Gold, death & taxes: Why billionaire charity can’t be what saves us
Coronavirus has plunged a global economy into a tailspin that we’re scrambling to correct. But philanthropy isn’t the answer to systemic inequality — and it should have never been the question
Do you know how much a billion dollars is?
It’s okay if you don’t, because almost nobody does. To most people it’s a foreign but familiar figure scrawled across some tribute to a novel, majestic act of capitalism in Silicon Valley or on Wall Street. In public conversation, it’s almost never properly quantified. Instead, it tends to just wind up being used as cultural shorthand for a more generalised idea of staggering personal success, which I guess, is certainly one way to think about it. But in the throes of an economy-trashing global pandemic, an urgent and wider-reaching need for a much more robust economic future means it is really, really important that we are all wide awake to the very specific reality of what one billion dollars actually amounts to.
One billion dollars, in digits, is one-thousand-million-dollars, and it comes with nine zeroes. It looks like this:
To have a personal net-worth of one billion dollars is to be a millionaire, one thousand times. Still, the human mind is not designed to understand how much one billion of anything is, and as this might be your first contact with such breathtaking scale, I’ll try to paint a picture of what the number means in some contemporary economic terms.
The average yearly income of a full-time, salaried employee in the United States in 2018 was $47,000 (and because that’s a median, for many, that would already be the key to a much better life). Now, for the sake of simple maths, let’s imagine a world where that person is exempt from all expenses of any kind. Turning those salaried earnings into one million dollars would take a touch over 21 years of stashing away everything they’ve ever earnt (discounting any compounding interest that would naturally speed it up). 21 years is approximately 0.27 of the average human lifetime in the United States (so, a touch over a quarter). In good news for our hypothetical and uniquely fortunate protagonist, it’s a realistic prospect for them to save their money and live to see a long, good life as a new millionaire.
I’ve already mentioned that one-billion is one-thousand-million — so if you haven’t fully registered that (understandable), what it means is that the length of time to turn those same annual earnings into one billion dollars would change from 21 years, to 21,000 years. 21,000 years is approximately 267 average human lifetimes in the United States. To draw an abstract but hopefully effective picture of that length of time, 21,000 years ago was approaching the end of planet Earth’s last ice age. Extraordinarily large pieces of this planet were covered in miles-thick ice sheets, which were just beginning to thaw. The entirety of Great Britain was a wild, natural ice rink.
To really hammer this home, let’s quickly illustrate what this looks like at the top-end of 2020’s most famous story of technology and empire. Jeff Bezos, Amazon founder, world’s richest man and poster-child for tech-powered, globalised free-markets, is worth about $140 billion ($140,000,000,000). Which means that on the same terms, it would take about 2.9 million years for our protagonist to earn what Bezos is worth today. 2.9 million years ago, there were four different species of human ancestor roaming the earth (evidenced by fossils found in what would, much later, go on to become Tanzania). It would be an additional 1.3 million years later that the first major innovation in human tooling — the hand-axe — was created. It has been less than 10 weeks since Coronavirus began to ravage the West, and less than 6 months since the virus emerged in China.
The global Coronavirus lockdown has made Bezos significantly richer too — because the crown jewel in Amazon’s long list of achievements is that it is no longer just an online bookshop, but a global retail and logistics utility, as well as an internationally successful computing and infrastructure business. Consequently, Bezos, 56, now owns an 11% share of the most valuable company on the planet. Amazon may have taken extraordinary flack over its highly problematic COVID-19 sick pay policy — but it’s still worth $1.14 trillion.
One trillion dollars, in digits, is one-thousand-billion-dollars, and it comes with twelve zeroes. It looks like this:
Today, Bezos earns an estimated $2,600 per second, or $156,000 per minute — and has made nearly 8 average annual US salaries since you started reading this article. In the space of 20 years, Bezos did something profound — something so commercially exceptional that he has been rewarded with a borderless digital empire, atop more private wealth than any human in history. But he didn’t build and doesn’t maintain his empire alone. Today, Amazon employs 800,000 people (more than twice the population of Iceland — the country, not the supermarket), and millions of others within its direct ecosystem and supply chain.
But massive global wealth inequality isn’t about any one man. It’s about what put him and another ~2,300 billionaires in control of the sort of world-shifting volumes of personal capital that now allow them the resources and controls to design and shape the world’s delicately interwoven economic structures. It’s about why they now decide which of any number of deserving humanitarian crises are beneficiaries of their support — outside the world of government, but inside the world of their own extremely unique agendas. In the age of Coronavirus, a historic healthcare and financial crisis, the 26 richest people in the world now collectively own slightly more wealth than the 3.8 billion poorest people on the planet, combined. As you might imagine, this presents brand new problems, that don’t even yet have names.
Today, the private wealth of 26 human beings combines to more than the private wealth of the entire ‘bottom-half’ of the living human population put together.
But, to share wealth is to share power
So when we hypothesise on a more equal, more stable, more human-centric future, we need to be crystal clear — the wealth, indeed, has already been created, and it continues to be generated on a historic and unprecedented scale. But the political appetite has not. Through the prism of maintaining power and hegemony, there is no political or social incentive to distribute it even slightly more fairly. (Ignoring, of course, the inconvenient fact that extremely large, organised groups of exploited poor people invariably end up ceremoniously cutting the heads off of the rich in regular cycles, with some very modern examples.)
Because when an entire economic modality is built on extracting, consolidating and deploying private capital, sharing that wealth is the same thing as sharing power. And historically speaking, the rebalance of power tends to change things for the rich at an alarming pace. A fairer social configuration reduces extreme economic pressure — poverty — and the very precarity that is an absolutely vital component of keeping neoliberalism alive. (Put extremely simply: it’s far more difficult to exploit people who do not desperately rely on a minimum wage job to keep their families alive, on a treadmill where becoming rich is always just out of grasp — and so is the myth of freedom, enlightenment or virtue.)
Those more predisposed to the benefits of libertarian or free-market economics (and, there are many benefits — capitalism has a long list of successes) will often make the argument that ‘wealth is not zero-sum’ as a defence of the fact that there is not a single pool of capital that everybody in society competes for in order to survive and thrive. They are correct, too. One of the most seductive parts of very lightly regulated capitalism is that wealth can be created out of thin air with little state intervention, using entrepreneurialism, imagination and resourcefulness — a practice that can be extremely fruitful for the people with the good fortune, security, ambition and competency to do so.
So, wealth itself may not be zero-sum — but — and there is an enormous but — considering that the overwhelming convention for the majority of human beings in developed countries is to be employed full-time by private businesses with finite amounts of cash and strict, fixed budgets, this does, in practical terms, make almost every regular salaried human being’s access to wealth part of a zero-sum game. For a CEO to earn 312 times what their average employee makes, the average wage must be kept incredibly low — or the maths just doesn’t work.
Liberal democratic political systems deeply romanticise markets — binding themselves to the promise of benevolent, competent exchanges that broadly regulate themselves, foster innovation, and reward everyone fairly in accordance with their capability. That healthy competition will spark innovation and responsibility — and that bad actors and weak performance will be run out of town by emergent, Darwinian economic order. But there have been three extraordinary, devastating global financial crises in the last 20 years, by which the world’s governments have needed to step in to resuscitate massive blocks of a chaotic, dying global economy. And they’ve done this by pumping obscene amounts of taxpayer money into the institutions that now make good business out of regular, cyclical mechanical failure.
‘The rich’ are not a single group of people
That wandered a little, but I wanted to paint this picture clearly. I believe that a critically important discussion on wealth inequality is being accidentally derailed by the creation of a fuzzy super-class that mostly-left-wing politicos and reformers are now just calling ‘the rich’. At best, it’s uninformed and clumsy — and at worst, it’s dishonest, sensationalist class baiting. Lumping together everyone worth between $1 million and $140 billion into a single, flabby enemy is warping an essential conversation on inequality and the role of the state under capitalism. It is neither sufficient, nor appropriate, to lambast, condemn or provoke ‘the rich’ without understanding the failings of an economy that creates the kind of rich that can design, refactor, and uphold the current structures of global economic hegemony.
What I’m trying to say, is that billionaires are not the rich, or the super rich. They are the ultra rich and their power extends through entire business sectors, ownership of whole newspapers and media outlets, and in some contexts, now run actual governments. In an economy where all-costs-profit is worshipped like an omnipotent, everlasting deity — where profit and power is enlightenment, the ultra-rich are now more powerful and protected than ever. And in an age of sophisticated digital integration, these are now stateless controllers of the planet’s most critically important resources and infrastructures. Their own private wealth and the business vehicles that they command put them in charge of an economic order that has rapidly outpaced the legislative and regulatory resources required to keep their behaviours in check — buying their way in and around glaring holes in taxation policy. And now their social power is awesome — but their personal responsibility, nothing. This compounds every time a nation state elects governments that double down on the deeper philosophies of neoliberalism, as the responsibilities of the state are intentionally dismantled and sold to the highest private bidder.
When you’re a billionaire, everything is for sale. Even entire democracies.
Note: There is a new, excellent and essential public visualisation on the premise of this section, and you can find it here.
Anyway, back to the virus
The coronavirus pandemic has gouged a potentially fatal wound in the corpus of capitalism and sitting governments really have no idea what to do about it. So far, the countries that are rich enough have once again, in a staggering lack of imagination, flooded their money markets with liquidity — trillions fed directly through the top of the labour funnel — in the hope that it creates a stopgap of cash sufficient to salary the majority through suspended animation, and keep enough citizens fed that we avoid massive, distributed civil unrest.
But the primary issue with having to pause an incredibly complicated, highly-extractive system of global trade is that indefinite extraction requires indefinite resources to remain not only viable — but even operational. The fate of the global citizen is now determined, even in heavily socialised countries, by a master economy of unstoppable abundance — dominated by massive consumer superpowers in China and the United States. There is no alternative to a debt-powered global economy that now needs infinite economic growth to remain alive. Pausing it is expected to create a much more significant economic depression than in 1929. Tens of millions are already unemployed. Forecasts are 20 million in the US, by June, which will have taken three months. It took almost four entire years for unemployment to top out at 24 million during the Great Depression. In the United Kingdom, the government is currently paying 24% of the national wage bill, but nobody has any idea for how long.
This complexity becomes a sort of luscious, dreamlike fractal when we see that there is no single country that now gets to experience the wrath of a highly transmissible viral crisis alone. Each country is a spoke in a delicate wheel — and any shock further up the line is felt in partner and enemy economies in new and novel ways. Transmission and distribution vectors are everywhere. There is no truly global council on managing a shared, global crisis — because we haven’t yet come up against the practicalities of one. Even ‘neutral’ organisations like the World Health Organisation have been party to the politics of the global political order, particularly in the context of China’s denial of Taiwan, resulting rightly in massive mainstream criticism. All countries can do is plan for catastrophe — or decide not to.
In the UK and the USA, where the free-market has become not just a trade modality, but also a kind of religious zealotry upheld by billionaire-backed conservative governments, their state departments have leant increasingly heavily on the private sector to do the work of the government for the last 40 years. But 40 years of privatisation and deregulation has now devoured the responsibilities of the state — and now Coronavirus has closed the world for business. That means that there are immediate gaps in all manner of crisis response as a result — not least underfunding in healthcare and pandemic response management, and the technical arms needed to power them in 2020.
Desperate times require desperate measures. When the governments of the most powerful countries in the world are powerless through either philosophy or policy and the companies that they administrate for have no definitive social responsibilities, a simple, but devastating question is laid bare.
Who else can save us?
Among the many problems that arrive with the people that make private yearly incomes that dwarf the GDP of small countries, is that they’re given access to quite a lot of extremely weird shit, including buying and spending time in doomsday bunkers in New Zealand, designed specifically as refuge from global catastrophes, and I’m not even kidding about that. It’s a pretty good microcosm of the wider issue of becoming so wealthy you become completely insulated from any of your own decisions, regardless of their magnitude, which is sort of the entire issue with threading money so deeply through the fabric of global politics in the first place.
But now, people are dying in droves. Or they’re really sick. Or it’s illegal for them to leave the house. Many are out of work. And people want to know where the billionaires are. Citizens are restless at the knowledge of a mountain of untaxed money that could be deployed to save the lives and livelihoods of themselves and their families, held under lock and key somewhere like the Cayman Islands.
So in an effort to avoid poor people with pitchforks turning them into shish kebabs on YouTube, the billionaire community have met a global pandemic with an incredibly mixed-bag of suggestions and private contributions. They address food banks, vaccine programmes, all sorts of different things — dreamt up by each individual party and their cohorts. Some of them appear staggering in their generosity. Some of them, frankly, are embarrassing.
- Jack Dorsey is donating $1 billion. (I mean, this is unreal)
- Soros is giving $2 million. (That’s actually pretty funny)
- Ambani is down for $66 million. (Hospital donations)
- Armani is good for $1.4 million. (Also hilarious. Hospitals, research)
- Bezos is down for $100 million. (Food banks)
- Bloomberg is good for $40 million. (He spent 10 times that on his presidential bid)
- Bill & Melinda, $100 million. (Vaccines)
- Zuckerberg & Chan, $25 million. (Vaccines, therapies)
- Ka-Shing, $13 million. (Medical supplies, PPE)
- Ma, $14.5 million. (Vaccines)
(There’s a very basic breakdown of how this is supposed to work here, and other details on this are pretty easy to find. It’s also fair to assume that there’s lots of other acts of both public and private philanthropy going on too. I should have made a more exhaustive list, but the premise is the point.)
At a cursory glance, it’s simple to see that the only consistency in this model of philanthropy is that there is, indeed, no consistency or consensus on what volume of money is required and where it needs to be targeted. That’s because these are completely voluntary acts — entirely down to the generosity of the individual. Why wouldn’t it be? It’s their money, isn’t it. And most of these people already have some of their wealth wrapped up in all manner of pet projects, philanthropy initiatives and humanitarian efforts, as it is. But this is a dumb and unsophisticated way to solve this problem, if that’s what we’re trying to do. Plugging systematic holes in social support systems with random, voluntary cash is a weak, unpredictable and non-scalable solution.
Because of that, there are crucially important reasons that reimagining wealth distribution and philanthropic expectation is critical to building a future economy resilient enough to stave off massive, spontaneous humanitarian crises into the future — especially in the shadow of a looming climate crisis. Some of these reasons are political and economic, others social — and some are just generalised issues of classical morality.
1. This is specifically what fair, progressive taxation systems are supposed to do
There is already an established mechanism by which money is pooled for citizen-focused projects of security, safety and societal development. It is not optional. This mechanism is called ‘tax’ and it exists in every country apart from the ~10 where billionaires always end up actually storing their money.
Overdue is the recognition that billionaire philanthropy is not even close to being a substitute for a fair, progressive, organised tax system, that can keep up with the pace of the world’s most aggressively innovative and fundamentally dishonest business interests. More than that, these tax systems are of little practical use unless governments are actually willing to pump those revenues downwards into powerful, long-term public investments in infrastructure, economic opportunity, education and social protection.
The mechanisms by which wealth is accrued in tandem with ultra-modern tech initiatives have vastly outgrown the current tax policies that exist to redistribute the sheer volume generated by globalised, Internet-scale businesses. The problem, however, is deeper — actually taxing billionaires and businesses properly is politically unconscionable. This is generally because sitting governments now often only make it into power on the back of the donations, connections and demands of ultra high net-worth donors in the first place.
Tax systems around the world are a complicated mess of systems and priorities, and incredibly difficult to reason about — but they exist specifically in order to defer public spending to a democratically elected state body — not to a small group of competing private business owners who incidentally became richer than anybody in human history in the space of 40 years.
The right taxation policy is not a silver bullet and it will not fix everything. But right now, the right taxation policy does not even exist. And that would be a start.
2. The solutions to public crises should not be held in private money
Philanthropy is a powerful, welcome tool when combined with an already fair and progressive tax system. But the funding for solutions to a massive, shared humanitarian crisis should not live locked up inside mountains of private wealth. There is no premise by which vanishingly small groups of ultra-rich humans should be able to stand and watch millions of people suffer and die anywhere — especially given that the state provides the infrastructure, innovation, structures and people that their spectacular wealth is built on top of.
The problem with charity is that the entire premise relies on distributing abundance, and for individuals to incisively apply a set of complex moralities to shifting human welfare issues.
3. Charitable giving is just… completely arbitrary
Societies tend to evolve as direct reflections of where their spending power lives. When the people with the true spending power are otherwise disconnected from society and community, inward investment and charitable initiatives tends to directly mirror the business needs of the ultra-rich, instead of the human needs of the very poor.
This means that it’s insanely difficult to channel the right money to the right places, and even harder to mobilise around real, effective efforts for good. Billionaires providing money for food banks, frankly put, is an abhorrent, malevolent shitshow. It’s a useless stopgap — a bandaid on a bullet wound on a patient they aren’t even trying to save.
The difficulty is that free-market types vocally back these initiatives, even if they don’t return much — because they don’t actually need to sacrifice much apart from some surplus cash that would otherwise end up stashed somewhere else. And for the most part, it totally circumnavigates the state, which effectively vindicates their entire ideology by illustrating that the market and society can indeed look after itself without the state. But the problem with libertarianism is that almost nobody can actually afford it in practice. Charity of this nature, is performative.
4. Wealth-warehousing is a thing
Wealth warehousing is a known, growing problem, by which incredibly wealthy people create their own charity, fund or philanthropic initiative that they then siphon their own money into. These funds (known as Donor Advised Funds, or DAFs) are then granted numerous tax protection benefits, but there is absolutely no legal requirement for any of that money to actually end up anywhere charitable on any specified timeline:
There is no legal requirement for DAFs to pay out their funds to qualified charities — ever. According to one estimate, the average annual payout rate for DAFs in 2016 was 20 percent, although some DAFs give considerably less.
Effectively what this means, with evidence, is that the ultra rich are moving their money into tax-protected financial instruments, owned by them, that are only pretending to be charities. The money is not only not being taxed, it isn’t making it to charitable causes either. This is called tax evasion.
5. Humanitarian aid has always been soft power
State-sponsored foreign aid is usually marketed to the international community as an act of benevolence designed to help repair and rebuild areas of extreme human hardship, especially those in deep political turmoil. In many instances, this humanitarian aid is absolutely critical for community survival. But this giving is rarely ever a no-strings transaction — it’s what’s called ‘soft power’ because it’s a strategic, non-military tactic to help shape a country’s international influence.
Being a sole provider of the support and resources for a vulnerable group buys a massive and extremely powerful sphere of influence in other countries, softening and boosting trade deals, political allegiances and even military presence — as well as all manner of other transactions. Aid is often actually just one piece of a purchase of something else, or worse — designed to repair damage done by the donor itself.
The same problem exists with billionaire philanthropy. Donating one-off blocks of capital to occasionally put out a massive social fire is not an act of benevolence. In its rawest sense, it is an act of power — and governments and societies will need to recognise that where these kinds of transactions are increasingly necessary to prop up the economic status quo.
6. Diversity and the state
This one is intensely complicated, but reduced — small state governments tend to work best for culturally homogenous, fairly harmonious communities with a relatively high quality of life, and low levels of social inequality. This is absolutely nothing like what has been fostered in Western democracies in the last 40 years — where society is a patchwork of thousands of diversities, ideas and agendas, sewn together into the same quilt. Governments and societies that are going to benefit from multiculturalism and immigration need specifically to address the complexities and problems that arrive when tightly networked, separate cultures interact with each other. This requires a lot of regular money. It requires deep pockets, education and strategic investment. And it requires state-level representation of cultural and economic minorities in order to curtail the problems of ideology, nativism and inequality.
You cannot solve wealth inequality hoping for the benevolence of people who became ultra-rich because of wealth inequality. Genuine, sustained generosity isn’t built into an economic and social operating system that is designed specifically to handsomely reward weaponised self-interest.
What are we going to do?
It took the Roman Empire roughly 100 years to collapse (although the decline was much longer), for many of the same reasons that Western democracies are under profound pressure today. It’s unlikely that things are coming apart in the next few years — but also likely that we’re at a newly-defined, beginning-of-the-end for this form of economic project.
What we need to do long-term, is outrageously complicated, and a redesign of that magnitude, today, is not realistic without massive civil disobedience. But to address our most immediate issues, and to preserve liberal social values under a tech-powered market economy, we need to be doing the following:
- Right now, there needs to be a complete and utter redesign of the taxation of the individuals and businesses that are generating economy shifting revenue. The public cannot shoulder their tax burden any longer — especially now that taxpayer bailouts are funding economic bailouts so regularly. This money needs to be ring-fenced for public initiatives that specifically address the alleviation of poverty and marginalisation.
- There needs to be the formation of a series of national and international public bodies designed to evaluate and de-risk approaching economic and social crises. These bodies need to span global interests and need to be designed with human-centric, existential welfare issues as their entire mode of existence. It needs to be very heavily funded and it needs to be an international coalition.
- There needs to be a complete reimagining of our personal data rights — rights that need to be sacred, in the same way that human rights are. The law needs to be updated to make abuse of data rights a serious criminal offence. Privacy rights are critical to protecting citizens from technocratic tyranny and eventual surveillance states.
- There needs be a generalised, society-wide reformation of the personal values that are driving massive, corporate expansionism. Consumerism, wealth — the very pursuit of massive tranches of power and money needs to become far less seductive and respected in a society designed to remove the toxicity of capitalism’s infinite social competition. In the West, we are a society of absolute abundance. This needs to be reflected for everyone.
- There needs to be a massive tone shift by the public — one that aggressively and unapologetically demands a fairer, more equal society that puts human and environmental welfare at the centre of social policy. This sustained pressure needs to find its way, regularly, to the people that are reliant on those people for making and keeping them wealthy. And it needs to have claws. This involves organising, properly, on key political issues such as rents, labour rights, healthcare and cost of living.
- And there’s an argument to say that there needs to be a wealth cap when private wealth hits a certain point, which is an effective 100% tax rate. Most people hate this because they think it stifles ambition, reward and innovation and replaces it with governance. It’s not perfect. Government isn’t always the answer. But I’d say that the reasons that they hate it are the exact reasons that it is absolutely essential that it happens.
There are no historic examples of deeply unequal societies that do not eventually become totalitarian police states, uprisings, or collapses — or each of those things in turn. And as is true of every major juncture in history, citizens will be left holding the rights, conventions and contracts that we are motivated and organised enough to demand. But the good news is this. The next time someone asks ‘how we’re going to pay for all of this’, we’ve already got our answer.
Have a day.