Yesterday Mark Zuckerberg announced that he and his wife would be giving 99 percent of his Facebook shares, some $45 billion at current valuations, to "charitable purposes." Sounds great, right? A lot of people weren't so sure. And a lot of other people were surprised that anyone would look such a gift horse in the mouth.
I don't really like all the snark a out zuckerberg giving a boatload of money to charity.
— harper (@harper) December 1, 2015
.@lukeoneil47 I haven't seen a single positive response to the Zuckerberg news on my TL
— Dr.LawyerIndianChief (@DrLwyrIndnChf) December 2, 2015
All this reminded me of something my colleague Carol Felsenthal wrote about Bruce Rauner that, I think, is key to understanding him—and, by extension, the times we live in. As a Dartmouth undergrad, what he really wanted to be was an environmentalist. That changed.
But then came a class in economics. “I just loved the process, the theory, and the issues,” Rauner told a Sun-Times reporter in 2003. “I realized that economics and business is life. It’s what makes the world go round.” Rather than become an environmental scientist, Ebbott says, Rauner decided to major in economics and go to business school, which would let him make lots of money that he could give to environmental causes.
This is genuinely astonishing, and in many ways prescient. As a college student, Rauner decided he could best impact public policy by becoming very, very rich. It's a narrow way of looking at the process of change—obviously, a talented environmental scientist can, with some luck, change things for the better—but he wasn't wrong. Long before he became governor, Rauner was influencing public policy in Chicago, having changed his focus to education. Set aside the ideological specifics of it for a minute, and it is a remarkable accomplishment, like a young boxer setting out to become Muhammad Ali not just for the championship belts, but to have a profound effect on society.
It also reminded me of another very good piece about Rauner, his very wealthy friends, and how their policy priorities are reshaping the state of Illinois, this one by Nicholas Confessore in the New York Times this weekend:
The rich families remaking Illinois are among a small group around the country who have channeled their extraordinary wealth into political power, taking advantage of regulatory, legal and cultural shifts that have carved new paths for infusing money into campaigns. Economic winners in an age of rising inequality, operating largely out of public view, they are reshaping government with fortunes so large as to defy the ordinary financial scale of politics.
Most of them lean Republican; some are Democrats. But to a remarkable degree, their philosophies are becoming part of a widely adopted blueprint for public officials around the country: Critical of the power of unions, many are also determined to reduce spending and taxation, and are skeptical of government-led efforts to mitigate the growing gap between the rich and everyone else.
This is not to say that Zuckerberg and Rauner are on the same page politically. But Zuckerberg's first great charitable commitment was to the reform of schools in Newark. At $100 million, it was five times what Felsenthal estimated Rauner's commitment to Chicago schools has been over the years.
And it was just as controversial, as reporter Dale Russakoff, a veteran education reporter and author of a book on Zuckerberg's effort, told Terry Gross:
Well, it played disastrously in the community because, immediately, nobody understood why do we have to turn on "Oprah" at 4 o'clock to find out what's going on in our own city? And if you want to save the schools for the benefit of our children, why weren't we told? And, by the way, there's a very large consensus on the ground in Newark at this time that the schools really need change, that the schools are failing in unacceptable ways…. And not only were they insulted that they were left out, there was an agenda that was crafted that didn't have the benefit of their really important insights into what was needed in Newark.
A friend of mine who works for a charter school network in Newark makes a compelling case from the data that Zuckerberg's money genuinely did good for a lot of kids. But he's also critical of the "paternalism" represented by the rollout of Zuckerberg's money, and writes:
It's hard not to look back at the Zuckerberg gift and wonder what might have been — one need only look a few miles downstate to Camden, where the hard work of improving a broken school system is being done in a way that brings in community members (and without the benefit of the Zuckerberg windfall).
So that's what $100 million will get you. How about $200 million? Bill Gates spread that across the country starting in 2008, infusing state educational systems with a common-core curriculum. With, of course, some familiar help in high places:
Several top players in Obama’s Education Department who shaped the administration’s policies came either straight from the Gates Foundation in 2009 or from organizations that received heavy funding from the foundation.
Before becoming education secretary in 2009, Arne Duncan was chief executive of the Chicago Public Schools, which received $20 million from Gates to break up several large high schools and create smaller versions, a move aimed at stemming the dropout rate.
This is not new, of course. In Chicago, for instance, the public schools system has been shaped throughout its entire history by tensions between capital, labor, and bureaucracy. As the types of industry and management practices in big business have evolved, they've been translated to new educational models. Remember SUPES, the principal-training program that led to Barbara Byrd-Bennett's ouster? That organization got seed money from the Chicago Public Education Fund, "its board loaded with wealthy friends and donors to both Rahm Emanuel and Rauner, and also with advocates of charter schools and Teach For America."
As usual, there isn't much new under the sun. But the rich are richer right now than at any point since the 1920s. And as Northwestern's Benjamin Page has shown, working with Princeton's Martin Gilens on a study of Chicago's elite, their policy preferences differ from those of the masses in important ways. One relevant finding is elite preferences on public education: "A very large majority (93%) favor the idea of charter schools, 'operating under a charter or contract that frees them from many of the state regulations imposed on public schools and permits them to operate independently.'” And the elite are more likely to get their way than everyone else.
What do they want? Page and Gilens found that they tend to be more economically conservative than the public as a whole:
[W]ealthy Americans are much less willing than others to provide broad educational opportunities… less willing to pay more taxes in order to provide health coverage for everyone… they express concern about economic inequality and favor somewhat more egalitarian wages than they perceive as presently existing, but—to a much greater extent than the general public—the wealthy oppose government action to redistribute income or wealth.
Which, in a time of greater government austerity, gives the wealthy even greater leverage in using philanthropy to effect public policy, as the actions of Rauner, Gates, Zuckerberg, and others have shown. As opposed to the opposite scenario, where much higher taxes would give the public greater control over how that money is spent for the public good, as was the case for much of the 20th century.
But that's not where we're at: "Nonprofit groups 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," writes Jeff Guo in the Washington Post. "Much of their wealth could otherwise be captured by capital gains and estate taxes."
It's also not where other first-world countries are at. As German multimillionaire Peter Kramer put it bluntly to Der Spiegel, "Would I rather donate or pay taxes? The donors are taking the place of the state. That's unacceptable."
So why are people looking the giant Zuckerberg gift horse in the mouth? For fear it's a Trojan horse, too.