' argument is just one of the arguments made in the book, and author Linsey McGoey discusses it much more thoroughly than the article does. See quote /a/
/a/ The second concern is that philanthropy, by channelling private funds towards public services, erodes support for governmental spending on health and education. Outspoken observers such as Michael Edwards, a former executive at the Ford Foundation, point out that private philanthropy is no substitution for hard-fought battles over labour laws and social security, in part because philanthropy can be retracted on a whim, while elected officials, at least in theory, have citizens to answer to.
Yeah, rather leave that money to the state who will spend it on actually useful things such as new wars that will make the military-industrial complex even wealthier.
This kind of thinking unfortunately is common in continental Europe, particularly in Germany and France. This is not all about the common good or democratic legitimacy. It's really all about redistribution of wealth and getting back at "the rich". It's about slave-moral thinking that strives to punish the well-off and make everyone feel equally miserable.
I don't think that level of detail is publicly available yet. And even non-profits start out as an LLC, and then gain that designation, so that _could_ be what's happening here.
The argument doesn't make much sense to me. Each government is basically a single decision-maker that already has a very large budget. Just by watching the news, we know these decisions aren't always all that rational (though democratic!). Giving more money to a government doesn't increase diversity of funding sources at all.
Starting another large foundation creates a new source of funding with an independent decision-making process. This increases diversity in sources of funding. (Though not as much as breaking it up into multiple charities.)
Whether it's a net improvement or not depends on whether their decision-making is better than average. Unfortunately, little can be done about charities with poor decision-making (there are no market forces, and corruption is possible). But at least it's independent.
Governments are good at solving broad, societal level problems. If they weren't, they would be overthrown and replaced. But they're remarkably inefficient at solving individual, specific problems: they can do it, but it will take 4x as long and cost 10x as much as it should. Also, government intervention is limited in scope - it's hard to be philanthropic outside your constituency.
That's where philanthropists can step in. There are some problems that don't provide enough benefit to any single government to throw weight behind solving, but that require massive resources. Bill Gates' anti-malaria campaign is a good example: no country with the money to fund a malaria eradication program has significant rates of malaria.
I'm curious why this dropped completely off the home page? Do posts get nixed by mods? If so, why this one? [I don't really care, just curious about the HN moderation process]
I'd appreciate if Dan would chime in, but I think it likely triggered the "Flamewar Detector". I think this is based on a ratio of Upvotes to Comments, possibly adjusted by flags, but I don't think it's been fully described.
This isn't a perfect system, as sometimes contentious conversation can be better than non-discussion. But overall it's probably a good to have a temporary throttle until a moderator can make finer grained fixes.
There are two trains of thought in the comment section: one that argues because the billionaire made the money himself (unless he/she inherited it) he/she should be entitled to distribute it and the other that he/she may be better positioned to do so than the state. You can argue that the billionaire was only able to make so much money because the country/state he/she lives in provided the necessary infrastructure and environment. Paid for by the tax payer.
As Warren Buffett famously said:"Had I been less fortunate and be borne in another country I probably would have become lion fodder." Hence, he/she should pay his taxes as a payback to the taxpayer. You can also argue that the billionaire, because he/she is so successful, must be better in determining what to do with his/her money than the state. However, research suggests that many successful entrepreneurs had significant luck (as Buffett's quote suggests too). Take successful hedge fund managers for example. It also runs against the idea of Democracy. Because if you follow through with this line of thought you may well abolish any elections and leave it to the billionaires to decide who rules - which is almost the case in the US, isn't it?
The maximum estate tax rate in the US is 40%. Sure, donations are tax free, but the donated assets amount to at least 2.5 times what the government would have gotten.
Is it acceptable to have the privilege to choose where your fortune will be allocated when you give away a supplemental 150% of it? Maybe it's not or maybe it is; I would strongly lean towards the latter.
One of the arguments here in Germany is that if these billionaires were actually paying taxes, the country would have more money and there would be less to pledge. Generally the thinking is that public sector should run many basic services and should provide/organize enough welfare to those in need.
It depends on what you like. Many people are probably happy that organizations like the Ford Foundation will advocate globalist left-wing anti-Americanism forever. Bill and Warren and Mark's money will do the same as well, no matter their intentions. O'Sullivan's law.
There's no point in arguing about whether the state is better suited to handle the money. It would actually be better off cashed out, piled up, and burnt. Literally. A tiny deflationary event vs. eternal troublemaking.
I’ll just let you know that without the money spent by the German government you wouldn’t have mp3, or AAC.
You wouldn’t have most of modern technology, nor would you have Wendelstein 7-X.
You wouldn’t have DHL or T-Mobile.
Sure, they waste lots of money (BER, S21, Elbphilharmonie), but still they manage it better than the private sector ever could.
The top politicians earn less than the managers of any company at that size — Merkel earns 216'000€ a year. The CEO of even middle-sized companies end up making far more than that.
[+] [-] Afforess|10 years ago|reply
Articles like this are bad.
[+] [-] thomnottom|10 years ago|reply
[+] [-] guntars|10 years ago|reply
[+] [-] mmaunder|10 years ago|reply
The question arises: How would the government be able to "give" Zuckerberg's fortune rather than him giving it himself? Through extremely high taxation for the wealthy that would take away the lion's share of his billions so that the government can put it to work more effectively. So what? 90% tax rate on the megarich?
Government isn't known for it's efficiency in spending or giving. I'm left leaning, but we don't need to give the government new ways to not spend money where it's needed.
[+] [-] Retric|10 years ago|reply
[+] [-] jobu|10 years ago|reply
Krämer: "It is all just a bad transfer of power from the state to billionaires."
It's just a philosophical difference in opinion about who should decide what to do with the money - elected officials or billionaires.
[+] [-] knughit|10 years ago|reply
[+] [-] HiLo|10 years ago|reply
[+] [-] s73v3r|10 years ago|reply
[+] [-] anon4|10 years ago|reply
Comments like this are bad.
[+] [-] HiLo|10 years ago|reply
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.
...
"There’s nothing necessarily wrong with the American system of tax-subsidized charity, of course."
"The critique is that this system affords too much power to the rich, whose decisions may not align with what’s best for society. This is not to say that the government is a paragon of efficacy either, but it risks a lot to depend on a handful of mega-billionaires to be prudent, effective philanthropists."
"What genre of philanthropy will Chan and Zuckerberg invest in? Possibly anything. Their letter Tuesday set two missions, both ambitiously vague: “advancing human potential” and “promoting equality." They mention curing diseases, improving clean energy, promoting entrepreneurship, fighting poverty and hunger, empowering women and minorities, and so on.
The pair do not have a sterling track record when it comes to effective charity. One of their previous efforts, a high-profile $100 million donation to fix the schools in Newark, N.J., has been widely criticized as a failure.
Chan and Zuckerberg write in their announcement that they have learned from their past experiences with philanthropy. For now, they will start with their own community in San Francisco, focusing on education, health and “connecting people.”
[+] [-] merpnderp|10 years ago|reply
[+] [-] lloyddobbler|10 years ago|reply
Or flip that around - is Krämer's implied solution not a case of the state taking the place of the individual?
Put another way, if you founded a company, created thousands of jobs for families and individuals, and made a fortune, why should the state be the one who decides what happens with your money? Why should the state have more of a right to decide which causes get your charitable donations than you do?
[+] [-] HiLo|10 years ago|reply
[+] [-] StavrosK|10 years ago|reply
I don't understand why people confuse this so much. It's not "should I pay this $100 in taxes or donate it?". It's "Should I pay this $100 in taxes or donate the $300 I made that the tax is for?".
Why does everyone make it sound like you can choose whether to pay taxes or donate? It's "pay taxes or donate 3-4x that amount".
[+] [-] pnut|10 years ago|reply
It's not like the government confiscates 100% of wealthy people's money as soon as they try to do good, it just taxes it like it does for mere mortals, whenever it changes hands. Using a legal construct to avoid personal tax liability, is quite literally depriving the government of funds it would otherwise be entitled to.
I think both sides of this debate have legitimate viewpoints, but I personally have a problem with the excessive opportunities given to the wealthy to avoid contributing to the funding of our shared system of governance and infrastructure.
Historically, they've never had it this good both tax-wise and income-wise, and to cry victim is in poor taste.
[+] [-] anon4|10 years ago|reply
[+] [-] sophacles|10 years ago|reply
[+] [-] radicalbyte|10 years ago|reply
A culture where private people donate is really attractive. I know that I get a lot of joy when I help people out - I donate regularly to the causes I feel important (mainly Africa, as a Brit living in Netherlands I figure I owe them). As the article says, it improves social cohesion.
Wouldn't it be nice to live in a society where "everyone" enjoyed the gift of giving?
[+] [-] merpnderp|10 years ago|reply
http://www.nptrust.org/philanthropic-resources/charitable-gi...
http://nccs.urban.org/nccs/statistics/Charitable-Giving-in-A...
[+] [-] zo1|10 years ago|reply
I fully agree with this, even though I completely disagree with the concept of taxation. If you have to have taxation to somehow collectively pay for the things society supposedly "needs", then have everyone pay for it. We are, after all, in the same boat, so we should all pay for it. And when I say everyone, I really mean everyone that has any income.
Though, to be fair, I live in a society where something close to 90% (the bottom-most earners) don't pay any income-tax at all. And stuff, society and government function. Sort of.
[+] [-] jey|10 years ago|reply
[+] [-] HiLo|10 years ago|reply
Nobody is saying either solution is great. All it's saying is that: wouldn't it be better to have all this power be in the hands of the democratically chosen, versus billionaires who may or may not be making relevant investments?
edit: Just downvotes, no response?
[+] [-] merpnderp|10 years ago|reply
EDIT: I picked the US government, but I doubt many other countries have to look for to see ludicrously immoral and unethical expenditures of their own.
[+] [-] oblio|10 years ago|reply
[+] [-] jeffdavis|10 years ago|reply
That doesn't seem like a bad trade to me, especially since rich people have fairly low marginal tax rates.
[+] [-] kuschku|10 years ago|reply
[+] [-] jessriedel|10 years ago|reply
[+] [-] mnx|10 years ago|reply
[+] [-] Maultasche|10 years ago|reply
The US federal government is far more likely blow it all on the military weapons systems or funding tax cuts that benefit the wealthy rather than funding guinea worm eradication or anti-malaria initiatives in Africa. The typical US congressman is unwilling to spend money altruistically on things that aren't perceived as directly benefiting the United States.
Sure, billionaires aren't saints either, but I think it's far more likely that they'll donate to causes that are geared toward having a positive long-term impact on humanity as a whole.
[+] [-] narrator|10 years ago|reply
[+] [-] Veedrac|10 years ago|reply
But I'm not inclined to believe that, since I can reasonably believe that the increase in charitable giving from not having the tax is more significant than the gain from having the government control 20% or so of it.
[+] [-] basaah|10 years ago|reply
The 'shift of power away from the government' argument is just one of the arguments made in the book, and author Linsey McGoey discusses it much more thoroughly than the article does. See quote /a/
[1] http://www.versobooks.com/books/1959-no-such-thing-as-a-free...
/a/ The second concern is that philanthropy, by channelling private funds towards public services, erodes support for governmental spending on health and education. Outspoken observers such as Michael Edwards, a former executive at the Ford Foundation, point out that private philanthropy is no substitution for hard-fought battles over labour laws and social security, in part because philanthropy can be retracted on a whim, while elected officials, at least in theory, have citizens to answer to.
[+] [-] BjoernKW|10 years ago|reply
This kind of thinking unfortunately is common in continental Europe, particularly in Germany and France. This is not all about the common good or democratic legitimacy. It's really all about redistribution of wealth and getting back at "the rich". It's about slave-moral thinking that strives to punish the well-off and make everyone feel equally miserable.
[+] [-] snorrah|10 years ago|reply
Not sure who's right, but if it's not WaPo, then that's some terrible fact checking and kinda invalidates the whole article.
Edit - Chan Zuckerberg is a for profit, that will fund non profits, so WaPo is actually incorrect.
[+] [-] steveklabnik|10 years ago|reply
[+] [-] skybrian|10 years ago|reply
Starting another large foundation creates a new source of funding with an independent decision-making process. This increases diversity in sources of funding. (Though not as much as breaking it up into multiple charities.)
Whether it's a net improvement or not depends on whether their decision-making is better than average. Unfortunately, little can be done about charities with poor decision-making (there are no market forces, and corruption is possible). But at least it's independent.
[+] [-] exelius|10 years ago|reply
Governments are good at solving broad, societal level problems. If they weren't, they would be overthrown and replaced. But they're remarkably inefficient at solving individual, specific problems: they can do it, but it will take 4x as long and cost 10x as much as it should. Also, government intervention is limited in scope - it's hard to be philanthropic outside your constituency.
That's where philanthropists can step in. There are some problems that don't provide enough benefit to any single government to throw weight behind solving, but that require massive resources. Bill Gates' anti-malaria campaign is a good example: no country with the money to fund a malaria eradication program has significant rates of malaria.
[+] [-] mmaunder|10 years ago|reply
[+] [-] nkurz|10 years ago|reply
This isn't a perfect system, as sometimes contentious conversation can be better than non-discussion. But overall it's probably a good to have a temporary throttle until a moderator can make finer grained fixes.
[+] [-] cjbenedikt|10 years ago|reply
[+] [-] abandonliberty|10 years ago|reply
I realized a few years ago that this is the end result in any organization, but some German beat me to it in 1911.
https://en.wikipedia.org/wiki/Iron_law_of_oligarchy
>Michels theory states that all complex organizations, regardless of how democratic they are when started, eventually develop into oligarchies.
[+] [-] radicalbyte|10 years ago|reply
[+] [-] bmmayer1|10 years ago|reply
[+] [-] ucha|10 years ago|reply
Is it acceptable to have the privilege to choose where your fortune will be allocated when you give away a supplemental 150% of it? Maybe it's not or maybe it is; I would strongly lean towards the latter.
[+] [-] lispm|10 years ago|reply
[+] [-] mynameishere|10 years ago|reply
There's no point in arguing about whether the state is better suited to handle the money. It would actually be better off cashed out, piled up, and burnt. Literally. A tiny deflationary event vs. eternal troublemaking.
[+] [-] kuschku|10 years ago|reply
You wouldn’t have most of modern technology, nor would you have Wendelstein 7-X.
You wouldn’t have DHL or T-Mobile.
Sure, they waste lots of money (BER, S21, Elbphilharmonie), but still they manage it better than the private sector ever could.
The top politicians earn less than the managers of any company at that size — Merkel earns 216'000€ a year. The CEO of even middle-sized companies end up making far more than that.