I.
Traditional book reviews tend to focus on a single book, such as Just Giving by Rob Reich. We ought, however, to be reviewing a broader question: what is the role of books in a liberal democratic society? And what role should they play?
Books were first invented during the early Bronze Age. Plato states people fiercely opposed the first books; in his dialogue Phaedrus, he recalls the Egyptian priests’ objection to early writing:
[Writing] will create forgetfulness in the learners’ souls, because they will not use their memories; they will trust to the external written characters and not remember of themselves. The specific which you have discovered is an aid not to memory, but to reminiscence, and you give your disciples not truth, but only the semblance of truth; they will be hearers of many things and will have learned nothing; they will appear to be omniscient and will generally know nothing; they will be tiresome company, having the show of wisdom without the reality.
Contrast the Egyptian scribes’ reception with the ceaseless praise given to the authors of our age. Rather than asking about the purposes of writing and the power of authors, we tend instead to celebrate writers, large and small, for their brilliance. But in our age, these are questions we should pose with greater urgency. Scholarly literature like Just Giving is an unaccountable, nontransparent, and perpetual exercise of power. It deserves more criticism than it has received.
There’s a conventional story to tell about book-writing and its relation to liberty. The story is this. Book-writing is thought to be tightly connected to liberty. This is so for two reasons. First, writing or reading a book is voluntary. Second, the exercise of liberty involves freedom of speech. This story is an attractive one, and it contains some truth. But it ignores that book-writing is inherently embedded in state institutions, like intellectual property laws. It should not be understood in the simplistic manner of an activity that takes place within a framework of nonintervention by the state, or as nothing more than private individual decisions to express thoughts. Instead, it must be understood as embedded in political institutions, laws, and public policy. Books may not be an invention of the state, but they are an artifact of it.
Most importantly, book-writing is heavily subsidized by the government. Authors receive a “pass-through” tax deduction of up to 20%. In addition, they can deduct most of the expenses they incur in writing a book, from freelance editing to literary agents to promotional events. In extending these tax incentives, federal and state treasuries forego tax revenue. Or to put it differently, tax incentives for writing books constitute a a kind of spending program. In fact, the fiscal effects of a direct spending program and a tax expenditure are exactly the same. In Suzanne Mettler’s apt phrase, federal policy driven by tax expenditures rather than direct spending constitutes the “submerged state”, obscured from public view and accountability, but with powerful distributional consequences. These tax breaks amount to massive federal and state subsidies for the creation and dissemination of written texts. They are supplemented by millions spent on libraries, literacy programs, and in some cases direct subsidies to book publishers.
A respect for the liberty of individuals to promote their views is one thing; subsidizing its exercise is another. The state does not merely permit and set guidelines within which writing takes place – offering the state’s imprimatur to every book and pamphlet and magazine and journal article – but is in a fiscally meaningful way actively participating in what authors do. If the state is actively funding, through a tax expenditure, some bad book, it makes the state partially complicit in the harm that the book causes. It is no exaggeration to say that as book-writing is currently structured, when authors do harm, so does the state. It is incorrect to say that mediocre books merely waste the time of the author and reader. Rather, writing a mediocre book squanders assets that are partially the public’s.
With this description of the relationship between book-writing and liberty in place, let us now consider whether the ideal of equality is playing any role in the institutional design of the policies. The median annual wage of authors is $62,000, twice the average US income of $31,000. Authors are most likely to be college-educated, upper class, and be the sorts of people who can take months off of their jobs to write a book. Scholarly books are often written by professors, a member of a tiny and unelected intellectual elite. This makes their immense ability to exercise power by writing a book and getting it published deeply troubling. Or consider a famous author like Jeffrey Sachs, whose successful books permit him to stride upon the world stage as if he were a head of state.
Perhaps books could play important roles in democratic societies, despite being an exercise of power and expression of plutocratic voice, if they were subject to different legal arrangements. But it is no coincidence that the wealthy dominate book-writing. The tax code is set up to unfairly privilege books by the well-off over the poor in two ways. First, the pass-through deduction and freelance editor deduction are available only to those individuals who itemize their deductions – people who opt not to take the so-called standard deduction on their income tax. This effectively penalizes, or fails to reward and provide an incentive for, all people who do not itemize their deductions, a group that constitutes roughly 70% of taxpayers. Thus the low-income renter who does not itemize her deductions but pays $500 to get their book edited receives no tax concession, while the high-income house owner who pays the same $500 fee can claim a deduction. Second, the tax subsidy given to those who do receive the deduction possesses what is known as an “upside-down effect”. The deduction functions as an increasingly greater subsidy with every higher step in the income tax bracket. Both of these features of the tax code are arbitrary and unfairly benefit the well-off. The choice of the the pass-through and business expenses tax deductions as the preferred tax policy for book-writing introduces a potent plutocratic bias.
Proponents of books might suggest that they nevertheless serve a compelling public interest in the form of spreading knowledge. But when we move away from individual works and consider the total distribution of literature, we find a pattern of writing that is hard to reconcile with expectations of educational outcomes. For anyone who believes that books imply something about knowledge or truth or education, the sunny picture of American book publishing here becomes decidedly cloudy.
Figure 1 demonstrates that the most popular type of book in the US is “mystery, thriller, or true crime”. Second and third place are held by history and biographies, which may perhaps be edifying to some people. But after that we get romance, cookbooks, science fiction, and fantasy. Literary classics and books on important current affairs are far down the list, only a fraction of total books read. What can we conclude from these data? The lesson is obvious: if we believe the purpose of reading and writing to be predominantly educational, an important mechanism to provide for our enlightenment and edification, the actually existing distribution of reading in the United States does not meet the test. Not by a long shot.
Finally, we must address the question of intergenerational justice. Books are designed to enshrine author intent and express their opinions in perpetuity. Thus does the dead hand of the author potentially extend from beyond the grave to strangle future generations. John Stuart Mill famously wrote that “There is no fact in history which posterity will find it more difficult to understand, than the idea of perpetuity, and that any of the contrivances of man, should have been coupled together in any sane mind.” Yet authors deliberately “write for the ages”, producing works that can be studied for hundreds or even thousands of years.
We might ask whether books would be a welcome institutional arrangement if we were designing a democratic society from scratch. The catalogue of the oddities of the book suggests a strong case against. Books appear at odds with democracy, for they represent, by definition and by law, the expression of plutocratic voices directed to public education. But why, in a democracy, should the size of one’s wallet give one a greater say in public policy? Why should this plutocratic voice be subsidized by the public? And why should democracy allow this voice to extend across generations in the form of intellectual property laws? It would seem that books are a misplaced plutocratic and powerful element in a democratic society. And we can trace, in the evolution of books, the emergence of a particular kind of high-profile author such as Dan Brown, Stephen King, and J.K. Rowling, whose activity supplants the state, subverts public education processes, and in so doing diminishes democracy.
I find many points of agreement, especially when considering the actual content of books today. Yet despite all this, I think a role for books can be defended. First, books can help overcome problems in the marketplace of ideas by diminishing government orthodoxy and decentralizing the production of knowledge. Second, because of their size and longevity, books can operate on a different and longer timeline than government propaganda broadcasts, taking risks in the expression of ideas we should not routinely expect to see in press releases by government agencies.
This argument is not intended to justify the full range of legal permissions currently afforded to books, but it provides hints as to what a just literary world might look like. I worry, for instance, about the massive boom in short books. Books with fewer than 150 pages primarily serve the author’s vanity. What loss to public benefit would there be with a minimum page length to publish a book, say 250 or 300 pages? I think very little, and quite possibly there would be some gain, for people with less exciting ideas who could not reach the page threshold might be convinced to help other people with their books rather than writing their own. But even if books of all lengths do partly decentralize the definition and provision of knowledge, the resulting pluralism of literary voices will have a plutocratic, not fully democratic, cast. The experimental or heterodox opinions in books will represent the preferences of the wealthy, not of the wider citizenry. Indeed, there is empirical evidence to suggest that at least in the United States, the very wealthy have significantly more politically conservative preferences than average citizens. Thus, the activity of books, even when it decentralizes the production of knowledge, retains a plutocratic character. Does this mean that we should eliminate books? I do not think so. Perhaps a plutocratic tempering of government orthodoxy is better than no tempering at all. I conclude that the decentralization argument provides a plausibly but not definitive case for books as a democracy-supporting institutional design in our society.
In conclusion, how can we make books more compatible with a democratic society? I propose that instead of giving authors tax deductions, they might receive a certain percent of their expenses paid back to them by the government, capped at $100, and that books with fewer than 150 pages should be banned. Are books democratically required? I am not prepared to answer this question affirmatively, for a democratic government has multiple mechanisms to cultivate pluralism and foster discovery. But I have shown that books are certainly democratically permissible.
II.
Yeah, okay, that was weird.
But I put the blame squarely on the hands of Rob Reich, author of Just Giving. The structure, arguments, and most of the individual sentences are his, not mine. I just changed the word “charity” to “books”, and replaced all the charity-related examples with book-related examples. A few parts were edited slightly to make them flow together better, and a few sentences are entirely my own, summarizing parts of the argument that wouldn’t fit into a short blog post.
I wrote this weird edited pastiche/summary because I couldn’t figure out how else to express my frustration at Just Giving. The book does not conclude that philanthropy is bad. In the end, it comes out saying that philanthropy is potentially okay and can serve a useful purpose, although the tax incentives around it are weird and should be structured better. But along the way it manages to darkly hint that philanthropy is bad about two hundred times on every page. Nothing in the book is wrong. But a lot of the right things in it are fully general counterarguments that demand charity display a level of rigor that nothing else has. And the author’s interviews and summaries mostly keep the dark hinting while watering down the “actually it is okay” part so much it becomes almost invisible. The resulting style could be used to condemn not just charity but any productive human activity, including the writing of Just Giving itself.
For example: charity is not just an activity that takes place in a void. It takes place in a human society. So far, so good – nothing takes place in a void, except maybe space travel. But the book manages to darkly hint that because this is true, any regulation on it is justified. It never says this. In the end it doesn’t even want to regulate charity. But if you started feeling creeped out by sentences above like “books should not be understood in the simplistic manner of an activity that takes place within a framework of nonintervention by the state, or as nothing more than private individual decisions to express thoughts” or “writing a mediocre book squanders assets that are partially the public’s” – if you started thinking “Wait, is he pushing totalitarianism?” – well, both of those are pretty direct quotes from Just Giving, and the originals gave me the same level of unease about charity.
Or: it’s true that there’s a sense in which if the state gives someone a tax deduction for something, it is subsidizing their activity. And it’s true that authors can deduct some of their book-writing expenses from their tax bill. But it seems troubling to go from there to calling book-writing “part of the submerged state, obscured from public view and accountability”, or to say that now “the state is partially complicit in the harm caused by bad books”. Yet both of these are real Just Giving sentences too. I find myself much less attached to the tax deduction for authors’ business expenses (which may or may not be useful, no strong opinions) than to the project of preventing people from saying things like “Making sure books are good is kind of the responsibility of the state, isn’t it?”
Or: it’s true that authors just write whatever they want. You could describe this as making them “unaccountable and nontransparent”, and “at odds with democracy”. But at some point you might think things like “Wait a second, isn’t democracy perfectly compatible with private individuals doing their own thing? Are you sure you’re not thinking of totalitarianism?” Normally I would add something like “…and these considerations become immediately apparently when we’re talking about writing books, which makes this a classic case of proving too much“, except that to me they also become immediately apparent when we’re talking about philanthropy, so there must just be some fundamental disconnect going on here.
In a few sections, I “cheated” by using Just Giving‘s sentences or paragraphs about charitable foundations, rather than philanthropy in general. Reich is not necessarily worried about every charitable donation making “the dead hand of the donor potentially [extend] from beyond the grave to strangle future generations” (yes, this is a real quotation from the book), only about donations from foundations doing that. Still, might this be a little dramatic? Reich treats it as self-evident that permanent foundations are bizarre, maybe literally the most bizarre thing, quoting John Stuart Mill’s opinion that charitable foundations are “among the grossest and most conspicuous abuses of the time” and that the necessity of banning foundations that outlast their founder’s lifetime is “so obvious that he can scarcely conceive how any earnest inquirer could think otherwise”. Unfortunately for Mill, this is not at all obvious to me, and I was left baffled on this point which the book kind of assumed to be a natural human instinct. Why should my ability to control my donations be limited by something as random as my lifespan? If Bill Gates happens to get hit by a truck tomorrow, does this coincidence have some sort of important moral bearing on how the Gates Foundation’s money should be spent? If we decree it does, this leads to odd conclusions, like that the most important effective altruist cause in the world is encasing Bill Gates in an impenetrable steel shell so that nothing can possibly harm him – do we endorse this use of resources? If we oppose foundations, is Bill Gates still allowed to leave all his money to the single person in the world most aligned with his values, and then hope really hard that this person doesn’t betray him? Isn’t part of the point of law to abstract out things like “people might betray you” and replace them with comfortable ironclad contracts?
(a confession: my point about books being a perpetual exercise of the author’s power in the same way foundations are a perpetual exercise of the founder’s power is unfair, and addressed by Reich in the book. He states that most permanent things wield power only as long as the living choose to humor them – eg a dead author only matters if living people choose to read them and take their advice to heart – but foundations do not need the support of the living as long as the contracts that create them remain enforced).
There is much to like about Just Giving. Its breakdown of where charitable dollars actually go (mostly to religious institutions if you’re poor, mostly to colleges and museums if you’re rich) contains data I’ve been looking for a long time, and rightly points out that we should do better. Its discussion of the way tax deductions interact with wealth is interesting, although not obviously more applicable to charity than to book-writing or anything else. Its conclusion – that charity and philanthropic foundations have an important role in diversifying the range of represented interests and experimenting with new social policy – seems dead right, and matches my own thoughts on the subject (and see also this article by Kelsey Piper). I really can’t disagree with this book too much on the object level.
And yet if my review sounds scathing, I hope this is a sort of justice. Rob Reich has limited disagreements with charity on the object level, but still manages to write what sounds like a scathing review of it. I think this is bad.
In conclusion, Just Giving is a government-subsidized exercise of plutocratic power and plutocratic voice repugnant to the very idea of a democratic society of equals. I hope this gets corrected in any future editions.
[EDIT: Professor Reich responds in the comments. Please be polite if you try to discuss this with him. Also, please stop mistaking him for former Labor Secretary Robert Reich, they are two different people.]
“The experimental or heterodox opinions in books will represent the preferences of the wealthy, not of the wider citizenry. Indeed, there is empirical evidence to suggest that at least in the United States, the very wealthy have significantly more politically conservative preferences than average citizens. Thus, the activity of books, even when it decentralizes the production of knowledge, retains a plutocratic character.”
wrong of course, an overwhelming majority of books are produced by people with left or far left opinions. And by ‘left’ or ‘far left’, alas, I mean, those enthusiastically in favor of expanding both the size, scope and power of the state. Don’t know why but intellectual’s idea of utopia always seems to boil down to an all powerful state. Of course, their ideal of an all powerful state is always ruled by philosopher kings, ie, people just like them, who control the rest of society by their silver tongues (or pens) rather than an all powerful state ruled by low class thugs with guns and truncheons, but, of course, they always get to the guns and the truncheons in the end, don’t they?
I don’t think that the analogy between charitable donations and books works at all. Book-writing is a business, and the government incentivizing people making books makes as much sense as incentivizing any other small business. Likewise, tax deductions on business expenses is standard and indeed, necessary – some businesses have much higher levels of expenses than others relative to income.
“Charitable giving” is a hodge-podge of a broad variety of things, from religious donations to donations to education to funding paying for mosquito nets in Africa to groups which engage in political activism. It’s much less clear if this categorization makes sense, and whether or not we should be incentivizing these things with tax deductions.
And these groups do wield political power, and that can create some unfortunate incentives – doubly so when they’re involved in political stuff and maybe are taking donations from people from other countries and using that money to indirectly influence American politics.
Scott,
That was brilliant and hilarious. I twigged to what you were doing about three paragraphs in and laughed aloud. Swift couldn’t have done a better job.
Scott,
I think there is a fundamental difference between tax breaks for charitable giving and “tax breaks” for writing a book.
Anyone who runs a business can deduct their expenses, with limited exceptions (drug dealers aren’t allowed to deduct their expenses, yes that is specified in the law IIRC). The basic concept is if you spend $90 to make something that you then sell for $100, you should only be taxed on the $10 profit. This is not very controversial as far as I know, and seems logical. Of course, it’s subject to abuse (like all tax laws), and there are complications (like anything tax-related).
The deduction for charitable giving is not nearly so easily justifiable. If you make $10 profit / income but then give half of it away to a particular organization, you can deduct the $5 and are only taxed on $5. Why is this type of giving to a particular organization privileged over any of the million other ways you could spend your money?
Imagine one person who gives $5 to a museum and deducts the donation, versus someone who pays $5 to take her kids on a trip to a museum (or a new country, or buys them an educational toy, etc. etc.) It’s not obvious that one way of spending the $5 (donation to museum / college / other institution) is better than the other. And I do think this is generalize-able.
I could go through other specific examples, but fundamentally the charitable deduction strikes me as arbitrary, while the “deduction” for business expenses is reasonable on its face.
Edit: And because the charitable deduction is arbitrary, it deserves scrutiny. I think it’s legitimate to claim that the government is “artificially” supporting charitable giving. I don’t think you can say the government “supports” writing books, because authors are taxed the same as all businesses (taxed on profits), and taxing profits seems a decent way to do it.
I don’t agree that it’s arbitrary; both these tax exemption follow logically from the same design. The design here is that people are taxed on income available for consumption. In both the ‘expenses’ and the ‘donations’ case, you don’t have that money to spend on consumption. In each case, that money will eventually go to people who can spend it on consumption (employees of your supplier/charity, or their suppliers, etc.), and will be taxed at that point. The fundamental idea is that people who directly benefit from spending the money get taxed on it, not people whose hands it’s passing through without benefiting them.
I disagree. I would consider charitable giving a type of consumption. A person can spend money on any number of things / experiences / feelings. A donation is a type of consumption, it gives you a warm fuzzy feeling (or a feeling that you’re smarter than everyone else, etc.)
Supporting a company whose policies you admire or buying organic food is not usually deductible, but in those cases (and many others) you could argue that some of your money is being spent on intangible benefits. An intangible benefit is still a type of consumption.
I would group deductions for charitable giving into that part of tax policy that seeks to actively promote / discourage behavior. See the previous comment on solar subsidies, and there are almost innumerable tax breaks for other things the government seeks to encourage (health plans) or discourage (tanning salons).
Deducting expenses from revenue is just basic accounting / tax system design. Spending money so that you can make something and sell it is different from spending money to feel good / support a cause or institution you like.
See the argument about tax-deductibility that I made at https://slatestarcodex.com/2019/08/07/highlights-from-the-comments-on-billionaire-philanthropy/ (CTRL+F for NocD)
Scott, I like how you put it in that post. I agree there are much bigger issues with tax policy than charitable deductions. Number one would be the non-taxation of employer provided health plans, number two would be the mortgage interest deduction. The state and local tax deduction is arguably a federal subsidy to high tax states and a penalty to low tax states, you can understand why Republicans wanted to repeal it and Democrats fought to keep it. Last I checked it was greatly diminished by Trump’s tax law.
In tax law, deductions for the above and similar types of things are sometimes called “tax expenditures,” because it’s as if the government is spending a certain amount to subsidize an activity it supports. The tax expenditure / government subsidy argument isn’t at all original to charitable deductions.
I still think there is a distinction between deductions for things the government wants to encourage and deducting business expenses. Deducting business expenses is a fundamental part of calculating income / profit. Many of the things you listed in your sections are activities the government wants to encourage, and could be labelled tax expenditures.
Exceptions from your list: Home office – this is in theory a business expense (since you need someplace to run a business), but it was abused so much that the IRS implemented byzantine regulations to curtail how much you could deduct.
Lunch with clients – again, theoretically a business expense (if you’re using it to win / impress a client) but subject to abuse with ridiculously complex rules about when a business lunch qualifies as deductible.
Gambling losses are a funny example. They are only deductible against gambling winnings, so if you were to win $5,000 in blackjack you wouldn’t have to pay tax on the full $5,000 if you’d lost $2,000 the day before. You’d only pay tax on the $3,000. This is sort of like the business expense model, in practice it means most people don’t pay taxes on gambling winnings since their losses will be greater than their winnings. You can’t deduct gambling losses against other types of income.
Edit for typos
Edit link to Tax Expenditure
This post is mortally wounded by the very different political and economic standing of making expenses used to generate income deductible in an income tax and making charitable contributions deductible.
The income tax is a tax on income. If significant expenses to generate that income are included it is no longer a tax on income because expenses are not part of the income. Similarly, pass-through is necessary so minutia around how you legally organized your business activity doesn’t immediately create double taxation. And and a wide variety of business activities can be passed through for this reason.
As a result the exclusion of business expenses from taxes isn’t really at all comparable to the tax treatment of charities. You could, for comparability sake, use the tax subsidies for solar energy as something with a similar structure as the charity subsidy. But I think then the attempt to create an absurd example wouldn’t work– because it’s not really disputable that incentives like the solar credit are potent interventions by the state.
I should have read this before my post, I said basically the same thing.
Writing books and charitable giving do have a lot in common. It is problematic that not everyone’s voices are heard and that the wealthy have more influence.
Rob Reich may not easily extend the demand for rigor into book-writing having just written one. But in all seriousness, why wouldn’t we prefer to decentralize knowledge production, etc?
Writing and giving are good, but it would be nice if everyone could access and enjoy them equally, both for their own sake, and to avoid perpetuating existing power structures. Even if ending subsidies that benefit those who are already well-off is just fixing a symptom, why not fix it?
I wanted to read the Mill quote in context- when someone I respect disagrees with me, I think I at least have a duty to hear out their arguments. Unfortunately, searching for the quoted phrases seems to be turning up… Reich’s book, people quoting Reich’s book, this review, and literally nothing else.
So I guess I’m asking if anyone has a source, and also saying, that’s kind of weird, right?
I didn’t locate the exact quote in a quick read through the text, but I believe Reich is referring to “The Right and Wrong of State Interference in Church Property,” the second essay in this collection.
When I search Mill pops right up.
Why didn’t you find it? First, you are probably using bing/ddg, which doesn’t search google books. Well, don’t do that. But even Bing hits this (better link).
I made that mistake. I had a vague impression that whenever I had seen something from Robert Reich I disagreed with it, I disagreed with the arguments this Robert Reich was making, so obviously they were the same person.
Surely there could not be two people, two with the same name, both of whom I disagreed with.
“I propose that instead of giving authors tax deductions, they might receive a certain percent of their expenses paid back to them by the government, capped at $100”
I’d suggest instead making tax deductions progressive, but in reverse. It also serves an additional purpose of reducing unintentional subsidies for activity across the board that very wealthy people are able to take advantage of that most citizens are not.
Have not read the book and am not likely to, but your review makes it sound so black-boxy. I mean, I wasn’t even creeped out by most of it, the text just seemed to put the word “books” into fantastic situations it would never encounter on its own? Does the book discuss charity from within, or does charity remain a solid block with few known properties?
The same with Reich’s book. I never would have considered “charity” to occupy those situations either.
Thanks. Now I am creeped out)
“charity is not just an activity that takes place in a void. It takes place in a human society. So far, so good – nothing takes place in a void, except maybe space travel.”
This is the point at which I cracked up.
I’m another one who had no idea this was a different Robert Reich. You know, things like middle initials sometimes come in handy.
Things like middle initials—or using nicknames like Rob. If you don’t notice that they have different written names, you probably wouldn’t have noticed an initial. If they both used initials, it would probably work, but it’s not the young guy’s fault that it’s too late for that.
Ooh, hello Atlas. You posted at the same time as me, and directly disagreed with one of my points!
You: “Namely, it is not clear to me that government generally or democratic government specifically deserves some sort of presumption of superior accountability and transparency, let alone wisdom or competence, relative to very wealthy individuals.”
Me: “The advantage of the state is that it opens “public-facing” spending to scrutiny.”
I think my major argument would just be to say, rich people have had loads of discretion over what to do with their money forever, and for most of forever, life was horrible. In the 20th century, we created these really big intrusive states, and in a few parts of the world, life got loads better. Clearly big powerful states can also do horrible damage, as well. But I see the state as a kind of technology that requires harnessing, but is ultimately the only way to generate massive improvements in living standards. And I want those! While governments’ openness and responsiveness to scrutiny is less than ideal, at least there’s something, in the form of law, that is supposed to constrain them.
Life got way better in big intrusive states that left the rich a decent part of their earning and were fairly supportive of rich people doing what they wanted with their money. Not so much in communist countries that were way more intrusive.
The world was much more productive in the 20th century than previously, and that’s the major cause of increased wealth – not redistribution.
Phil,
“I see the state as a kind of technology that requires harnessing, but is ultimately the only way to generate massive improvements in living standards.”
I have been studying the topic of massive improvements in living standards for twenty years, and I totally disagree with your conclusion.
There were at least three key institutional ingredients in the Great Enrichment which started around 1776. These are the institutions of science, free markets and representative governments. When you get all three, and the cultural values which support all three, we see progress created. Other societies can draft off those with these three institutions, but they depend upon the wealth and knowledge created by those with all three.
An overly intrusive state (such as one which oversees charity and freedom in publishing) threatens all three institutions. On the other hand, an effective state with checks and balances and representative democracy of some sort is probably necessary, or at least has been so far.
Life started getting substantially better well before the rise of intrusive states, and there were very intrusive states in some places long before things started getting better — consider the Inca.
The single sharpest improvement in human living standards we know of, weighted by number of humans whose standards improved, was probably the abandonment of socialism in China after the death of Mao, a shift to a much less intrusive state, although still much more than I think desirable. The most spectacular increase, not weighted by number, may be the rise of Hong Kong, from a dirt poor society with ten times the population density of the most densely populated country in the world and a constant inflow of immigrants to a society with a per capita income above that of Britain, over a period of only a few decades. And it had one of the least intrusive governments around.
I think you have the causality backwards. The rise in real income in the 19th century under what were, by our standards, weak governments — in both the U.S. and the U.K. all governments combined spent about ten percent of income, and in the U.S. local spending was larger than state was larger than federal — provided sufficient resources to fund a large and mostly unproductive public sector.
They had that only at the discretion of the powerful, which not all rich people were. Consider the situation of Jewish moneylenders in medieval Europe.
Al-Tannukhi has an anecdote about Ibn al Jazzar, a near contemporary who was famous for his wealth. The anecdote involves his protecting himself from a Vizier who disliked him by threatening to bribe the caliph to replace the vizier. But it starts with the point that he made a point of keeping a low profile, had the reputation of being a fool and wasn’t, because being taken too seriously would be dangerous. And in fact, at a later point in his life, most of his wealth was confiscated.
One of the things that changed, leading up to the modern period, was increasing security of property rights. More recently, it has been changing in the other direction.
Thanks for those comments.
Aapje: “Life got way better in big intrusive states that left the rich a decent part of their earning and were fairly supportive of rich people doing what they wanted with their money. Not so much in communist countries that were way more intrusive.”
Yes, I agree. There’s clearly a level of intrusion that goes too far.
Blacktrance: “The world was much more productive in the 20th century than previously, and that’s the major cause of increased wealth – not redistribution.”
But why did the world suddenly become more productive? It would be bizarre to ignore the tectonic shifts in politics that happened at exactly the same time. As I have commented elsewhere: the economic growth was a result of massive increases in equality. Specifically: public health improvements at the end of the 19th and early 20th centuries reduced death rates (disproportionately improving life for the poor); the introduction of universal education massively leveled the professional playing field; the birth of democracy enabled poor people to obtain some leaders who were actually sympathetic to them.
Swami: “There were at least three key institutional ingredients in the Great Enrichment which started around 1776.”
The problem is, the Great Enrichment didn’t start in 1776. Check out this site https://ourworldindata.org/economic-growth, which has growth series over the relevant period for both the UK and USA. GDP per capital for the UK in 1800 is about 2,300, by 1900 has doubled to 4,800; over the 20th century, it multiplies 5-fold to 25,000. There was a qualitative difference in the growth over these two periods. For the US, it’s a similar story.
David Friedman: “I think you have the causality backwards. The rise in real income in the 19th century under what were, by our standards, weak governments”
I know you have the history backwards. The rise in real income in the 19th century was much much weaker than the rises in the 20th century. We can argue causality, but first you have to know what happened when.
“only at the discretion of the powerful…Jewish moneylenders in medieval Europe…Ibn al Jazzar”
That is a pretty good point. And yet… I don’t see property rights stepping in to make the difference for marginalised and persecuted groups. On the subject of moneylenders, I recall a Shakespeare play about exactly how a strong court system could still be subverted by prejudiced participants. Was it property rights that who made life for women better? Or was it universal suffrage, followed by equal treatment law? Was it property rights that ended Jim Crow? Or was it MLK making use of the constitution? Was it property rights that enabled gay acceptance? Or was it the queer resistance of Stonewall? Property rights were much improved in the 19th century, as noted above. But the real advances in equality only followed the 20th century political equality movements.
Phil,
Thanks for the reply. I certainly do agree with you that an influential government has been a necessary ingredient (perhaps we both disagree with David on this matter?) and that growth rates started small and grew from there. Actually growth in population and per capita income started prior to 1776 in the US and Britain. It started centuries before this in the Netherlands — which influenced institutions in the other two.
In addition, there were lots of other factors which influenced growth. These include the issue of recovery from the Black Plague and the opening of resources an order of magnitude larger than Europe in the discover of three new continents with population soon to be virtually eliminated by disease. Malthusian constraints were severely relaxed.
Efflorescences — short term gains in living standards — were not uncommon in history, consider Athens, Florence, Song China, etc. What was absolutely unprecedented was sustained, cumulative growth in income and population which completely eradicated Malthusian effects. All prior efflorescences tapered off. The thing that was different with the Great Enrichment was that like many efflorescences before, growth started out, but then instead of tapering, it began to accelerate and cumulate and increase.
England had a semblance of all three key institutions by 1776, as did the US. Growth was already occurring relative to the rest of the world, and the rest of Europe, but over the 19th C it increased a lot faster. As you explain, it continued to grow even faster in the 20th, and to continue to expand to more of the world. This growth was not a factor of government power, but this argument is taking us way off topic…
Off-topic but interesting!
My own personal guess on what “it” is that enabled the west to become rich is simply and only rule of law. Rule of law enables people to undertake massive projects with confidence that their assets will not be stolen, and that everyone will more-or-less follow the plan. I just don’t think you need anything else.
Yeah… I pretty much agree with that. I once saw a distinction between immediate goals and ultimate goals. Penn Jillette argued that he doesn’t know or care what the endgame of libertarianism is, but it feels like on all of the current issues of the day, taking a step in the libertarian direction seems like the better option. I thought that was a good argument that neatly sidestepped the problems inherent in some full working-out of a libertarian ideology.
This was lovely – both the pastiche part and the fact that the author came to engage. It’s a privilege to be the 267th part of this conversation!
I think Reich’s answer offers very clear reasoning, and I can spot exactly the point where I disagree:
“Philanthropy…represents the direction of private assets toward some public-facing or other-regarding influence. In this respect, philanthropy represents an exercise of power, and power deserves scrutiny…”
I just don’t think influence is the same as power. I remember The Economist writing about Cass Sunstein’s Nudge, where they very clearly distinguished the idea of nudges from paternalism – paternalism is ultimately backed by force, nudges are not. The same goes for philanthropy. It’s ultimately not backed by force, and that means it should not be assessed as such.
I also think it’s a misdiagnosis of where the problem with philanthropy is. The problem isn’t that it involves power. The problem is that it claims to help people, but most of it probably doesn’t. All that giving to churches? Spending on pointless arts projects or scientific research that goes nowhere? The problem is that it’s *inefficient* at what it claims to do. The advantage of the state is that it opens “public-facing” spending to scrutiny. Initiatives like the Gates Foundation and effective altruism are working on the same problem.
I also think Scott is wrong about permanent trusts.
“I was left baffled on this point which the book kind of assumed to be a natural human instinct. Why should my ability to control my donations be limited by something as random as my lifespan?”
Because your ability to control anything depends on you having an interest in it. I respect your interests as a person, and I would morally choose not to violate them; and I am legally constrained from violating them in many ways. Once you die, though, you have no interests, and you cannot be harmed.
Or to turn it into a reductio, if the will of dead people matters as much as the will of living people, then every decision we take these days should be conditioned on the wishes of long, long, long dead people. Every square inch of Tennessee was once owned by committed racists; are we compelled to compromise with their wishes? Before that it was owned by native Americans; are their wished to be curtailed by something as random as the fact that they were wiped out in a genocide?
Another reductio: if r>g, and permanent trusts mean that incrementally more and more of the country’s wealth is bound up in unbreakable contracts, ultimately the living will be left with zero discretion on how any money is spent.
Ah, but it is backed by force, because private property is backed by force.
That’s tricky. Do you agree that I have an interest, now, in things that will happen after my death, such as the welfare of my children and grandchildren? If so, institutions whose direct effects will only occur after my death affect my interests now.
Hi, David.
Sure, but I still think your interests in those long-term institutions end at the time of your death.
I’m struggling to think of an example, but here’s one: I’m near death, but I have a gay grandchild, and I want that grandchild to have the option of marrying. It’s in my interest that the law permits gay marriage now, even though the child will not be marrying for another ten years. But once I die, that interest ends.
Because the alternative is unthinkable – how many dead people’s “interest” do we have to count? How could they be counted?
Don’t you think that we should pay attention to the interests of future generations? At the least, such a notion is commonplace, but the difficulties of doing so are at least as large as the difficulties of counting dead people. After all, we have much more evidence of what now-dead people wanted than what the as-yet-unborn might want. What’s more, if we think that future generations won’t pay attention to our interests when we are gone, then we might not pay attention to their interests now.
One way of looking at it is that society is a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born.
I’m going to just say no to that. I see what you mean – cross-generational reciprocity – but there are two problems.
One is that the level of uncertainty is just too big. The dead can no longer tell us what they want, so when we “respect their wishes,” what we’re really doing is applying our own interpretation to their wishes. (Importantly, by being dead, they’re being denied the right to change their minds.) The unborn can’t tell us what they want, so the same problem applies.
The second is, I’m not sure there’s anything to be reciprocal over. I’m not sure there has ever been or ever will be a situation in which the interests of this generation conflict with the interests of future kids. Doing the best for ourselves now is literally the best thing we can do for our kids.
(I know, global warming, but that’s hurting people now!)
Given those two deep problems, I’m not yet willing to believe that any kind of intergenerational reciprocity is necessary.
In the particular case we are discussing, someone who establishes a charitable institution that will survive after his death, the donor did tell us what he wants.
Some of the arguments in my utility function are things that will occur after my death. I gain utility now by the existence of institutions that allow me to take actions now that will affect those things.
It’s true that, if the institutions change just after I die, I don’t lose utility, since I am no longer around, but people still living who are in the same situation I was in lose utility, unless you believe that you can keep fooling people over and over again into believing that their wishes will be respected post mortem and then not doing it.
David: “Some of the arguments in my utility function are things that will occur after my death.”
Yes, but I’ll happily bite that bullet. You can’t have those things. There are lots of “arguments in a utility function” that are simply not legitimate. In particular, you don’t get to arrange what other people do. It may suit my conception of marriage, and give me utility, if marriage is banned as an institution; but I don’t get to impose that on others. It may suit me to have everyone in the country work for the glory of the motherland, but I don’t get to impose it. Similarly, I may have desires about the past, but for reasons of physics, we can have no control over them. I would suggest that for reasons of moral and legal practicality, any desire to legally control what happens after our death should not be permitted (though I’d allow a small exception for wills).
“In the particular case we are discussing, someone who establishes a charitable institution that will survive after his death, the donor did tell us what he wants.”
Sure, but that’s not how contracts work. It’s not enough that I once contracted to do something. I have to remain willing to enforce that contract, or it loses its effect. There are millions of badly drafted contracts out there with no sunset clauses in them. They are no longer valid because they are no longer being enforced. There are common law rules about this! A dead person is no longer willing to enforce. As I said, crucially, you are always allowed to change your mind about a contract (to the extent that you don’t harm the other party). The dead have lost that capacity, so they have lost the capacity to meaningfully and continuously consent to the ongoing effect of their original establishment.
You wrote:
My
is a full rebuttal to that particular argument.
Your:
May or may not be an argument for your conclusion (in fact isn’t, since it assumes its conclusion) but it isn’t a defense of what you had written and I responded to.
“how contracts work” is a characteristic of a particular legal system. In the Anglo-American legal system, and Islamic law, and I suspect most other legal systems, lots of contracts continue to be enforceable after the death of one of the parties. It’s true that someone has to act to enforce them, but that can be someone who benefits by the contract but is not a party, such as the recipient of income from a trust fund. It can be someone who has the job of enforcing the contract, such as a trustee.
There are lots of ways in which I don’t get to arrange what other people do, but that’s true while I’m alive. But there are other ways in which I do — for instance by deciding who is allowed to come onto my land. What is special about exercising such rights in ways that survive my death that makes it different?
Surely true. But I am still waiting for you to explain why this particular argument is not legitimate.
Hi, David.
“My…’the donor did tell us what he wants’…is a full rebuttal to that particular argument.”
No, I really don’t agree. Because, as I said, what the doner wanted 50 years ago, when she was alive, does not tell us very much about what she might want now. It’s a well-known feature of people that the things they want change over long time spans. And as I said, the signing of a contract or other legal document doesn’t strictly tell us what someone wants: it just sets up a series of conditionals. *If* party A does this, then party B has the right to do that.
Similarly with your land example. Property rights do give you the right to exclude people from your land – if they are exercised. You can choose to remove squatters this year, and you can choose not to remove them next year. There’s a whole section of law dedicated to the question of standing to enforce rights, and typically the right-holder has to do it herself.
Trusts are the obvious counterexample, and of course that’s how these bequests are usually structured. Clearly, they do exist in current common law. All I’m saying is that there are also a bunch of very standard principles in law that would exclude permanent trusts, if they were applied just a little differently to how they are, in fact, applied.
“…why this particular argument is not legitimate”
Because no damage can be suffered as a result of things happening after your death. You argued that you can have an interest in events after your death, and I accept that on a psychological level, but not on the level that can constitute a legal interest. You can’t materially benefit from or be harmed by those events, so to claim them as an interest is to stretch the meaning of the word beyond any useful definition.
What you said was:
Are you now conceding that that is how contracts work, but wouldn’t be if the law was interpreted differently?
“…why this particular argument is not legitimate”
As I thought I explained, I can be damaged now by the existence of institutions which control what will happen after my death. The obvious evidence is that people bear costs while alive in order to achieve objectives that will be achieved after they are dead.
You are arguing for changing the institutions in a way that restricts my ability to take actions now that have effects after my death, actions that I am entitled to take in order to have effects while I am alive. So you are arguing for restrictions that harm me. Now.
Again, I can be materially harmed now by your arranging things so that I cannot affect things that happen after my death.
How do you feel about promises? Your best friend, dying, gives you ten thousand dollars with instructions to pass it on to his son, who isn’t present to receive it. You promise to do so. Following out your stated principles, once he is dead should you treat the money as you would treat it if you had found it in the street, simply use it for whatever purpose you wish? Your friend is no longer around to be harmed.
Sorry, I got busy for a few days.
“Are you now conceding that that is how contracts work, but wouldn’t be if the law was interpreted differently?”
No, that’s exactly how contracts work… but it’s not how trusts work. I mean, clearly trusts exist! Clearly the law as it currently stands allows for permanent trusts. I’m saying that that is not a necessity. There are whole branches of the law (most of the law, in fact) that work on completely different principles.
“I can be damaged now by the existence of institutions which control what will happen after my death.”
No, you can’t be damaged. You may prefer that those institutions not exist, but that’s not the same as being damaged. You as an individual never had the ability to change things after your life. If you live in a society that agrees to it, you can arrange for the creation of institutions that give you that option. But if society changes, and the institutions change, that doesn’t damage you as an individual.
“How do you feel about promises?…best friend…son…promise…use it for whatever purpose you wish…no longer around to be harmed.”
Keeping promises is a good rule. Helping friends’ sons is a good thing to do. Permanent trusts don’t need to exist in order for me to do the right thing.
The 20% pass-through deduction can be taken without itemization. In general the tax benefits to authors are only those allowed to the self-employed generally.
Creative writing prompt:
Reconstruct the deleted scene from Ayn Rand’s Atlas Shrugged where “Dr. Reich” goes around closing charities because they’re not approved by the government’s Central Committee.
Don’t forget to include “Dr. Reich’s” 20-page monologue which ends with him shoving a child in a wheelchair out into the street as he closes down a cancer charity.
To the extent that there might be a critique here, it doesn’t seem aimed at the central arguments of the book. I haven’t read the book entire, but have skimmed through it and am somewhat familiar with its arguments having been involved in non-profit governance and foundation fundraising for twenty years in a prior career.
The book itself doesn’t seem to be advancing any kind of regulatory agenda to hamstring philanthropic giving. The perhaps clearest, most novel argument is what Reich calls the “discovery argument” — which as I understand is the view that foundations are best situated to fund long-horizon exploratory/innovation efforts that the political and economic imperatives of government and private sector leave them not as free to do.
This seems like an argument worth engaging with. I don’t know, but my guess is Reich would most hope to influence foundations themselves to engage with this idea of where their most strategic value-added may reside, to encourage foundations to think strategically rather than endlessly extending (or re-inventing) the passion projects of their founders and descendants. I’d be interested to hear what Scott has to say about that argument, particularly from an EA perspective given his experience in that corner of philanthropy.
There’s also a somewhat less new argument about how rich people’s money has historically had a tendency to distort democracy, and how large foundations are an instance of that dynamic. This seems uncontroversial, though I suppose like much history writing, there’s value in documenting this particular manifestation.
I don’t know Reich at all but I see from his resume that this book is more or less at the center of work he’s been doing academically and IRL for a long time. So to the extent this book represents a significant amount of experience, it seems worth engaging with its content substantively.
To provide a contrary data point, I thought the analogy was immediately obvious from the first paragraph.
I read the first paragraph and checked to make sure it wasn’t April 1st. I was glad to get to part II of the piece.
Edit: Aaaand upon searching through the thread, I see I’m not the only one.
I like the discussion so far, though.
I figured from the first paragraph that the author of the book being reviewed was far enough from culturally standard opinions to qualify as “a crackpot,” and wondered why Scott was wasting his time reviewing this book I’d never heard of. I also started a mental sub-thread considering the accuracy of the statements about taxation of authors, and which jurisdiction(s) they might apply to.
Eventually Scott’s intent in writing those paragraphs became clear – but not, I’m afraid, much of anything else. I’m still confused about what Scott was actually trying to convey, and about what the book being reviewed actually says, never mind the intents and beliefs of its author.
That may be partly because I’d begun skimming rather than reading by then – this style of writing (by Scott) simply doesn’t work for me, and it would take something like needing to review Scott’s essay for money or grades to motivate me to read it attentively.
Also, from where I sit, Rob Reich is probably right. (Note that I’m basing this entirely on what Scott seems to be saying about the book.)
Lots of government-recognized charities appear to primarily act as means of transferring money from donor to charity executives and staff, and sometimes to the charity’s suppliers. Other “charities,” are focussed on doing something I oppose, like spreading cultural ideas I disagree with. And big donations from extremely rich individuals are potentially worse – they can do a lot to farther improve the donor’s power, status, etc., without doing anything especially useful for the recipients. Of course they all deserve scrutiny.
That doesn’t mean that most charities are crooked, or so incompetently run that they might as well be crooked. It also doesn’t mean that some large philanthropists don’t earn their increased power and status by doing a lot of good – or even act out of actual altruism, and forego most of the side benefits.
But saying “it’s charitable” doesn’t give anyone a free pass – even if the person saying it believes what they are saying. Sensible people should look at the reality, not just the name.
What the government should do is a different question. I’d expect that any government trying to identify “real” or “actually valuable” charities would create a bureaucratic nightmare, riddled with corruption. The best that’s reasonable might be rules enforcing that a non-profit actually not make a profit – and even that’s hard to do, given the potential for simply transferring the profit to the executives as salary. (How much should a professional charity administrator be paid anyway?)
We could come up with lots of potential arrangements, including making more of charitable giving come from after tax dollars. (I believe that’s one effect of Trump’s tax changes – fewer people itemizing means less before tax charity. OTOH, I didn’t check where charitable deductions get applied on the new forms.)
But realistically, chartitable giving doesn’t seem to be broken enough to deserve significant attention currently. What the US has now, and what Canada has now, each works the way it is, albeit in the usual ham-handed, bureaucratic fashion of all regulations. (I’m not familiar with systems in other countries.)
I’d prefer to focus on something more important to me, like governments supporting businesspeople in socializing risks while privatising profits.
It seems to me that this argument is really one where perceived object level benefits of charity that are simply too good to give up are coming into conflict with more meta level intuitions about how society should be influenced. This was my main takeaway from Scott’s Against against billionaire philanthropy, where he focused on foundations such as the Gates foundation. A point about the staggering successes of outlying charities seemed particularly pertinent, in that they are simply doing work that government seems to be incapable of, which far outweighs any downside of the selfish endowments that are zero-sum status battles.
My take on Rob’s argument is that there are several procedural policies that should be reformed, because they give some small group of people(e.g. billionaires) too much power that might be used against the interests of society, potentially in enduring ways.
The first example of a perpetual charity arising from these sorts of “indefensible” policies that comes to my mind is the nobel prize fund. Money in perpetuity, donated at a heavily advantaged rate on a wealthy man’s death, run by a secretive committee that often makes strange, unaccountable decisions based partly on popularity.
A refresher, Alfred Nobel was the inventor of dynamite, and became very wealthy as an arms manufacturer. He was literally insulted as “the merchant of death” in the newspapers. He said that he was remorseful over the use of his inventions in war and intended the use for things such as mining where they reduced the obviously dangerous and horrid work of carving tunnels into rock. Even if he was pandering to improve his reputation with an appeal to higher morality, that’s entirely the point. The Nobel prizes act as an inspirational redirection of status motivation towards our higher values and goals as a society. I know the prize committees are not perfect, but on balance it seems like an astoundingly effective posthumous charity that promotes good in the world. It would not have happened at all if we aggressively prevented the wealthy from trying to pay for charity this way. Other similar prizes were founded by posthumous endowments as well, such as the Pulitzer prize, and probably innumerable others I don’t know about. Many university endowments come from similarly wealthy donors under posthumous arrangements, who may or may not have believed the stories they tell about wanting to contribute to a better world.
Apparently, Rob Reich himself has worked for the Aspen Institute(Founded by a shipping magnate), served with a Carnegie Foundation(Andrew Carnegie funded so many institutions with his fortune it’s barely even fair, including one of my favourite libraries!), and is a professor at Stanford, practically a whole system that attempts to turn money from rich people into productive social work.
Are cases like this outliers? Are they just crass attempts to buy influence and standing? Maybe, but it doesn’t matter. So much good comes out of them that I just don’t think that the any government can compete! The Nobel endowment is only worth about a half billion, which doesn’t even buy a single subway line in the medium city I live in. I would take the Nobel foundation over an extra subway extension in my city in a heartbeat, it’s not even a contest.
I dislike the idea, in the abstract, of a dead weapons salesman promoting which ideas I hear about and my government supports. In the abstract, I understand a call to prohibit such an affront to my sensibilities.
But here in practice, I just have to suck it up because I think that something like the Nobel prizes are an inspiration that provides so much intangible motivational value to the world’s scientists, engineers, and lay people that it is near impossible to replicate.
The specific policies that Reich argues against sound offensive in the abstract to my sense of fairness and justice, but I just cannot ignore the shockingly effective foundations, outliers or not, that seem to be promoting common social good that is extraordinarily unlikely to be replicated through any taxation scheme preventing these donations. When a billionaire buys charity influence, they do so with their best foot forward, promoting a feedback loop of goodness as they try to one-up eachother in promoting good works, for the benefit of us all.
The Nobel Prize is a good example of a positive effect long after the donor’s death. Can anyone counter this with an example of the opposite?
On power beyond the grave and perpetuities. Although morals change, and we seem to mostly think that our morals are better than what was before, there are periods of history when the morality of the time went backwards from the previous time – as we would see it now.
Not to put too fine a point on it, but you know who liked to strip charities and donations in perpetuity? Nazis. The city of Viena was recently involved in a lawsuit oven a charity created by a Rothschild to fund a psychiatric hospitals (the heirs don’t want the money, they want the charity to go back to its original purpose).
How can we make sure, if we are starting to take away funds donated for charitable purposes, that we’re not being Nazis?
Yes, I know it’s a slippery slope argument, because it is a slippery slope.
I think the comparison to writing books is a bit disingenuous. The US government tax advantages charitable giving to encourage charitable giving. It doesn’t tax advantage authors to encourage the writing of books, it does it because taxes are based on income and if you are self-employed and spend $50 buying copies of journal articles needed for your book, and you then earn $50 from book sales, the government correctly recognizes that your net income is $0, not $50. In some ways writers are tax-disadvantaged, for example, having to pay self-employment taxes, and not being able to take advantage of tax-advantaged employer-provided health insurance. If the government were specifically tax advantaging writers for the purpose of promoting the existence of books, many of the proposals being caricatured in section one, such as instituting requirements for the length and quality of books needed in order to qualify for a tax break, would IMO be perfectly reasonable proposals.
Government deciding what qualifies as a good book. What could possibly go wrong?
It shouldn’t be unlimited either — we don’t allow billionaires to bribe politicians or raise private armies. The status quo is not 100% libertarianism — but what’s so special about it other than being the status quo?
Wouldn’t most/all arguments for resisting this also support resisting private security guards, and from there, all employees? If the accusation stems from the idea that the officer on a donation payroll would be biased toward the donor? If the wealthy pay more in taxes, considering officers are paid via taxes, doesn’t that already bias them toward the wealthy?
Though I agree that even inefficient chairity is better than none at all, I’m not sure how well the analogy to authorship holds up. It seems as though asymmetries within charitable givings would have much more pronounced effects than similar asymmetries in writing.
Using an example of a topic that is nearly evenly split in America today, $1,000,000 given to a pro life organization will have a clear advantage over $100,000 given to a pro choice organization. However, if 20 news websites publish articles on the pros of abortion while only two write about its cons, it can be assumed that each group of readers will choose to read from the websites that they are aligned with. An authorship is not limited to a certain number of views, nor is each published work guaranteed to be seen by a certain amount of people. If I want to read things that align with my values, and 90% of the books being published today are contra my values, I’ll read the 10% that line up nicely. Money has a much more proportional effect on what gets accomplished than written work does.
It seems like the better efforts are put into validation/vetting that supposed “Charities” and tax-advantaged “Philanthropy” actually goes to that and is not simply wealthy people feather-bedding for their own or running various shake down and tax-evasion schemes…
Like say for example – what were Harry and Meghan doing to get paid the £3+ million/month from various tax-free Royal “Charity organizations”…
Unfortunately – getting “The Government” into the business of charity seems to significantly increase management costs (often >20%) vs the garden variety private charity which is able to operate for a LONG time at under 10% administrative cost…
“But this also applies to books” isn’t as powerful as a mic-drop as you think it is.
Part 1, intended to be snark, made more sense than anything that followed. Spending money is private power that deserves democratic scrutiny, and so is publishing books. This isn’t a description of totalitarianism. This is a description of any system that isn’t radical libertarianism. This is already how things are. The state recognizes that publishing information doesn’t exist in a vacuum, and we don’t treat it as “nothing more than private individual decisions to express thoughts”, because it isn’t.
Reich’s argument here, if I understand it, is that any opposition to regulation can’t be defended on the grounds of “this doesn’t affect you”. Not that any regulation is automatically good. For an economic analogy: Reich is saying that the state has the right to tax, and you are interpreting him as saying the tax rate should be 100%.
And the wrongness of the “this doesn’t affect you” argument is of upmost importance. We should be shouting it from the rooftops. Publishing books about it. We should be subsidizing publishing books about it. Because this atomistic view of the world underlies so many bad arguments, has poisoned so many minds in the American collective consciousness.
If Person A can do something that affects Persons B and C, I see two choices presented:
1. We can determine whether Person A can do the action using some sort of democratic method (i.e., we assume actions that affect others “deserve state scrutiny”)
2. We can let Person A do whatever he wants to Persons B and C, regardless of what B and C think (i.e., assume he is not “deserving of state scrutiny”)
Option 1 still leaves plenty of room for game theory social liberalism. Persons B and C could realize that if they stop Person A from doing things, Person A could team up with Person B against Person C (or vice versa) and do the same.
Option 2, however, opens the door for actual, absolute totalitarianism. Person A is now only constrained by the power he can amass, and the more power he has, the more he can control everyone else. Persons B and C have no recourse, other than to try to amass countervailing power themselves. And if they can’t, Person A is free to implement whatever sort of monarchism or slavery he desires.
It’s quite funny to me, that for as much as you’ve batted around accusations of “totalitarianism” towards those advocating for Option 1, did you ever stop to consider what Option 2 entails? Democracy is “totalitarianism”, sure, but it’s less “totalitarian” than every other system.
Those options set up a false dichotomy because “doing things” is such a general category. For example, A shouldn’t be able to murder B and C even if he wants to, but this has nothing to do with murder deserving state scrutiny – B’s and C’s lives just aren’t up for vote. At the same time, A can do something like donate to organizations that indirectly affect B and C in ways they don’t want, and that’s not up for a vote either, because it’s none of their business. So most actions are one of (1) should be forbidden regardless of what the democratic method says, or (2) not up for random affected people to veto if we are to live in a free society; relatively little is to be left to democratic discretion.
As I see it, the first of your options is tyranny of the majority, and the second option allows some terrible stuff, but a bit closer to being correct.
@blacktrance
The first option is “tyranny of the majority”, but the second option is tyranny of-the-regular-kind, needing no other qualification. There’s no escape: someone, or some group, always gets to be the decider.
So given that people will always be affected, we could set up a spectrum of “how much does this effect you?” in order to determine whether democracy or autocracy is the best approach for a given action. You posit that charitable giving is one of those things that is “none of their business”, with no further explanation.
Can I presume this is because you think charitable giving doesn’t negatively affect people very much? Am I correct that this is the contours of the debate? If so, aren’t Reich’s lengthy explanations of how charitable giving affects the larger society not irrelevant to the question at hand, but highly germane towards it?
I think so.
Sure, in the same way that Scott’s explanation of how books affect the larger society are highly germane.
Scott’s Part One only checkmated people who are trying to thread the needle of “charity can negatively affect others, but writing books doesn’t, because its just speech”.
If you don’t make that mistake, there’s nothing substantive here to persuade you to his position. It’s like, yeah we regulate books too, for much of the same reasons we regulate the rest of the economy. Welcome to non-libertarian land.
If a democratic state is “tyranny”, then everything is tyranny, and the word has no meaning.
What kind of regulation we have on books that comes close to what Reich seems to be proposing for charity?
You seem to be only checkmating people who think we live in libertarian land. I’m pretty sure no one thinks that. Pretty sure everyone thinks we live in a democracy. Pretty sure that, “…and so we should adopt my preferred policy positions on charity,” does not follow from, “We live in a democracy.”
As long as we all agree that its a good thing that we live in a democracy, where questions such as charity and book writing can be subject to state scrutiny, then we’re all in agreement.
I think we all agree that it’s a good thing that we live in a democracy. I think you’re being a bit slippery when you say that things are “subject to state scrutiny”. You’ve basically argued that 1) All actions affect other people, 2) Any action which affects other people should be subject to state scrutiny, 3) 1+2 => All actions should be subject to state scrutiny. (And you’re trying to claim with a straight face that you don’t understand why anyone could possibly think you have totalitarian tendencies.)
That’s fine as far as it goes, but I think we all should also agree that in the vast vast majority of cases, being theoretically “subject to state scrutiny” in this way doesn’t actually involve anything that looks like “scrutiny”. As we’ve discussed before, if A has sex with B, then C is unable to have sex with B at that time. Therefore, A’s action affects C. We live in a democracy; ergo, this action should be “subject to state scrutiny”. Nevertheless, the democracy has told the “state” to piss off and not engage in anything resembling “scrutiny”.
“Scrutiny” just means “to examine”. You could examine it (“scrutinize it”) and decide the best course of action is to do nothing, as you show with your sex example.
You seem to be thinking that I am proposing something far more draconian than I actually am.
That moment when you think you’ve checkmated a self-proclaimed rationalist by saying, “People should examine stuff.”
I don’t agree that book writing can legitimately be subject to state scrutiny, whether in a democracy or a dictatorship, and I would be surprised if most other people here do.
The answer always comes down to ‘who is doing the scrutinizing’ followed closely by ‘and then what’?
Are we talking about a right leaning politicians scrutinizing donations to Planned Parenthood? Or left leaning politicians scrutinizing a donation
to the NRA?
Once they are done scrutinizing what do they do next? And is everyone OK with the party you are most opposed to making these decisions roughly 50% of the time?
@smilerz
Once we scrutinize it, we then decide whether aspects of it are a net-benefit or net-harm to society. And if the benefits of regulating it outweigh the harms, we regulate it.
We do this already, with both charity and books. This is the normal, mainstream position. There are many restrictions on what you can write, just as there are many restrictions on how you can give money, and to whom.
You suggest that one political faction could theoretically make decisions that harm the other, only to have the reverse happen whenever the balance of power swings against them. Simple game theory explains why this doesn’t happen: Typically, the harms of having the things you liked banned are greater than the benefits of seeing the things your opponents like banned, leaving no party with the incentive to begin such a cycle.
Only in the narrowest sense of the term. There is no cost benefit analysis on either activity at individual action level. There are minor restrictions on book writing to the order of “don’t copy someone else’s material”. The only restrictions on giving money are around direct political action and limitations on some exchange of services.
But you didn’t answer the question – there is no ‘we’ there is a person or persons. Who are those people?
It does happen and is happening all the time. There are constant erosions and expansions of regulations/subsidies that affect particularly political groups.
@DavidFriedman
The state has to meet a high burden, but ‘your book contains classified material’ is a legit reason to scrutinize a book.
Or if the work is potentially libelous – taking the author to court to protect one’s reputation is subjecting their work to state scrutiny.
Right. The way this usually works is to reason, “The vast vast majority of books do not come close to the level of presenting a real danger to people. At the same time, there are reasons to believe that norms encouraging the publication of even controversial books are beneficial to society. Therefore, we’re going to set an extremely high burden, and the state (or a private actor in the case of libel) will have to argue extremely persuasively for why this particular book is across the line and unacceptable.” I’ve often been surprised at just how high the Supreme Court’s gag reflex is for people trying to test this.
It’s similar when considering charity. I think Scott is also reflecting something like this. “The vast vast majority of charity does not come close to the level of presenting a real danger to people. At the same time, there are reasons to believe that norms encouraging even controversial charity (see also: Planned Parenthood) are beneficial to society. Therefore, we’re going to set an extremely high burden, and the state (or I guess private actor if you can think of a way how) will have to argue extremely persuasively for why this particular instance of charity is across the line and unacceptable.” This can also be done, as is seen by the complicated rules trying to walk this line when it comes to politics.
If we lived in a world where there just weren’t any complicated rules for charities/politics, then perhaps the abstract claim, “Charity can conceivably be problematic (because of political effects or whatnot),” would be a useful set-up for analyzing particular problematic cases and starting to come up with those types of rules. (Repeat for a world in which there weren’t any complicated rules for material that could damage national security in books.) But in a world where we already have complicated rules for charities/politics or classified material in books, vague, abstract arguments that, “Things affect other things,” and, “Well, maybe this thing could affect other things in bad ways, possibly,” have absolutely no force.
I have not read the book that was reviewed here. It could be teeming with detailed arguments about what the rules currently are, examples of a variety of bad things that are still happening, and specific proposals for how to tailor an adjustment to the rules to help combat those particular things without doing too much damage to anything else. My impression is that Scott didn’t think it was like this. It sounds more like, “There could conceivably be a bad thing that occurred. We should implement a sweeping change to this massive category of things, even though we have long-standing good reasons to like, say, 90% of those things.” That type of argument is repulsive to people who know why we currently have the rules in the place they are currently. It would be repulsive if the Trump admin argued, “Here’s an example of classified information in a book (or even just, ‘It’s possible for classified information to be in a book’); therefore, we should require every book ever written to go through pre-publication classification review,” and it’s repulsive when people broadly claim that we should abolish charitable deductions because some charities have been or could be a problem. It’s simply missing the level of sophistication that is necessary to move Chesterton’s Fence.
I decide how to arrange the furniture in my room, without asking or letting anybody else have any input, but that doesn’t make it tyranny of the regular kind. It’s not just because it has a negligible effect on other people, but because I’m entitled to do it regardless of what people say.
Absence of significant negative effects is sufficient, but not necessary. For example, if I decide to close down a factory in a one-horse town, that will affect a lot of people negatively, but they’re not entitled to veto my decision because it’s not their stuff to dispose of. Contra your Option 2, I don’t have the carte blanche authority to do whatever I want to them (e.g. I may not enslave them), but I have the right to use my stuff without asking for other people’s permission as long as it doesn’t interfere with them using their stuff as they’re entitled to.
What are these entitlements? How are they determined? How should they be enforced and maintained? Answering these questions is beyond the scope of a comment thread. But I will note that in practice, we don’t require the democratic method for everything, and we could use it much less and still not have to worry about tyranny.
@blacktrance
You live in a largely democratic society that has granted you the legal entitlement to arrange the furniture how you wish. The question of how to arrange your furniture is still under democratic purview, a subject of state scrutiny. There are arrangements of furniture that are certainly illegal: for instance an arrangement that was designed to harm people in the house.
If you could arrange your furniture however you wished without being subject to democratic scrutiny, then you would indeed be operating an tyrannical autocracy.
Whether it’s “your stuff” or not is irrelevant to the question of whether you are legally entitled to dispose of it. The state places numerous restrictions on how people can use own property that is privately owned.
You seem to be confusing your personal moral theories with actually existing legal rights. You absolutely do not have the legal right to use your property in any way you wish without the consent of the state.
@ Guy in TN
Currently, the law certainly allows billionaires to use their wealth in many ways you don’t like. If you argue that they shouldn’t, based on how things already are… you seem to be confusing your personal moral theories with actually existing legal rights.
If you (or Reich) argue that those laws should be changed, you’re appealing to your personal moral theories, and others are allowed to do the same.
@Guy in TN
I don’t apologize for the slight snark, but I will unpack.
You seem to have a “positive” concept of freedom – “freedom to”. One has the rights that society “has granted you”, in your words. Others (blacktrance seems to belong to that category) prefer “freedom from”. All is allowed except for a few extremes (arranging furniture in a manner so bizarre it’s life-threatening). Those limitations do imply that not literally everything is free but not much more than that.
Under this view, much justification is required before preventing people from giving other people money – and this does not mean we are any less of a democracy. One then notes that our democracy has indeed decided not to scrutinize charity too much, and books even less so. The democratic “existing legal rights” do not support your position. Of course, you’re free from restrictions to try and change the status quo. Or, in other words, nobody has taken that freedom from you yet.
@B_Epstein
“Freedom” doesn’t play much of a role in my vocabulary, it’s a word that’s lost too much of its meaning to try to rehabilitate IMO. My prescriptive statements instead defend trying to maximize human well-being, which nebulous as that phrase is, at least tends to hit closer to the target.
I would argue that because they are under democratic control, both charity and books are under legal scrutiny. And although our regulation is light, both charity and books are indeed regulated.
Guy in TN:
Most people agree that some things aren’t up for vote, and when they acknowledge that, they’re not granting a legal entitlement, they’re acknowledging a supposed moral entitlement and presumably bringing the law in line with it. Along with basic human rights, the right to control the living space that one owns is a paradigmatic case of stuff that’s not up for democratic scrutiny. Anyway, as far as I know, no one has ever gotten together and voted on whether I can arrange my furniture. And it’d be tyrannical for them to do so, because it involves the implicit acknowledgement that they could just as validly decide the other way.
I thought we were talking about moral rights. We could look at actually existing law, but that doesn’t seem relevant to the questions at hand – legal acts are legal and illegal acts are illegal, but that says nothing about what should be.
Anyway, if legal rights aren’t in accordance with moral rights, it’s unjust and may be tyranny.
@blacktrance
I’m trying to unpack this. So your argument from what I gather is: Because most people agree that we shouldn’t regulate charity or regulate property usage (i.e., because most people are radical libertarians), this makes having control over property a “moral right”. Thus, regulating property usage via democratic state would violate this moral right.
Am I strawmanning you here? I really don’t intend to.
Some basic questions:
How do you know that most people believe that property shouldn’t be regulated? Is there any evidence for this? (Does the fact that every democratic country has implemented some form of property regulation add nothing as counter-evidence?)
If a majority in a democratic country votes to do something, doesn’t this indicate that most people in that country support that thing happening, over the alternative that you claim they supposedly support?
Like, if you are trying to average people’s ideologies into a general folk-morality, there are straightforward ways of doing this. Polling has been done. You may be surprised to learn that radical libertarianism and anarcho-capitalism are not considered “median” or “average” in any way, let alone a majority.
I’m not suggesting that we should average people’s moral beliefs or that they’re secretly radical libertarians. My argument is (1) most people acknowledge that some stuff shouldn’t be subject to democratic scrutiny, and (2) broadly speaking, property rights are part of that category (regardless of whether people agree with that). I understand that the second part is controversial, but the first part isn’t. People don’t believe that the absence of democratic oversight necessarily invites tyranny, and I agree with them.
@Guy in TN
What we call ‘democracy’ is actually not merely people voting for things, but also an agreement that democratically elected representatives only get to vote for certain things.
For example, under the Trias Politica, law-makers only make impersonal laws. They can say: ‘you may not hang a Sword of Damocles above your door’. They cannot say: ‘blacktrance can hang a Sword of Damocles above their door, but Guy in TN may not’. Tailoring the law to individual cases is the job of the judiciary, not of politicians, as to limit the ability to abuse power.
Similarly, I think that a lot of things should not be up for a vote, regardless of what the majority wants. For example, if the majority thinks that a certain belief/ideology is harmful, they shouldn’t have the right to ban people from explaining that belief/ideology or advocate it.
The US position on free speech is not a good example of option 1, though. Restrictions on speech are shrinking driven largely by the supreme court, all while the elected politicians continuously try to ban various kinds of speech (which might just be posturing for their voters, knowing the laws will be struck down).
The court is not democratically elected nor representative of popular opinion, and derives its decisions from the constitution (which theoretically could be altered by popular decision, but in practice is a pretty much fixed document). Where does that even fit in this 2-bucket model?
@Christophe Biocca
It’s possible for a system to have both democratic and non-democratic aspects. Our currently existing system mixes bits of Option 1 and Option 2.
I would say that if an aspect of government is not capable of responding to democratic referendum (e.g. the supreme court), or if a government is relying on its power from a claim of authority that is not alterable by popular decision (e.g. the constitution), then those aspects of government are non-democratic.
This doesn’t negate the aspects of government that are democratic, e.g. popular referendums or elected representatives passing laws (although even this exists on a spectrum, for example the House of Representatives being more democratic than the Senate.)
You are shifting from “do something that affects” to “do whatever he wants to.” Isn’t it obvious what is wrong with that?
A and B are both courting C. A proposes to C, she accepts. That clearly affects B. Does the fact that we don’t take that as an argument against permitting A to marry C imply that A can do whatever he wants to C?
Our laws, our norms, and our moral intuitions distinguish between affecting people and doing things to people. Lots of ways of affecting people do not count as doing things to them, and are licit. Some do count, and are mostly illicit.
Do you really want one moral category to lump together saying hello to someone and murdering him?
@David Friedman
We’re probably just using different definitions here. The way I see it “to do something to” is the colloquial use of “to affect”, they are synonymous. So it’s fine to place all of these in the same moral category, because its the only category available for this question, since it is not possible to do something that doesn’t affect (syn. “do things to”) others.
The negative utility of B is an argument against A marrying C, just not a great one because stopping the marriage also creates a good bit of negative utility.
This is separate from the question of “can A do whatever he wants”. We live in a democratic society where the actions of A are under state scrutiny, including both who he can marry and who he can have sex with. That we have permitted him to marry C doesn’t mean that he isn’t still under democratic rule.
That way of putting it, I think, illustrates the fundamental problem with your position, in terms of your own objectives. Having a society where people believe that is up to them, acting through government, to decide who other people can marry on the basis of what the net effects will be is a very poor way of maximizing human happiness, flourishing, or much of anything else desirable, unless you consider democracy, the power of the majority to decide things for people, to be itself an end goal of enormous value.
If you are going to be a consequentialist, the question is whether the consequence of a set of moral rules under which government is free to do anything it wants, subject to the fact that it is supposed to decide by majority vote, direct or indirect, are better or worse than the consequence of a set of moral rules under which government’s authority over individuals is sharply restricted.
Why would you prefer the former?
Yes, he could have written a book about money or inequality. But he didn’t. Why not? Does the book actually have anything to do with philanthropy? Does the nominal topic affect the book? Isn’t that an odd question to ask?
I’m not satisfied with this argument. You can make this X-is-analagous-to-Y-in-structure argument where X is a large and dangerous effect and Y is a small but structurally similar effect, but it doesn’t prove that the original argument was wrong about the large effect. For example, let’s say I explain that eating chunks of uranium is super bad with this reasonable and cogent-sounding causal argument about radiation poisoning. You could quickly (and correctly!) point out that ‘bread’ could be swapped in for ‘uranium’ and the argument would still be cogent-sounding; after all, bread emits a very small amount of radiation. Does it follow that I have proved too much? I think not. What’s really at stake are the premises of the argument: is billionaire philanthropy significantly radioactive, or isn’t it?
Well, we may share different beliefs about values and the instrumentality of certain actions and this can affect our judgement of whether something is beneficial. To the liberal mind, which is admittedly my own, egalitarianism and consent are among the principles that make democracy important. While everything is a matter of degree, UHNW philanthropy strains these principles. Much like how uranium powers a nuclear reactor, a billionaire powers the economy, and the influence of both can be potentially very toxic in the wrong situation.
But if that’s true and it’s a matter of degree or detail, how are billionaires different from authors? First, in terms of equal availability of billionaire philanthropy influence, it’s very hard to argue that just anyone can be a UHNW philanthropist because one has to first be UHNW, and that is not handed out by merit. Children become UHNW every day through birth lottery, while you cannot become a successful author automatically through no effort of your own.
But more importantly, authors also have to obtain consent. Like the dreaded politician, the author must generally obtain the agreement of someone else to colonize their brain with ideas and beliefs before those author’s opinions influence their community. But when a billionaire influences a community with his money, he or she need only convince a small percentage of those community members to accept payment for services rendered. The community not only does not have to “enthusiastically consent” to what the billionaire is doing, they would have to successfully organize a community wide boycott with nearly total participation to stop the billionaire from doing whatever it is he wishes to do to impact that community with his money.
Fortunately, billionaires are human beings and human beings are generally benevolent, so it is true that most of the time billionaires try to act benevolently with their money and some of them even do things that are useful. I think this is all about degrees. I think that if we start looking at the specifics of where billionaires do harm and good, they probably do a decent but not great job when they spend the money on helping people. But before you say they can do no wrong in this area, if you want to criticize the government for being so inefficient when it directs resources into a system from the top down, then surely you have to criticize the inefficiency of a billionaire doing the same thing while not even being indirectly accountable or beholden to the community he’s changing! But still, at the end of the day, maybe they build some dumb statue or spend it all on the opera or something kind of useless and the resource is allocated inefficiently, and while that’s potentially a little worse than just burning the money it probably isn’t a complete world-ending disaster even if sometimes it’s not good. I think it’s not so poisonous it has to be absolutely banned, but it’s often ineffective and sometimes corrosive. On the other hand, in some rare cases (EA) it yields big wins. At the end of the day, I’ll call it a bit of a wash from where I’m sitting. Before you counter that billionaires do all this altruism in developing countries, keep in mind that I just said that it’s good, but that what I’m saying is that I don’t know if it’s better, because none of us have access to the counterfactual world where billionaires decide to work with the government to do useful things instead of besieging it at every possible opportunity; we cannot say that this world is worse than that world and this is a useful heuristic for how to develop a good society because that world would be so unlike ours in deep and important ways that it is hard to even imagine it, much less speculate about the consequences of it.
Where I think things get extremely poisonous is political spending, as well as pseudo-political and religious spending masquerading as philanthropy. At any rate, when one person spends on one political party and another counterspends on the other, the net result is an economic deadweight loss with a side of political polarization as a waste runoff of the infighting process. For that reason, I believe that every sane measure should be taken to get money as far removed from politics as possible, and that includes getting politics and fake-education as far from UHNW philanthropy as possible and banning or heavily sin-taxing political spending. I’d also say there’s no denying that philanthropy is an appendage of the nexus of money and political power, in the sense that it justifies the system. Closing thought, I think it’s important to notice that this idea that philanthropy is “good enough” to prop up the system is a political belief, specifically that the nexus of political power and money is acceptable because the runoffs of that power are beneficial. Philanthropy is an appendage of this nexus because it is a justification for the status quo.
“But more importantly, authors also have to obtain consent. Like the dreaded politician, the author must generally obtain the agreement of someone else to colonize their brain with ideas and beliefs before those author’s opinions influence their community. But when a billionaire influences a community with his money, he or she need only convince a small percentage of those community members to accept payment for services rendered.”
I’m not sure this holds up.
If you do not consent to read my book, you will not read my book, but you will still live in a society that is influenced by my book (eg we all have to deal with being in the sort of world where Marx wrote the Communist Manifesto and other people read it).
If you do not consent to take my charity, you will not receive my charity, but you will still live in a society that is influenced by my charity.
The difference, as best I can tell, is that it’s much more likely my book affects you than my charity. We’re all living in Karl Marx’s world for better or worse, and the next generation is going to have their morality shaped by Harry Potter whether I like it or not – but as far as I can tell my life hasn’t changed even a tiny bit because Bill Gates gave a bunch of people who aren’t me vaccines (except maybe I have better herd immunity). It’s not even changing that much because there are charitably-funded museums and symphonies I don’t go to, or because there are university scholarships I didn’t get.
If you’re focusing on the tiny subsection of charity that is political, I guess your argument applies for that tiny subsection, but also, lots of books are political too.
“If you do not consent to read my book, you will not read my book, but you will still live in a society that is influenced by my book (eg we all have to deal with being in the sort of world where Marx wrote the Communist Manifesto and other people read it).”
Oh, absolutely! This is what I mean – a book’s memes have to get individuals in my polity to consent to them before they start affecting me proportionally. To be very clear, they need not reach everyone or reach me. This is democratic.
I can agree that the most important authors in history have larger impacts than individual spenders, but and perhaps this is more to the issue there is not (in my view) any known acceptable alternative to freedom of the press that is less dangerous than allowing the free presses to continue, whereas I think reasonable steps can be taken to limit UHNW oligarchy without endagering personal freedom, and that in fact UHNW oligarchy is a great danger to personal freedom.
That said, I think Bill Gates has done some amazing work to fight global poverty. I also believe very strongly in EA, which benefits from billionaire donors. But to continue using Bill Gates as an example, the gains he uses for his impressive and magnanimous philanthropy were unfortunately built by exploiting the American people through Microsoft’s monopolistic business practices. And Bill Gates’ extraordinarily large and effective charitable giving, while truly commendable, is an exceptional outlier among billionaires, but his ruthlessness in business is normal. In this way, talking about the real problems in terms of philanthropy can get circuitous because really the big issue IMO is that philanthropy grows out of, lives by, and justifies the nexus of economic and political power. (Concerning non-UNHW philanthropy like you or me giving to EA funds, this criticism is non-applicable as far as I am concerned)
Anyway, thank you for your reply. Your blog exposes me to new ideas and challenges my point of view in a way that has been good for me.
How does a natural monopoly exploit its customers? They are worse off than if the industry was a competitive one, but better off than if the firm did not exist at all.
There seem to be two main points here, one of which is good and one which is not so good.
(1) Philanthropy on the scale that individual billionaires and/or deep-pocketed foundations can distribute has a warping effect on the society in which it happens; the philanthropist gets credited for virtuous actions, which helps with their immunity from accountability (who wants to criticise someone who is doing good?) and they accumulate a lot of influence and social power, besides the ability to use mountains of cash to buy what they want done in shaping society. This should be held accountable and examined as a threat to democratic society rather than meekly accepted and facilitated as ‘doing good’.
That’s the reasonable point.
(2) It would be much, much better if instead of having mountains of cash to spend on influencing society, those mountains were taxed appropriately and the revenue raised disbursed by government. That would be much fairer, more accountable, and in line with democratic values of the people directly electing public servants who then govern in accordance with the will of the people: if the people want ‘do-gooding’, they can vote into power parties who run on such platforms and put forward such policies.
This point is not so good. Yeah, if it worked like that, it would be great. But it doesn’t work like that.
This is hitting where I live, so to speak, and I have to be circumspect about what exactly I say so I can’t give too many details. However, broadly the situation is this: I work in a service that receives funding from the publicly funded health service. We are registered as a charitable organisation (under the definition of “charity” as described here).
In addition to our state funding, we get donations from the public and other bodies. If we didn’t, right now we’d be lacking one particular service. The government should provide that service, but doesn’t. (See what I said above about “if it worked like that but it doesn’t” for the second point). Believe me, my boss has argued over this time and time again, gone on local radio shows, etc. The end result is, as the Irish saying has it, “if you put your hand to your arse until you get it, you’ll have an everlasting patch in your trousers”.
Enter philanthropy. Amongst other donors, the local production facilities of a multinational pharmaceutical company whose name you would recognise if I mentioned it, selected us as their Charity of the Year, organised a sponsored walk, and raised a shit-ton (to use the technical term) of money for us to provide this particular service. We also got money from various individuals, including a local moneybags (an American billionaire who relocated here once he found his Irish roots), again all for this purpose.
Is the Big Pharma company only doing this as part of PR efforts? Sure! (though the local employees are invested in the community). Is the moneybags having his vanity tickled by playing lord of the manor disbursing largesse? Yep, you bet! Do I care a straw’s worth? No, I do not, because we damn well need this money.
So I will write that boot-licking letter even if rolling my eyes whilst doing so (you bet your life I finely gradated the exact degree of servility and obsequiousness to include) to thank the moneybags, and we will plaster the Big Pharma logo all over the service provision objects. Because we would not get the money off the government and we would not be able to provide this particular service otherwise.
“But tax revenue!” I hear you cry. Yeah, well, about that: we’ve just had a 1% cut in our funding (which doesn’t sound much but on our kind of budget does mean belt-tightening). More widely, and I heard this direct from my boss when asking about why precisely this hit, every service in this particular sector in Ireland are being hit with the same cuts, because the government needs to find €20 million in order to pay off a bailout (they’re calling it a “loan” as part of a “rescue package” but it’s a bail out) it recently gave to a particular sporting organisation that got itself into deep indebtedness.
“The government shouldn’t be bailing out private for-profit organisations!” you say? Well, you would think, wouldn’t you, but we all know how the real world works.
Which is why in my estimation philanthropy may be a threat to democratic society, but no more than anything the government might do with the money.
That explains why neither the Koch brothers nor George Soros ever get criticized by anyone.
Koch brothers and Soros engage in political lobbying which is inherently controversial. Not in “pure” philantropy.
Not only human philanthropists, but even cold-blooded corporations, often engage in philantropy purely for the PR value which helps to insulate them from unrelated criticism. This is known in corporate-speak as “community relations”.
I don’t know about Soros, but the Koch Brothers have engaged in quite a lot of pure philanthropy, donations for hospitals and the like. And while I am sure they do some lobbying, a lot of their political donations are aimed not at directly influencing legislation but spreading ideas.
Whether one considers that propaganda or education may depend on whether you agree with the ideas.
The argument of people not influencing beyond their life is interesting.
If you stop anyone from having an “active” influence on the world post-mortem, you seriously limit (semi-)permanent changes to society, and allow new generations more leeway to make their own decisions about how society will look.
So I can’t make a trust with a hidden agenda of spreading confusion about different issues, or some other malicious purpose. And institutions like this can’t build up over time.
This would also stop positive institutions from popping up over time – except for fully transparent institutions made for a positive, public interest.
So hopefully plusses keep building up over time while negatives stay more or less three same.
(It is generally accepted that being destructive is easier than constructive, so allowing negative institutions to build up is a bad idea even if positives will build faster).
(Would this make culture wars more extreme or less?)
I mean, the whole problem with the interminable culture war is that nobody can agree on what things are a positive, public interest. Liberalism tries to reduce the bloodletting and lower the stakes by saying that the government is going to keep a monopoly on violence and butt out of arguments like that.
Any functional liberal definition of a charity has to be either broad enough that the a huge supermajority of people agree that their idea of charitable works is entirely included or narrow enough that a huge supermajority of people agree that their idea of uncharitable works is entirely excluded.
The US mostly goes with the former (with an exception carved out for politics which complies with the latter.)
That’s as good a definition as I’ve ever heard.
I can’t help but see parallels between this and the argument between libertarian and communist ideals. Emphasis on ideals.
You can sort of think of a ~100% donation based society as a libertarian/anarchy society where the government has minimal spending/taxing ability, only doing based on what the people have donated to the government to do.
While the opposite, would be a communist society where all proceeds are distributed as needed by society and individual spending/power is limited.
On a separate but related note, I’m not sure how much of a difference between donation type spending and “normal” spending differ.
Is not regular spending also not a exercise in power?
If the difference is only for the tax advantages, then the problem seems more political than philosophical. After all, the various advantages where put in place through legislation. It could/should be examined as any other tax subsidy or government expenditure (and the various issues with those such as lobbying).
If the difference is where it is going, then that seems to be a problem with control and consumer’s lack of information. The former is similar to what I mentioned earlier, and the latter is something things like GiveWell and EA are trying to tackle (and surprised isn’t compared/mentioned given Scott’s involvement with those).
It’s clearly true that spending money on charity is an exercise of power. You’re incentivizing people to do your will instead of the (rest of the) market’s.
The bit of the reasoning that I don’t follow is that therefore it warrants our scrutiny. If you buy golden faucets, you’re incentivizing people to make fancy faucets, prospect for gold, mine gold, refine gold, etc. If you spend your money on fine dining, you’re incentivizing people to raise, prepare and serve rare foods. If you spend your money on blowjobs, then you’re incentivizing people to become prostitutes.
You can’t spend money without exercising power. That’s what spending money is. So any argument that claims the sheer fact that you’re exercising power means your actions should be scrutinized applies to all methods of spending money.
On the other hand, the argument for deference and gratitude is that you’re exerting your power in ways that benefit yourself less (and at least nominally benefit others more) than the usual ways plutocrats exert power. That’s a moral and societal good (relative to the norm), and so should in general be rewarded with social status.
It’s completely fair to ask how sure we are that a given charitable exercise of power is ACTUALLY benefiting people. But the fact that it’s an exercise of power is irrelevant to the answer. It’s implicit in asking the question.
I want to note that incentivizing is a substantially weaker form of power than forbidding or mandating something. Ultimately, money is just a proxy for a time-shifted exchange of goods/services.
If I offer to make you 2 sandwiches now in return for washing my car, that is not morally different from offering you two coupons that you can use to have me make 2 sandwiches later, which is not morally different from offering you money that you (or the person with whom you exchange the money) can use to have me make 2 sandwiches later.
In each case, ‘power’ only flows from me having something that you want and vice versa, which you nor I have the right to just take. So (unless I give charity,) I will only give you my sandwiches or the money equivalent, if you wash my car or give me the money equivalent. Neither of us is required to take that deal, if we think it unfair.
This power is ultimately self-generated, by our own needs/desires.
Reich’s idea is that charity is a state function. All private giving should be forbidden, because it might end up in the wrong hands.
Yet another progressive person (was going to be a much more profane descriptor, but my full contempt will have to be privately vented).
Agreed. I am far more confident that private charity provides more net benefits than net harms.
I am not at all confident that the state does.
Reich explicitly disagrees with this in the book, and I mention this in my review. Please try to be more charitable here
even though charity is an exercise of plutocratic voice repugnant to a democratic societyQuality comment right here.
Can’t a billionaire philanthropist avoid taxes anyway? I.e., instead of income (presumably from a corporation), set up a subsidiary corporation to spend money on malaria nets, making it a tax-deductible expense? The accumulated losses might even be good for future tax deductions. I’m probably glossing over the details, but if there are alternative routes (besides channeling the funds via income to charity) that avoids taxation, having a tax deduction can make charity less convoluted and more transparent.
Along with Deiseach, I did an “eh?” and then an “oh!” about halfway through part I. Very entertaining. Also,
needs an “in.”
Wow!
For a second I had to check the date to make sure it wasn’t April 1st. Then I was worried you had a stroke or something.
Glad you are okay.
I see the phrase “dead hand”, and the words “perpetual” and “perpetuity”, and am reminded of the Rule againsts perpetuities. It’s something of a memorable rule as applying it leads into weird hypotheticals – standard weird hypotheticals such as: the fertile octagenarian, the unborn widow, the precocious toddler (where “precocious” is a euphemism for “fertile”), the slothful executor, the magic gravel pit, the war that never ends.
The idea is that you’re not allowed to create a future interest in property that “would vest beyond 21 years after the lifetimes of those living at the time of creation of the interest”. The problem comes in that an interest can be ruled invalid if it could concievably create such an interest, even if it would require someone to become pregnant at the age of 80 (or whatever). These difficulties have led to the rule being extensively criticised, made fun of, and watered down or abrogated in many jurisdictions. In California it’s not legal malpractise to draft a will that inadvertently violates the rule; forgetting to consider some outlandish psuedo-relevant hypothetical seems to be accepted. It’s all very silly.
Some of the problems here seem to just be an unavoidable problem with laws, rules and regulation: the creation of arbitary-seeming thresholds. Lines have to be drawn somewhere – however there are better and worse places to put lines and the particular place the (unmodified) rule against perpetuities put the line in leads to absurdity. Sometimes choosing death to be the place to draw the line creates its own absurdities – and bad incentives – and so looking for somewhere a bit further out isn’t necessarily a bad thing; but it can lead to absurdity if you’re not careful.
The silliness resulting from poor legal draftsmanship aside, I find it hard to argue with the underlying compromise; having some legal powers that persist for a while after death isn’t too bad, but those should fade out before too many generations have passed. Possibly intuitions differ here, but the existence of such a rule suggests that it’s more than just me and Mill and Reich who have qualms about too much legal power sticking around for too long after death.
Also: there are some game-theoretic ways in which it is convenient to be dead. It means you can’t be persuaded to change your mind, and given that death tends to end up being public, that it becomes obvious to all concerned that you can’t change your mind – that you can’t be persuaded or pressured or otherwise negotiated with. It’s like the old cliche about throwing your steering wheel out of the window during a game of chicken, but where your steering wheel comes conveniently pre-thrown.
Some of the initial claims are… confusing, let’s say.
…a 20% deductible out of a base tax rate of 40% on book advances, so 8 points, so you pay 32% in taxes. The national average is 27%.
Most of the expenses listed are things an author doesn’t have to pay themselves unless they self-publish. The link specifically says that most literary agency already deduce their fees from the author’s pay, and so this is not additionally tax deductible.
I was confused by this claim, since most authors do not make a living and have to keep their day job. So I followed the link, and they claim the trop 3 author professions are “Medical Writer”, “Technical Writer” and “IT Manager, Medical Affairs/Clinical Development Systems”, and now it makes more sense: it’s not your median (or even average) fantasy fiction writer who makes 62k a year.
… How many writers do you know who do this?
I think you may have missed that the first part was a parody replacing charity with books and quoting passages from the book to highlight the oddity of the arguments
Machine Interface isn’t critiquing the structure of the argument (which would indeed be missing the point) but the underlying facts. This is relevant because if the facts aren’t there, then the argument does not in fact prove too much and the analogy fails.
I want to clarify up front that this is not a defense of Reich. Seriously, I can’t stress this enough.
That said, I think this is a pretty weak analogy. The deduction for expenses incurred in the writing of books is a specific application of the general principle that expenses incurred solely for the purpose of making money are tax-deductible. There are very good reasons for this. To take an extreme example, if you buy goods from producers and then go door-to-door selling them at a 25% markup, you might end up with yearly revenues of $100,000, expenses of $80,000 and income of $20,000. If the government levies a 30% tax on your revenues, you end up with losses of $10,000 instead of income of $20,000.
The problem with a tax system like this is that it encourages excessive vertical integration. To use the example above, the producer of goods you sell might instead choose to sell the goods door-to-door himself. He can sell them much more cheaply than you can, because that extra step where he sells the goods to you doesn’t happen, and the 30% tax only gets levied once (when he sells to the customer), not twice (once when he sells to you and again when you sell to the final customer). And you’re out of work, so maybe you make and sell the goods yourself, too.
When this happens, you lose the benefit of specialization. Instead of each of you doing the thing you’re best at, you both produce and sell goods. There are some other issues, but this is why economists generally agree that taxing gross revenues is a bad idea, both at the personal level and at the business level. Some jurisdictions do have gross revenue taxes because politics is broken and we can’t have nice things, but they tend to be very low, nowhere near income tax rates.
TL;DR: It’s very important that business expenses be tax-deductible. There is no reasonable tax system that does not have this feature.
This doesn’t really apply to the charitable giving deduction. Eliminating it doesn’t throw the economy into chaos and create extremely powerful tax incentives to do everything inefficiently. Personally, I think the charitable giving deduction is good. It strikes me as a clear win if someone gives $2-3 to charity in exchange for a $1 discount on taxes, not only because that’s more money spent on good causes, but also because I think that, at the current margins, it’s good to have social spending be relatively more decentralized and relatively less at the discretion of Congress. But it’s not the absolute slam dunk that deduction of business expenses is, and the justification is very different.
Somebody’s probably going to point out that things like food, clothing, and shelter are necessary expenses for staying alive, and thus for earning income at a regular job, and those aren’t tax deductible. My fan theory about the tax system is that this is what the standard deduction is for.
First I went “Eh?” and then I went “Oh!” and settled back to enjoy the review, and the second half only confirmed what I suspected: that the treatment of charitable giving by the author could be extended to anything, including the writing of books.
I always like a good slagging and this was an excellent one!
I suppose one way to treat Mills’ attitude is to take the example of how long-term charitable donations (such as almshouses) in the UK had degenerated into cosy little sinecures for the trustees and the ostensible recipients were very much at a loss (think of the “please sir, I want some more” scene in Dickens’ “Oliver Twist” where the trustees of the workhouse all get together for an annual banquet, including discussing how wasteful and improvident the poor under their care are, while the workhouse inhabitants who should be getting the benefit of the money spent instead are grudgingly given the bare minimum of scanty food). Such enterprises had been so turned away from the original donor’s intention that they were an offence instead of a benefit. Many such trusts had been set up in pre-Reformation times and by the 19th century had been long turned away from “provide lodgings and upkeep for a set number of the paupers” into general institutions, with the trustees able to skim off a lot of the invested income towards paying themselves.
On the other hand, if I had the money and the cause in mind, it’s my money and I can spend it how I like. If I like ash trees and want to set up a foundation to plant ash trees everywhere they can be planted, that’s my perogative to spend my money that way and if you don’t like it, that’s your opinion.
Which countries, other than the US, offer 100% tax deductions for individual charity donations?
The UK doesn’t; they have gift aid, where after-tax money gets topped up by the government by the marginal tax rate of the donor.
There is a huge difference between the government topping up and being able to deduct income. In the case of a deduction, I can donate 100% of my income, and don’t owe any taxes; in the case of a top up, if I donate 100% of my income, I still owe the government tax money.
In France, the deduction is 66% after 521 euros (75% less than 521 euros), and limited to 20% of your income.
In Spain, the deduction is even lower: up to 150 euros, 75% deduction, after that, 30%. But in Spain, corporations also get 35% deduction, limited to 10% of taxable income.
So in many countries, you still have to pay tax on money you donated, even if some of the donation gets partially deduced from the taxes you’re paying. These tax advantages are much lower than other, less altruistic ones: for example, capital losses are 100% deductible from capital gains for tax in Spain (and partially deductible and carry-forward from dividend). This is not an argument against other tax deductions, by the way: I’m just pointing out that tax deductions for charity are much lower than the social benefit they could potentially achiev.
> the marginal tax rate of the donor
I think it’s actually a flat 25%. But you have to have paid that much tax?
They top up 25%, but higher tax rate donors can get a tax reimbursement of the difference between their marginal tax and the 25%.
So yes, you pay tax and the charity gets the tax from the government. You can’t do things like lower your total taxable income to avoid the almost 100% marginal tax rates you get when you change income band.
Umm… am I missing something or do the “the almost 100% marginal tax rates you get when you change income band” not exist? You go from 32% to 35% band, your next dollar is taxed at 35% not almost 100%.
A quick search online shows the top marginal tax rate in the UK to be 45%, not anywhere mathematically near 100%.
The extreme tax rate results from a bondoogle of tax bands for pension contributions and how overall compensation is taxed. It caused many people in the NHS to stop working and staff shortages.
It’s a very complicated affair that will hopefully be solved soon.
I don’t know about the U.K. case, but you typically get marginal rates above 100% through the combined effect of income taxation and the reduction in benefits going to the poor as a result of increased income. To take the simplest case, if there is some valuable benefit that has a sharp income cutoff, available to people with an income below X, then increasing your income from just below X to just above can reduce the benefit by much more than the income increase.
In the US, you may deduct a maximum of up to 50% of your adjusted gross income (AGI) (Line 36 on IRS Form 1040) for the tax year the donation was given. However, if you give more than 50%, the excess may be carried forward for up to five years.
Uh, why shouldn’t capital losses be “deductible”? You think you should be taxed on money you demonstrably do not have?
Anyway, the rest of your argument is a difference of degree rather than kind. Saying “charitable donations should be somewhat less tax advantaged than they are in the US” is very different from saying “they should not be tax advantaged at all, and even then they are problematic”. Reich is arguing the latter.
No, I don’t think you should be taxed on money you don’t have, whether you don’t have it due to capital losses or due to a donation. Maybe it was unclear.
I was trying to argue for an increase in deductions for charitable donations by pointing out that they’re not actually that high outside of the US. And this leads to the attitude another commenter described about Austria, where problems are expected to be solved by the government instead of private phylanthropy.
I guess you confused me by calling losses “tax advantaged”, which to me is a weird way to think about money that no longer exists to be taxed in the first place.
The losses aren’t advantaged, the gains are. Because you can pool the gains and losses from successful and unsuccessful investments and pay only on net.
The money is there.
Obviously, when you lose money, it isn’t. But you’re offsetting it against gains. The gains are what’s taxed.
1000$ you invested on company A became 900$. 1000$ on company B became 1400$. Your net capital gains if you sell both companies is 300$. You made 400$ on company B. You have that money. The money’s there.
For other things (like a freelance business that requires high investment and gives low returns) the tax agency will tax the income even if it’s a net loss (if you don’t make money for three years straight as a freelancer, it’s a hobby, and thus expenses are not tax-deductible). They don’t do it for capital gains.
Capital gains are advantaged when compared to some other activities. And that’s done to increase investment, which is considered a social good. Shouldn’t charity be also considered a social good, and be tax advantaged?
Capital losses should be more deductible. Wagies pay a gross receipts tax on their income from labor, something that is correctly considered ridiculous in every case except the one where the state defrauds the laborer of his wages.
Add Australia to the list of countries allowing deductions (with minor caveats – see https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Gifts-and-donations/).
I don’t see it, but perhaps I misunderstand how topping up works.
For mathematical simplicity, assume a marginal rate of 50%. I donate $100 to a charity. The government adds $50. Is that correct? The result is that the charity gets $150 at a cost to me of $100 and to the government of $50.
Suppose instead my donation was deductible. I give the charity $150, deduct it from my taxable income, saving me $75. The charity gets $150 at a cost to me of $75 and to the government of $75.
That looks as though the only difference is that the former is equivalent to the latter with less than 100% deductibility. In my example, if I got to deduct 2/3 of my donation the results would be identical.
Well, it’s different because how UK pension rules work and how marginal income and contributions are taxed.
Tax-deducible donations allow you to adjust your income at will every tax year – which can make a big difference, because after a certain income threshold, pension contributions become taxable. It’s a very complicated system, that has created lots of headaches for all involved.
So, if you earn an adjusted income of £151,000 and a threshold income of £111,000. If you donate £1000, the charity gets £1000 plus %25 percent from the government. If that money was tax deductible, though, you would also save yourself a lot of very complicated tax accounting issues. But with gift aid, you’re unable to reduce your income to avoid tax issues.
Yes, it may not be the most moral thing to donate money to a charity to get yourself out of a tax bondoogle created by overeager politicians who don’t want to seem too generous to rich people. But I don’t think it’s wrong, per se, to do it, when the government is introducing marginal taxes of more than 100%.
EDIT: in most cases, there’s no difference, but at the marginal income threshold, being able to reduce your income to avoid extreme marginal taxation by having a deduction, a deduction is better. There are also psychological benefits: I prefer giving less money to the government and giving it to a charity, than giving part of the money to a charity and part to the government, and the government then giving that money to the charity. It just feels less satisfying, because I don’t see the charity getting the money.
That seems to be true only for the corner case of earning between £150,000 and £151,000, no?
For everyone else, though, “topping up” is much preferable. It means you don’t have to find the receipt for every donation you made and do the math and ask for the tax rebate and follow up if you don’t automatically get it. None of this is needed, and instead the charity does all the paperwork (a much reduced amount of paperwork, because they can do it all at once, rather than thousands of donors each doing it separately).
I had a friend from moved from the UK – he was shocked the charity tax rebate system was so much more complicated in the US. Admittedly he made well under £150,000…
If you are a taxpayer that earns an income with a higher tax rate than 25%, you still have to save records of your donations to get the rest of the tax deduction back from the government. So it doesn’t simplify much for people earning above the higher tax brackets.
And 151000 is just an example. A person could still prefer to work to donate than to work to get taxed.
In Switzerland we have 100% tax deduction for charitable giving. AFAIK there are no limits to this either, so I could reduce my taxes to 0 if I were so inclined.
This even applies to political donations, btw.
On the question of JS Mill and charitable foundations, I think what’s going on here is simply that many such institutions in Britain in the first half of the 19th Century were notoriously, staggeringly corrupt. The Charitable Trusts Act of 1853, which established a regulator in the form of the Charities Commission, seems to have been a (largely successful?) attempt to address this. If I’m right, then what seemed obvious to Mill was presumably that trustees could not in fact be trusted to honour the laudable wishes of the deceased donor, rather than profiting themselves or through lax oversight allowing unscrupulous employees to do same.
It might be illuminating for Mr. Reich to look at a society where philanthropy plays less of a role and government spending a much larger one in how funds are redistributed from those that have to those that need. My society – Austria – happens to be such a society. My quick take is that the results are mixed. My impression is that Austrians tend to be less civically engaged and somewhat passive. In America people will volunteer to run a library facing budget cuts, organize a clean up for the local park or do a bake sale to finance the school band. This “can do” spirit sounds cliche, but it does percolate into society and the economy in ways that spur innovation and growth. In Austria the expectation is generally that the government will fix problems. Even volunteer activities almost always take place under the auspices of a government approved “Verein” (club). On the other hand, Austrians do expect the government to deliver services, punish parties that don’t deliver and generally get a better return on their tax dollar than Americans do. “Oligarchs” also, seems to me, have less power in Austria vis-a-vis the political parties than in the US.
It also depends on the level of government. In the US, local government is stronger and more functional, while central government is weaker and more dysfunctional. (In my subjective impression)
Interesting, my take has always been that in the US, local government is weaker but more functional while the Federal/State government is stronger but more dysfunctional.
Even in the US, national/state government is stronger than local government. However the difference is less extreme than in nearly all other Western countries, I think. Local government is relatively stronger, and national government relatively weaker.
Being from neighboring Switzerland, I’ve observed very similar things. For example, if you’re poor, it’s just expected that the government will step in and help out (and if it hasn’t, it must be your own fault). This passive attitude extends quite widely to the public sphere.
However, I don’t understand your point about volunteer activities and clubs at all. A Verein is just a legal person established for a specific (non-profit, not necessarily charitable) purpose. Being “government approved” makes it sound ominous, as if the government was dictating a list of things you’re allowed to do in your free time.
Vereins are not ominous, didn’t mean to imply that. It just strikes me as an added layer of organization that Americans don’t always see the need for. My point is that Austrians don’t seem to feel comfortable taking social action unless it is within some sort of structured legally recognized organization. The American approach is to act first and then maybe create the structure afterwards. Whether that flows from the the different balance between philanthropy and government or, more likely I think, is indicative of a deeper underlying social structure is another question.
Vaguely reminds me of the “feel good” stories in the American press along the lines of “12 year old works paper route to pay off classmates lunch debt” or “community raises money for beloved teacher’s operation”. These are definitely laudable individual acts of heroism, but the fact they are necessary at all is a bigger problem. And for every individual feel good story of overcoming adversity there’s a hundred cases where it was not overcome
I think you are expressing exactly the sort of attitude Joseftstadter ascribes to Austrians. Little boy sees “some kids can’t afford lunch”, takes direct action at significant personal sacrifice to address the issue. Meanwhile you just lament that the government doesn’t make the problem go away.
What’s annoying is when people (not ascribing this to you here, but I see it all the time) do the “lamenting that the problem exists” thing and act as if that makes them morally superior to the “celebrating young boy’s charity” crowd.
No it’s not. Or rather, it is, but it is a problem with reality rather than society, namely that the depredations of chance are not levied equally or solely to those capable of overcoming them themselves.
But it is no tragedy when they are remedied by voluntary, personal action rather than enforced, impersonal action.
The virtues of the former would only be outweighed by the latter’s greater efficiency and universality, but I’m not sure it is enough so.
> the depredations of chance are not levied equally
Though I agree literally, I disagree with the implied position. Most of the “depredations of chance” are not actually chance. They are the result of knowing actions taken by people. For example, a child “born into poverty” themselves may not have any control over the issue, but their parents certainly did!
I posit that addressing such issues in advance (via eg. breeding control) or afterwards (eg. via public lashings) are just as legitimate as addressing them via taxation to spend on ameliorating their conditions.
This also hinges on disagreement over the interactions between society and the individual, or for that matter, society/individual/government/nation.
To fix every little potential problem may end up creating a worse overall situation along other metrics: the totalitarian cure may be worse than the edge-failure disease, if you will.
Or as Randy M put it, this is a problem with reality. Disappointment that we’re not in the Garden of Eden or the FALGSC future.
As an especially non-altruistic guy, I do have very little problem with charity, at least under the current government. Associated with the usual tax deduction, I see it as just some (very) limited way to choose were your taxes will go, within a list of government-approved possibilities…And to exert this choice, you have to pay more taxes.
As I believe both that I pay too much taxes, and do not agree fully with how they are used by the governement, I have no issue with the tax deductible charity option: Will some philantropists assign their taxes worse than the governement would have done it? Yes, very probably (not difficult to imagine, as I am opposed to some governement-approved charities actions, not only indifferent).
But some will also do it better than the government would have done (from my point of view), and the total amount of redistributed wealth will also be higher. All in all, I think charity benefits me, although very indirectly.
Situation in Europe (my place) is quite different from US I think, the taxation level is much higher (for work revenue at least) and charity is less common. I think high taxes decrease the tendency to give money. People feeling altruistic are more likely to give time (volunteer work within non-profit organisations) than money under high-tax regime, because the taxes are partially felt as charity already…
Nicely done!
I was briefly confused, but then the bit about the 20% deduction tipped me off that books were being used to represent charity. But I was still puzzled because the writing style seemed much more stilted and less good than your usual style, and a bit high-school-essay-ish – particularly the “There’s a conventional story” paragraph. I wondered if the post was AI-generated, but it was too coherent for that. So I figured you must be writing it under some hidden constraint, like making it all rhyme.
But it turns out the “constraint” was just that you were reusing direct quotes from the book with minimal edits to make them about books rather than charity. Conclusion: not only your ideas but also your usual writing style is better than Reich’s.
I had similar thoughts – I scrolled back to the top to see if it was a guest author post. Then checked the date to see if it was April the 1st. Then speed read to (what turned out to be ) the half-way point to find out what the heck was going on with Scott’s world.
I think it was a really creative attempt to get round the dilemma of how Scott could explain his frustration with the book. I don’t think it quite worked, for me – the analogy was too distant from the subject of the book (and too long) for me to be able to learn much about the book, or Scott’s problems with it.
I have a lot of critical thoughts about philanthropy in general but I don’t get the feeling Just Giving addresses any of those. I’ll have a deeper read of Scott’s post, but don’t think the book is for me.
For what it’s worth, I figured out what was going on from the first sentence. [EDITED to add: Not specifically that it was all lightly-retouched quotations from Reich, but that Scott was parodying Reich’s style and saying about books what Reich says about charity.]
(I’m not claiming that this represents extraordinary cleverness on my part; just giving another data point relevant to the question “did it work?”.)
And I’m not quite as dumb as I portrayed. After ruling out the guest poster and April fool possibilities, I knew Scott was doing something interesting, and speed read to find out what it was.
I wonder – if I’d had a better sense of what the creativity was (as you did) would I have found the post more convincing?
Leading you down some kind of blind alleyway in part I is a very SSC thing to do.
Same here.
The writing style suffers from having every sentence taken out of context, I wouldn’t judge the book based on that.
In that case I hate to say it (because it was amusing), but format may have been a mistake, because I assumed you meant to imply that the writing was quite stilted as well as poorly argued.
Could I request that this be noted somewhere in the article itself, after the section has ended? It definitely influenced my view of the author in a way which I think is probably unfair
I stopped reading part way through the initial section, since it was obvious that Scott was doing something weird with the writing for some reason, and scrolled down until I found the part that explained it.
Same.
> most permanent things wield power only as long as the living choose to humor them – eg a dead author only matters if living people choose to read them and take their advice to heart – but foundations do not need the support of the living as long as the contracts that create them remain enforced
Sounds to me like foundations wield power only as long as the living choose to humor them!
I don’t have to agree with the aims of a foundation to engage in mutually beneficial exchange with it in the way I do with a book.
Eg if the Bob Smith foundation for digging big holes and filling them in again offers to pay me a million dollars to be a hole digging consultant I’d happily take that money, while not caring about the overall goal of the organisation. In theory if the contracts founding the organisation are sufficiently good you could have a whole organisation composed of individuals who had no interest in hole digging, but due to the legal fiction of the foundation devoted their productive energies to it, which does feel a little bizarre.
Though I’m not sure if the fact its a foundation rather than a normal corporation makes a big difference. A still living billionaire could pay a hundred disinterested people to dig holes. Arguably it’s a general problem with how wealth and power are distributed.
Wow you really got me in part i haha.
The key thing I would add to the conversation is around the note on taxes. With the example on authors being able to itemise/deduct certain costs, this is just treating authors like a business and taxing on “net profit” rather than “gross revenue” which is its own big debate. Charitable contributions being tax deductible is a different matter where governments are effectively giving donors a subsidy of your marginal tax rate for diverting funds away from government directed society and toward the donor’s own pet charitable preferences.
Different people will have different opinions on whether they would rather the government have the money vs a local church or whatever, but it’s a very different proposition to the example used applying it to authors.
Or is it a fee extracted from the well-off people (well-off enough to itemize deductions) who decide not to be more generous?
To be fair to Plato, he was right. As scrolls and litteracy spread it replaced the skilled use of memory to the point it was pratically forgotten. While it’s fun to have an actual example of a long lost art powerful enough to look like magic, the critique that writing would cause people not to learn how to properly use their memory is simply accurate. A similar phenomena today is that many people unintentionally learn to remember good Google search terms instead of a fact of interest to them, or programming by stack overflow, copy and modify the makefile of the ancients etc. People are lazy, and will use the simpler option even if it has downsides, important skills are lost in turn, it isn’t a critical failure, but certainly a fair concern.
I’d not heard this idea before, that people applied their memories more, or in entirely different ways, before the invention of writing. Is there a name for this idea that I could look up? Google gets a lot of semi-relevant results but nothing that really hits the nail on the head.
Memory Palace, Method of Loci. Those are the search terms you are looking for. For a book length autobiographical account of their use read Moonwalking With Einstein
I’m familiar with those methods, the but I’m not finding anything on them being more prevalent before the advent of writing. I’m curious about the idea that the average person had a (very much) more capable memory before the invention of writing.
It makes intuitive sense, before cell phones I’d remember phone numbers by heart after hearing them a couple times at most, and remember them for a long time. Now I know maybe ten numbers by heart
In The Praise Singer, by Mary Renault, Simonides, a professional poet in classical antiquity, is shocked to discover that his apprentice has written texts of poems. His view is that a professional poet should carry all of it in his head.
The dictator of Athens has a project to rescue Homer. Every year he holds a festival at which people who have memorized chunks of Homer and recite them, presumably for pay, are invited to come
and he has what they recite written down, with the objective of producing a full text.Simonides’ response — they are friends — is that it is unnecessary, since he himself knows all of Homer. The dictator reads from his text — and there are two lines that Simonides didn’t know, presumably lost at some point in the oral transmission, but that obviously belong. At that point he becomes reluctantly reconciled to the project.
Fascinating. There is a more recent parallel story about R’ Ovadiah, he was brought the proyect hashut for his blessing.
He had a talmid ask for sources on a sugia and gave 24 sources. The shut gave 26, and so recieved his blessing
A good example of why writing should have won (I think it won for other reasons). But I think the apparent dichotomy is created because of laziness, not any inherent contradiction. The question remains: does the option to re-read affect memory?
Beyond the well proven surviving techniques of memorization, are there other skills of memory which might have been truly lost?
It seems like memories are altered every time we recall them, but how much they are altered seems to vary, clearly controllably so. Perhaps a society in need of the ability to remember without writing would naturally find such skills important enough to develop. Perhaps we dont need them today, but it would be high on my list to learn.
I didn’t realize Simonides had been friends with the tyrant Hipparchus. I suppose that’s part of the reason Plato throws shade at Simonides in Republic.
My impression is that a lot of The Praise Singer is conjecture/invention, that we don’t know a lot about Simonides.
The tyrant he is friends with is Peisistratos, not his son Hipparchus. In Renault’s version Peisistratos was the younger lover of Solon. He tells Simonides that, when Solon made the law, everyone liked it except for one thing — everyone wanted the law changed in his favor. Solon left Athens, since if he wasn’t there they couldn’t make him change the law.
“They kept his law. They keep it still — I see to that, who could have given them laws they liked less well.”
(from memory, so possibly not verbatim)
He’s been kept honest by the memory of his dead lover. Then he dies, his sons take over, things slide downhill, and Simonides leaves Athens, so definitely not a partisan of Hipparchus.
The book is in part about tyrants in the Greek sense, popular dictators.
Midjje,
I am sure that prior to the invention of vastly superior techniques for preserving knowledge, that memory played a critical and gallant role. Surely something was lost when we shifted from memory to writing, first in glyphs, then alphabets, then printing. But something much, much greater was gained.
To quote Einstein “My pencil and I are more clever than I”.
As a writer I am several orders of magnitude more powerful in thinking because I can record thoughts, come back to them and build upon them — for years. This allows not just the preservation of thought, but the creation and advance of thought. Honestly, absent writing, I would be a complete idiot.
And the benefits of writing are even greater when we extend them to others. Plato’s comment is only even known to us because (unlike Socrates) it was written. Writing, especially printed alphabetic writing, is easily propagated among billions of people, for eternity. And knowledge is a cumulative, collective thing.
Every solution has costs. And I am sure the conversion from memory to writing had costs. But the costs were insignificant compared to the gains.
To quote one of my favorite tweets, tweeted by Aaron Roth quoting Manuel Blum:
“When you are working on a problem, take notes. This transforms you from a finite state automaton into a Turing Machine, and so makes you vastly more powerful.”
source: https://twitter.com/Aaroth/status/1050356440391659520
My point was simply that Plato had a point, not that writing wasn’t useful, something I doubt Plato would have argued either. The argument is out of context(contemporary social, not the specific text), but consider if that context was in defense of still teaching the class of memory, rather than dropping it entirely for just reading/writing.
Most things have tradeoffs, but what if most people were unaware of a important downside of something, especially a downside which will only hit once people have used the alternative exclusively for generations. How should someone inform people in a way that they pay attention, hyperbolically perhaps? …forgetfulness in the learners’ souls…. I am not sure if writing things down makes me not remember them, but rather remember where I wrote it down, but it seems that way some times.
Consider the the modern discussion of if writing things down during lectures is advantageous because it makes the material easier to remember, because it lets you look it up later, or because it forces you to pay attention. I lean towards the focus explanation, because that the biggest challenge for my university students seems to be one of focus, they are motivated, they are clever(enough for the material), but they cant concentrate at all. Meaning for most people the advice write during lectures is a good idea, since it comes with a minimum amount of focus required. But doing something else while trying to understand something is distracting, and there is a reason most students in the phd courses take far less notes…
The specific which you have discovered is an aid not to memory, but to reminiscence, and you give your disciples not truth, but only the semblance of truth; they will be hearers of many things and will have learned nothing; they will appear to be omniscient and will generally know nothing; they will be tiresome company, having the show of wisdom without the reality.
Consider how accurate the translations of memory, reminiscence, and truth are. In particular given that by memory he certainly means skilled use of memory, not remembering. Yet this nuance is certainly lost to modern audiences, and perhaps to the translator as well. Within this accuracy, Plato could be making an argument that writing facilitates remembering facts, not understanding facts. Well that or a critique of a reddit.
Not that anybody is going to read this, but the interesting question is, “What type of an organization COUNTS as a charity, and how is that decision made?” It’s where all the ethical bodies are buried, so to speak. Scott doesn’t really do anything more than take that as a given.
For example, counting churches as charities I consider morally grotesque. Giving to religious institutions should not be considered charity at all, in my personal view. Where are the pros and cons of similar view litigated? They aren’t. Anything with a 501(3)c status is automatically a “charity”. So how do those boundaries get drawn?
I read it. 🙂
I agree that defining charities is the tricky part. “Non-profit” seems to be the main criterion that the US tax code enforces. In other words the organization doesn’t funnel money to specific private individuals / organizations, either directly or through payroll, purchasing, and so on. The actual activities of non-profits aren’t restricted, except for some rules around lobbying apparently (which seems very reasonable). This has the advantage of being a reasonably principled and enforceable rule with no political content.
“Morally grotesque” is a strong way of putting it. What principled line are you going to draw that leaves churches on one side and MIRI, the SPLC, community organizations, etc. on the other?
My “principled line” would be that no religious purpose can be classified as charity work. it’s not typically very hard to identify religious groups, they tend to enthusiastically self-identify.
I’m not saying that it would pass constitutional muster, nor even that it’s necessarily a good idea to try. My point is that not everything that calls itself charity is a good idea to encourage. Holding public education seminars on the evils of vaccines, for example, could be plausibly construed as charity, or even religious, depending how you slice it.
But if you want me to put forward something positive, my first pass would be that a charity is “An organization devoted to promote specific, articulable improvements in material wellbeing without any conditionality or expectation of any specific consideration whatsoever”. So, for example, donating to a library would be an articulable improvement in material wellbeing, but doing it in exchange for having it named after you or anyone else would cross that red line. I’m sure it has some loopholes, but so does the current system.
“Giving food to poor people” is not charitable work? Lots of churches do that. “Building a fancy church”? Maybe not, but SPLC doesn’t work out of a cardboard shack. “Evangelizing”? Is that not what the ACLU does a lot of?
From further down:
It’s no stretch to say the same thing about EA, if one takes a slightly loose definition of religion and uses a certain set of criteria for what constitutes poisonous nonsense.
You should work harder to develop the guidelines surrounding your inflammatory policy, since it is germane to the discussion at hand.
Suppose we have two charities, one of which is run by people who think governments should spend less, and publishes research arguing for that. The other acts similarly for the opposite objective.
Is it your position that at most one of them, the one whose position you agree with, counts as a charity?
1. Without wanting to commit myself to defending other Churches, the American Catholic Church does a lot of very tangible social work and is a fairly important part of those institutions in some cities.
2. The lines between religious, ethical, and self-help beliefs are very blurry. The religious certainly believe it is in the public’s best interest to continue their mission, and other secular charitable goals can be misguided to the point of failing to accrue benefits. Where do you draw the line for an attempt at altruism to be allowed? Bonus points if you do not presume your own preferred ethical system in constructing the rule.
I think that if the Catholic Church wants to receive tax breaks for their charitable work, they should absolutely have them. They just shouldn’t get tax breaks for merely existing. So, building a new hospital => tax break. Putting a new spire on their steeple => no tax break.
You would need to apply this equally to all charities – would any office building used by a charity not strictly meeting the barest definition of functional be taxed?
Why would you need to apply this to other charities? If an organization’s sole function is charity, then it should be tax-exempt. If an organization has multiple functions, like a church, then it should receive tax breaks only for spending specifically toward charitable functions.
Taboo “charity” for the moment, because what we are talking about here is “non-profit tax exempt organizations that you can donate pre-tax dollars to”
And those include many things!
Consider a university and what they do with tax exempt donations. They build fancy buildings. They pay staff (some quite handsomely). They assemble people together in big rooms to hear someone talk about philosophy. They have a choir (and bands. And a basketball team)
That… sounds awfully church like!
A professional organization? Well, they spend money hosting events for like-minded professionals to gather and talk about their mutual interest. Maybe publish some magazines. Again, pretty church like.
Okay, consider something more of a standard charity. Maybe an animal shelter or something. Do they pay their employees? Do they pay for the shelter? Is the shelter designed with amenities to make it a reasonably pleasant place for the employees and animals, and to make prospective adopting families more comfortable when they visit. Maybe they print T-shirts and go to local events to advertise and solicit donations.
Why should a church be taxed for engaging in activities equivalent to these?
@gbdub:
I think that your definition is too loose. I think that a charity is all the things you mention; but, in addition, when you give your money to a charity, you do not receive any material benefits in terms of goods or services. So, for example, when you pay money to a grocery store, you get groceries in exchange (a product). When you pay tuition to a university, you get education in exchange (a service).
But when you donate your money to a university, and tell them, “build something cool with it”; or even, “build a new biology lab and name it after me”, you aren’t directly getting any products or services. Sure, you can use the new lab, but so can everyone else — you don’t own it. Thus, your donation should be tax-exempt. Arguably, you do get a sense of self-satisfaction, but until we have mind-reading technology, we can probably safely ignore it.
The first two examples are beside the point. I don’t really care about the tax status of universities. We were not talking about non-profits in general, but charities in particular.
In the animal shelter example, the organization has a single purpose, which is to provide for the welfare of local animals. All of their spending — paying employees, expanding their facilities, and buying advertisements — furthers that purpose.
Churches have some charitable functions, like running soup kitchens, but their main function is religious in nature. Paying to operate a soup kitchen is charitable and should be subsidized; adding a new steeple is part of the religious function and clearly shouldn’t be treated like charitable spending.
@Bugmaster – I’m not sure I get your point. What’s the “product” you get in return from your church donation? In any case, my “too loose” definition is exactly what the government uses.
@Act_II you can’t just dismiss things that fall under the same tax exemption that you are trying to take from churches! That’s precisely my point, you are providing special scrutiny to churches that you do not apply to other nonprofits. “Philanthropy” covers a lot more than just a very narrow definition of “charity” (supporting the arts for example).
If you want to remove the tax exemption for donations to all those other “non-charitable” non profits, that’s one argument. But that’s very different from “keep everything else the same, but tax churches”, which was my impression of the proposal on the table.
(In practice I think if you did that you’d see churches split into a “church” and a “religious charity”, and you donate to them separately, sort of like how some groups have a separate PAC for political funds)
I think that kind of already what happens? I bring food for the food pantry to my church, but it gets loaded up into the Catholic Charities van, and Catholic Charities (the non-profit corporation) runs the pantry. Then I put a check in the collection basket for my church. Some of that gets spent on other charitable endeavors, but the vast bulk of it pays for church operations. When I make a donation to the United Way collection at my secular workplace, I can select Catholic Charities as the organization I would like the money to get funneled to, as can anyone else even if they don’t attend my church.
I don’t think people should be mixing the arguments about charity with the arguments about religion. Churches didn’t get tax exemptions because people like charities and churches do charities. Churches got tax exemptions because religion is (or was) central to the lives of Americans, and the idea of churches unable to serve their flocks because of the government chafes.
Tax breaks for charities and tax breaks for churches are really two separate issues.
Consider a missionary organization. Assume its sole purpose is to spread the religion, to convert people. That looks like your “religious in nature.”
Contrast that with a non-profit organization whose sole purpose is to spread information on nutrition. It acts because it believes that knowing about nutrition is good for people. The missionaries act because they believe that knowing about God is good for people, indeed more important than knowing about nutrition. Is your only argument for classifying only the nutrition organization as a charity that you happen to agree with it about what is good for people?
Will you similarly conclude that a non-profit that exists to spread political views you agree with counts as a charity, one that exists to spread political views you disagree with doesn’t? Shouldn’t that be your conclusion, as a matter of consistency?
@gbdub
The parent comment specifically mentioned charity, and the subparent defending churches cited their charitable work, so that’s why I focused on charity. The truth may be closer to what Conrad Honcho suggested, which is that churches are exempt specifically because of their religious nature. If you want to expand the conversation to cover non-charitable purposes, then I have to say churches really, REALLY don’t make the cut. It is pretty absurd to subsidize religion for its own sake. I agree with benf that organized religion in the modern day is a net drag on society.
@DavidFriedman
Nutrition is not a religion. This is a very shallow analogy. Everything Is A Religion is a shallow rhetorical technique in general. And so is moral relativism.
@Act_II:
Nutrition is not a religion. Catholicism is not Judaism. The question is what the relevant difference is.
In both my cases people choose to bear costs for what they regard as the benefit of other people. What significant difference is there, other than that you happen to agree about the benefit in the one case and not in the other?
Being tax exempt is not a subsidy. Subsidy implies they couldn’t exist (or exist as well) without being given resources. They’re not being given resources by the government, they’re being left unmolested by the government.
The power to tax is the power to destroy. It is certainly not absurd to not destroy something central to people’s lives.
Oh it definitely is. If you make contributions to your church you can deduct it on your tax return. This is a tax expenditure which is substantively equal to the government sending money to the church.
Below is the IRS code section 501 (c)(3), which lists the activities allowed for tax exemption, which allows you to deduct donations.
Actually I am in favor of eliminating tax exempt rules altogether, so the government doesn’t subsidize any charity. But I do think that including religion as an acceptable activity for tax exemption is especially egregious. As you suggested above, churches could break out their charitable activities and those make sense as being tax exempt. But I don’t see why the government should subsidize church operations any more than it would subsidize a non-religious social club.
@Mark V Anderson
Subsidies can make people completely against their desires, while tax exemptions cannot.
For example, imagine that I dislike eating tomatoes. You give me a tax exemption, so I can buy tomatoes more cheaply than other food. Then I’m still not going to eat tomatoes.
Yet if you pay me to eat tomatoes, you can get me to do that, if you pay enough. You are not limited to merely compensate me for the cost of buying tomatoes, but can give me much more, offsetting the negative utility of eating a tomato.
The practical answer to how it’s decided is decades of very messy and heavily litigated case law. Which has the problem of a lot of civil and administrative law where there’s a strong incentive for the organisations that could benefit from it being expanded (churches and other debatably charitable organisations) have a lot of incentive to spend money litigating and lobbying, but because the costs of reduced taxes raised are diffused across society there isn’t as strong an interest pushing the other way.
So I could see an argument that if the status is inevitably going to be abused it would be better for it not to exist at all. But I’d need to see some figures on the good caused by “real” charities vs the costs of “fake” ones to come to a conclusion
My university’s a charity.
Vice-chancellor’s minted and the profs go on strike every year but there’s no shareholders making a ‘profit’.
There’s some *very* lucrative links to private business, too.
In the end, I’m not certain it matters that much. Most of the expenses of a church go towards the same things that would be covered under a slightly-strange non-religious charity. Building, utilities, etc., are some of the biggest expenses of a church. Sure, the building design is frequently distinct, but doesn’t matter all that much. The salary of the church employees (priest, etc.). You’re talking about someone who could be considered a 24/7 on-call counselor, plus who does administrative paperwork, fundraising, leadership, education and outreach. Plus the charitable works done themselves which are diverse including soup kitchens, emergency shelter, etc.
Indeed, the religion-specific work done by a church is surprisingly small. The biggest impact is on the choice of missions taken up and policies enacted, but not the works themselves. How would you structure a policy which allows for charitable organizations into which a church couldn’t slot themselves with a small bit of work?
I´ve read it and I agree with you. There should not be tax exemptions for giving money to religious institutions.
@benf Why would religious organizations not count as charities?
You’ve given a pretty harsh judgment without justification, so I assume you think it’s obvious (or had some bad experiences with religion).
This is counterintuitive to me. Religous groups generally have a serious focus on actually helping people who need it. Giving to the needy is entrenched deeply into a lot of religions. If there is any type of organization that you can trust to get money to were it will make a difference, I’d put my money on religious ones (pun intended).
The money that doesn’t go to the needy goes instead to upkeep of communal buildings, community events, etc
IME everything going to religious groups is used for the cause of making sure people have what they need (Which includes community).
Why would the “agenda” driving them to do good things change whether they are charities?
What is your logic here?
My point was not to have a discussion about the pros and cons of allowing theological evangelism to be tax subsidized, my point was that the whole category of questions about where we draw the lines between charity and non-charity is totally ignored in the post, even though it’s actually the only really interesting category of questions.
BUT since you asked, I personally consider religion a force for evil in the world, and while true charity done in the name of religious faith is all well and good, we don’t need to subsidize the spreading of poisonous nonsense just because the same people may, or may not, also spread improvements in material wellbeing. That’s my personal view, and I don’t consider it worthwhile to discuss any further, seeing as it’s not really germane to the issue at hand.
Personally I consider socialism and related ideologies forces for evil in the world. We don’t need to subsidize the spreading of poisonous nonsense.
Does it follow that no organization with left wing views — and from my position, an awful lot classifies as left wing — should count as a charity for tax purposes?
Probably a bad example to trot out if you don’t want to discuss it.
As to your main point, similarly to free speech, charity in general is a pretty easy schelling point, with specific issues like political charity or encouraging genocide being excluded, this doesn’t damage the schelling point because tree vast majority of people think this makes sense and that these are legitimate distinctions.
So the way we should probably handle the categories here (policy wise) should be similar to free speech – unless a distinction is pretty much universally accepted or is very very important, dont make the distinction.
For what it’s worth, they’re going to “spread the good word” regardless imo, the material differences are the main thing dependent on money
Yes, that’s the major problem. People keep assuming the US 2020 status quo is perfect.
I know people who think the government subsidizing giving to Planned Parenthood or the Pride Foundation is morally grotesque as well.
I mean, this is the whole problem liberalism is trying to solve: people don’t agree on moral frameworks. They disagree radically, incompatibly and violently. The liberal solution is for the government to hold a monopoly on violence and refuse to use it to adjudicate moral questions that aren’t agreed on by a huge supermajority.
And the US charitable categorization is rather well designed along liberal lines. Your opinion on the moral grotesquery of religion can coexist with a religious person’s opinion on the moral grotesquery of abortion or marriage sancitity, and both are equally supported by government.
Any line that restricts charitable government support has to be something that either includes or excludes both of your sensibilities. Otherwise, ‘who’s in charge of the government’ becomes ‘who’s in charge of the correct morality’. And that way lies bloodshed and misery.
Indeed! My point is exactly that: we need to be discussing what the proper boundaries between charitable and non-charitable activities are, and not wasting our time talking about whether “charitable giving” is itself good or bad.
No – we don’t. Because “we” can’t define it.
Charity is, in a manner of speaking, in the eye of the beholder. A charitable activity is any activity that the person engaging in it thinks is charitable. This could include providing malaria nets to the poor in Africa, providing meals to the poor in your neighborhood, providing donations to make Joel Osteen’s books available to prosperity gospel-oriented churches, or even anonymously tipping a camgirl without expectation of anything in return.
All of those are charitable activities, because the people doing them see them as such. You may think some of those are more worthy than others. You may even think some of them are actively harmful. But your opinion is irrelevant.
If the government is going to tax-advantage charities then it must define ‘charity’.
Our current definition strongly emphasizes avoiding controversial moral discriminations, which I think is a good thing. But it’s still defined. GM selling cars is not a charitable action. The Donald Trump Campaign is not a charitable cause. Both Planned Parenthood and the March for Life are charities.
Congratulations: you’ve defined charity so broadly that literally any exchange of money can be considered charity, and unless you think that means that all taxation is illegitimate, the practical upshot is that “charitable” giving is the same as commercial exchanges and should receive no preferential treatment. Hence, you are now arguing for the maximalist position AGAINST tax incentives for charitable giving, although somehow I doubt that’s what you intended.
I tend to agree that the government should not be in the business of defining what is or is not charity, and that the best principled position is to just remove the tax-free status of charities entirely.
I do, but that’s not really the point.
“Could be,” yes. “Should be,” no. Charity is entirely about intent. Trying to objectively define it based on the characteristics of the money exchanges themselves is like trying to define “sexual assault” based on entirely physical criteria. It just doesn’t work. Any and all sex acts “could be” sexual assault, but that doesn’t mean it’s pointless to try and define it.
The government does not need to, and in fact should not, get in the business of saying “this activity is charitable” or “this activity is uncharitable.” All it has to do is define the explicit criteria for its particular tax deduction program. If I believe that electing Donald Trump will make the world a better place, and I donate $100 to help ensure that happens, without expectation of any particular personal benefit or consideration in return, that is a charitable act, regardless of whether it qualifies me for a particular government program or not.
The government need not say “X is charitable,” all it has to say is “X is the type of charitable activity we choose to recognize with a tax deduction.” No more, no less.
The power to tax is the power to destroy. I’ve never seen an advocate for “tax the churches” that wasn’t salivating at the prospect of that destruction. Charity is besides the point. All such efforts should be resisted on the simple grounds of separation of church and state.
FWIW, I personally don’t give money to charities that self-identify as religious, or to charity aggregators that give any share of their aggregations to religious charities.
I don’t trust them not to attach religious strings to the help they give.
Churches are the prototypical charity. Other charities have legal privileges because they are like churches.
That’s not quite right. Repair of churches is a prototypical charity, but a church itself isn’t. The full list is:
Thanks! I didn’t know that.
But this was a time when churches were part of government. Private churches weren’t charity because they were illegal. I think that you could interpret this as meaning that charity was the private shadow of churches, very close to what I said. I’m not sure that’s the right way to interpret it, though.
I my country, a lot of church towers are owned by the government, as they had significant public functions (showing the time, warning the populace of disasters, etc). The government is typically not so happy with this, because it means that they have to pay for upkeep, rather than have the church pay for it.
Legitimate question: Is it consistent to criticize charity for being plutocratic and non-transparent, but write that criticism in a book that is not available for free?
(If possible I’d like to avoid Just Giving specifically and focus on the general question.)
Unless the book has been specifically pulled from libraries, it is available for free. Libraries typically being publicly funded institutions.
Ah, even more plutocratic government subsidies for books, huh?
What does the word plutocratic mean to you and how does it apply to libraries? This is a very strange comment using the common meaning.
How many philanthropy dollars would Orwell have to pay to even come close to matching the impact of his books? What about Mein Kampf? Das Kapital? Hell, even Catch-22? Most philanthropy isn’t aimed at changing minds. The part that is aimed at changing minds or designing society or whatnot has a negligible impact compared to other sources of influence. So is writing a book the same kind of power that philanthropy is? Not at all.
Ironically, you chose to write a book – would you pursue your goals better by massive donations?
Umm. Really. You wrote this whole book and declared B to be a “basic idea animating” it. Isn’t there a very obvious flaw in the argument above that at least deserves a major caveat or justification or something?
That seems to sneak in a key assumption, one that I believe many (here, in particular) would disagree with. I admit to not (yet, at least) reading your book. Is it something you take the time to justify?
Is that an obviously nefarious thing to do, that should be resisted? I could see arguments for and against this.
Aren’t you missing on some major benefits philanthropy could (and does, indeed) provide? Precisely the kind billionaires are fond of?
Not sure about the arguments yet, but this was a lot of fun to read.
I wrote a long anti-Just-Giving comment and I feel bad about it, so let me try to steelman Reich’s position.
In practice many successful democratic systems give control of some percentage of GDP– let’s be super-generous and say 50%– to government, via taxation. Decisions of how to spend the “private half” are (trivially) allocated proportionally to how much money each person made. Decisions of how to spend the “public half” are allocated proportionally to population, i.e. each person gets an equal say regardless of how much they made. Or so we’ll stipulate for our spherical-cow model of the system.
Now we’ll complicate our model by letting citizens deduct charitable donations from the 50% flat tax. Suppose 10% of GDP gets donated this way. Now as far as spending decisions go, only 45% of GDP is allocated by majority rule. The remaining 55% (45% normal selfish consumption + 10% philanthropy) is allocated proportionally to income.
What you think of this situation depends on how strong a constraint you think “philanthropy” is. In one extreme, the controls are very weak and it amounts to a tax loophole, where the donors get to spend tax-free on things they wanted anyway. In the other extreme, the controls are very strong and philanthropy is strongly aligned with the government’s goals, to the point where it’s being spent on what majority rule would have allocated it to anyway.
Note that we haven’t yet made any assumptions about how beneficial any of these allocations are. That doesn’t seem to be Reich’s point. The point is that under certain assumptions philanthropy in this model starts to look like an avenue for weakening democracy and therefore suspect. The relevant assumptions include:
1. Controls on philanthropy are weak and bad at aligning donations with what the majority actually wants. (This is what Reich advocates changing.)
2. Donations are relatively well-aligned with what the donors would selfishly allocate independent of what the majority actually wants.
3. Donations resemble selfish consumption in that they “buy” large amounts of status and influence for donors.
4. #2-3 amount to saying that donations are relatively inelastic, i.e. donors would make similar allocations out of their “private half” anyway if donations were taxed.
5. The “public half” really is a substantial fraction of GDP, even if it isn’t 50%. (Currently in the US it’s roughly 38%.)
6. Maintaining or enlarging the size of the “public half” is an important component of a democratic system.
7. Preserving a democratic system is a paramount objective. (Either it’s a sacred value, or it’s an instrumental value that dominates the calculus– e.g. the long-term destiny of democratic systems is much more important than the short-term benefits or harms arising from the different allocation of spending.)
1) Reich specifically states that he thinks philanthropy potentially problematic even if the tax advantages are removed, and I don’t think your steel man works without the “public half” part of the argument.
2) Allowing people to donate pre-tax dollars was democratically enacted (at least as democratically as anything else) and could be democratically removed (that’s what Reich is advocating!), therefore it can’t really be “undemocratic” unless all subsidies / tax deductions are undemocratic.
1) Yeah, that’s a harder case to make. One could argue that government exercises control over spending in other ways than taxes; e.g. environmental, anti-monopoly, consumer-protection regulation of businesses. In that sense, the raw tax rate doesn’t capture the full extent of the control that government claims over private spending and might similarly claim over philanthropy.
2) This seems to prove too much via confusing two different senses of “democracy”. In principle, yes, “democracy” just means “whatever the people choose”. But in practice we can still be concerned that a system that, say, elects Vladimir Putin 5 times in a row has in some sense become “less democratic”. Similarly we could take Reich as believing that “percent of the economy controlled by government” is an important metric or attribute of actual democracy, along the same lines as believing that the Nordic states are in some sense “more democratic” than the US (not my belief, FWIW). This distinction between principle and practice will exist as long as the actual operation of a “democracy” doesn’t reflect the literal majority will of a fully informed populace.
In this model, the obvious way to spend money in the way the majority wants is to have the government spend it. Part of the argument for charity is that it lets people spend money for what they consider good purposes even when the majority doesn’t agree.
They don’t. Democracies, in the sense of political systems that make decisions by voting, give disproportionate power to the swing voters, who might be a very small share of the population.
This sounds like a limited demand for rigour. Most democracies already have some mechanisms for protecting minority rights against the majority. Does Reich call for eliminating the US Supreme Court because it doesn’t give everyone a say proportionally to population?
I mean who wants to live in a world entirely determined by everyone having an equal say? I don’t know anything about you but I am willing to bet that you differ from the majority in *some* way: religion, hobbies, lifestyle, sexuality, etc, there’s going to be something.
Scott, I’m grateful for your engagement with my writing about philanthropy.
I have been reading Slate Star Codex for a few years. I’ve long admired the site: where else to find a writer with a distinctive voice, a willingness to read widely and deeply, to engage in long and detailed discussion, and to treat readers as interlocutors. You go deep on science and social science, you post reading notes. You buttress your posts with arguments drawn from unexpected places (e.g., too much money in dark almonds).
So when I awoke one morning last year to find your post Against Against Billionaire Philanthropy, I was excited because I had been led to think from your other reviews of books that the post would contain a detailed discussion and criticism of my book. Possibly even notes on your reading. Surely a reconstruction of the basic argument.
Instead, it turns out that you’d cobbled together an idea of the book from your reading of various blogs, interviews, and a few articles. When I express puzzlement in an email and ask directly if you’ve read the book you say you haven’t. You have hyper confident things to say about what you attribute to me — diminishing the impact of my work will save lives! — but you haven’t extended me the basic courtesy of reading what I’ve written.
So now you have gone and read the book. A proper review of the actual writing. What’s more, it contains great humor and cleverness. It’s also willfully obtuse.
Philanthropy is definitionally the direction of private assets to some public-facing or other-regarding influence. Book-writing is in one respect other-regarding — authors want others to read (and perhaps be influenced by) the books they write. But is writing a book the same kind of power that philanthropy is? Not at all. Try showing up in a public setting with the proposal that you have a book or a blog to offer people that will try and persuade them to do or believe something. Then show up in the same setting with money to give to people to undertake your preferred projects and see what happens. Try sending a charity your writing and see if they take you seriously. Then try sending your money and ask for a return phone call.
Leaving this entirely aside, your review shows that you’re only willing to think of philanthropy from the perspective of private morality. But the book’s very purpose is to explore the political dimensions of philanthropy.
Basic ideas that animate the book:
A. Philanthropy — especially big philanthropy — represents the direction of private assets toward some public-facing or other-regarding influence. In this respect, philanthropy represents an exercise of power, and power deserves scrutiny rather than deference and gratitude.
B. In many, but not all, liberal democratic societies, philanthropy is also generously tax-advantaged. This means that all citizens lose out on revenue that would otherwise go to the treasury.
Conclusion: even if we eliminated all tax subsidies, we’d still be left with big philanthropy as an exercise of power. So it would still deserve our scrutiny. Sometimes the exercise of that power should be resisted (e.g., the example I give in chapter 2 about donating money to a police department to pay for an officer on your own block). In other places it might be welcomed. What is the framework by which we can distinguish between philanthropic power that is welcome and that which is to be resisted? The answer is found in the goals or ideals of a flourishing democratic society (pluralism for ordinary charity, discovery for big philanthropy).
I would have thought that the identification of a democratic framework as the grounds on which to referee good from bad philanthropy is where you would object. As someone with affinity for effective altruism and rationalism, perhaps you think democracy has no special status at all. You might not care about political or systemic approaches to problem-solving. You care about analyzing what individuals can do to improve human welfare (and maybe animal welfare). But not a hint of this frame appears in the review.
The set of policies that currently exist to structure philanthropy are indefensible — perpetuity, the tax deductions for giving, the nearly non-existent demands for transparency. That accounts for the book’s critical tone.
The book also is a staunch defense of the role that philanthropy should play in a democratic society. Philanthropy is not just remedial, something to be dispensed with if only we could achieve social justice. To play this role, policies and norms would have to change.
If the revenue would go to the treasury and not to me, in what sense am I losing out on it?
If you’re a citizen, you would stand to gain some fractional benefit of the expenditure of a tax dollar. Moreover, as a citizen you have the civic standing to affect the distribution of tax dollars insofar as you can hold public officials to account through elections. You have no standing to affect the distribution of someone else’s philanthropy.
How much is standing worth if it doesn’t have any effect in practice? I can keep voting for the people and ballot propositions I want, and have negligible impact on the outcome (and often be on the losing side). In contrast, while a philanthropist doesn’t have to listen to anyone, I have more hope of persuading them than a majority of the voters.
(I can’t edit my reply for some reason, so I’m making a second one.)
If the government magically found an extra few billion dollars in the treasury, I wouldn’t expect to benefit at all. I’d expect to benefit even less if it has to be taken through taxes. Of course, it depends on how they spend it, so if they eliminated the tax break in favor of a general tax cut, I would benefit some, but this wouldn’t be a great change because the justification of the tax break for charity is that it makes some other government spending less necessary.
@blacktrance
> If the government magically found an extra few billion dollars in the treasury, I wouldn’t expect to benefit at all. I’d expect to benefit even less if it has to be taken through taxes
I feel like you underestimate, or are particularly cynical about, the governments role in redistribution of wealth. There’s the direct benefit that more money coming into the system means more can be spent on services, without raising taxes on the majority of the population. And reducing the political capital necessary for action.
Obviously there’s significant wastage in the system, but the state is still more redistributive than not.
More controversially there’s an extent to which power and money in society is zero sum. A reduction in the wealth of those wealthy enough that this is relevant increases the relative power of everyone else. Because their capital is proportionately more impactful than before. (to take a toy example, imagine there is a fixed supply of land in an area people are bidding to own parts of, the presence of someone with significantly more money than you in the market raises the cost of any unit, because they can bid the prices up, even if your own money is unchanged.)
In utility terms the marginal value of the money at the top end is also lower.
The government doesn’t just spend money to redistribute wealth (i.e. tax the rich and send checks to the poor) but spends it on programs, some of which are worth the cost, others aren’t, and some shouldn’t be done even if they were free. My view is that the second and third categories are quite significant.
Also, my understanding is that government spending isn’t particularly responsive to changes in revenue. Of course, spending can’t be much greater than revenue in the long run, but it’s not like the government plans to spend only what it receives in taxes.
I think it is very easy to assume that money spent on government programs does less than it actually does. Or that it has less of an effect than we think on enabling our society to continue prospering.
It’s all too easy to provide examples of government programs that clearly aren’t worth the cost. Anybody want to defend oil drilling subsidies in 2020?
The interesting question is the programs that “clearly” are worth it. It’s not hard to imagine that it costs less to have a fire department than to have a city burn to the ground.
But in those cases the question isn’t really whether there should be a fire department, it’s what the most efficient way to fund a fire department is.
Governments have an intrinsic advantage — they can efficiently raise funds. A government can just order everybody to pay a share and if they don’t they go to jail, whereas voluntary fundraising has high transaction costs. You have to spend labor begging people for money. There are also fairness questions if not everybody pays.
But governments also have an intrinsic disadvantage — they can efficiently raise funds. Not much incentive for thrift when the money comes easy and from a deep well. There are also fairness questions if not everybody pays.
Which of these factors dominates is a local/regional empirical question and doesn’t have that much to do with the intrinsic goodness of the endeavor.
But even when the government comes out ahead, which requires it to have high efficiency and low corruption, the difference is rarely dramatic. If the government was suddenly captured by anarchists who canceled all government spending, people would still want fire departments and roads and schools enough that they would come together and build them anyway.
Though they might not come together to subsidize oil drilling.
Sarcasm Alert
Sure, I’ll take a swing at it.
The purpose of all institutions of power, including governments, is to give additional benefits to those who are already powerful, and thus control the institutions. Anyone who’s doing oil drilling already has considerable wealth, so the tax code should be set up to give them more.
“It’s all too easy to provide examples of government programs that clearly aren’t worth the cost. Anybody want to defend oil drilling subsidies in 2020?”
I don’t want to be obtuse, but what is the argument against oil drilling subsidies? Is it something to do with CO2?
I am no expert on either tax policy or oil, but my understanding is that the US government encourages capital investment for economic growth reasons. Oil drilling seems to qualify, and I am not sure why we would disqualify it, though I am open to suggestions on the matter.
I would also argue that there are legitimate reasons to encourage domestic oil drilling. These include:
1) Better oversight on environmental considerations
2) Less dependence on foreign oil from dysfunctional petroleum states and the subsequent issues related to military involvement in said areas
3) Local jobs (not my favorite argument, but some may differ)
4) less dependence on coal, which is substantially dirtier and more harmful to climate change
And yet, empirical experience suggests that the political factions most interested in “shrinking the government” tend also to be most interested in promoting and defending the oil drilling subsidies.
It’s almost as if the continuance of oil drilling subsidies is an example of corruption. And as if corruption flourishes in an environment where regulatory institutions and public/communal infrastructure are starved at the expense of private infrastructure, enabling private interests to more efficiently exert leverage over the machinery of the government.
There are a few points built into the foundations of this argument that I think are quite questionable.
Firstly, government tends to be self-regenerating. Remove it and the people who really want fire departments and roads and schools will tend to found a new government to make the continued existence of these things enforceable.
The difference is that once you remove government, it becomes feasible to compete for political and economic power using pure violence, because the state’s monopoly on force goes “poof.” The newly regenerated government tends to be much less effective at providing schools and roads, and much more effective at killing people and taking their stuff, than the old one.
They would assuredly come together to subsidize oil drilling, if the new government is put into power by mercenaries paid by the oil companies. And if it’s not going to be drilling subsidies, it will be someone else.
The only way to prevent corrupt measures like drilling subsidies is to prevent corruption. But destroying the machine will not eliminate corruption; it merely ensures that after a short period of total chaos, the corruption comes back stronger. The machine must be designed with safeguards and mechanisms to replace broken parts- efficient regulatory agencies, mechanisms for banning private and foreign interests from influencing the government unduly, strong education of the public in the principles and ideals required to keep a republic running, and so forth.
Can we sum up your theory as “less is more”?
The less regulatory institutions and general government power, the less for private interests to exert leverage over and the less the incentive to exercise such power.
@Rob Reich
I also get a fractional benefit of a billionaire’s philanthropy.
[I happen to also live in society.]
I’m not convinced that government action gives me (or the average OR median member of society) a better deal.
Actually, I’m extremely skeptical of it.
The comparative is presumably between a billionaire you have zero influence over the decisions of, and a government you (and others who are similar to you) have some degree of influence over and therefore how likely their decisions are to align with your interests. (I imagine Reich would also say that this argues for better democratic feedback in the system)
Our influence over billionaires is actually greater than zero.
In fact, the decision to vote for politicians who won’t limit billionaire’s philanthropy, or who will, is influence over billionaires.
Arguably this is democratic feedback where people like davidgretzschel are saying that they trust billionaires to spend that money well more than politicians.
@Alkatyn, perhaps that’s the case, but if so we should first get that better democratic feedback in the political system, somehow.
No kidding. And our influence over government is hardly overwhelming.
It’s wholly unclear to me whether I have more influence over Jeff Bezos than I do over Donald Trump.
Living in a non-contested state, it certainly seems like Jeff Bezos would miss my business (if I chose to withold my purchases from Amazon) more than Trump would miss my vote (if I chose to stay home or vote for his opposition).
Note that for non-US citizens, your influence over Bezos is “small, but something” while your influence over Trump is literally zero, so there’s that…
@Matt M
Probably not literally zero. I can pseudo-anonymously influence people on social media, run advertising campaigns for or against Trump via sockpuppets, selectively spread fake (or real) news, donate to US campaigns through proxy, or attempt his assassination.
Here’s a thought: your influence over Bezos is higher than Trump because it’s easier to assassinate Bezos compared to a POTUS.
It’s easier to have confidence in “civic standing” when you’ve previously served in the Cabinet, because in that case you genuinely do have a lot of civic standing. For the rest of us, it’s not necessarily clear that the Treasury is more accountable in practice than the Gates Foundation.
I think you’re thinking of Robert Reich, not Rob Reich. Two different people.
Yikes, now I look like an idiot.
If it makes you feel any better, the two have never been photographed in a room together, so the whole “two different people” bit could just be a clever ruse.
Yes, two different people. For any interested, there is photographic evidence here.
Yeah, I just made up the part about no photographs as a joke 🙂 I didn’t check.
Ah yes, now who do I hold to account for Social Security? It takes a complete unfamiliarity of how democracy in the US works to make claims like ‘you get control of dollars as a citizen by holding officials to account’.
The thing about democracy is that you personally don’t necessarily get the policies you want, if there is popular support for them. If 60% of the population strongly desires that Social Security continue, then you don’t get to “hold to account” the fact that it continues.
On the other hand, there are a lot of good arguments for why this should be so- it prevents tyranny in which the same small elite gets to “hold to account” all ideas they disapprove of while letting anything that benefits them pass through the system.
And if you would counter my argument by saying that there are widely popular policies which are not adopted by the government and that this proves that democracy has ceased to be a mechanism for accountability to the citizens…
Well, you’re going to need to ask the question, who in society has a power base that doesn’t require majority support to thrive?
The complaint about SS is not that I am in the minority, it is that was created into law before I was able to vote. Most of the government institutions we live under were created decades before most current voters were voters. Its not really my congressperson’s fault that social security is a huge mess, and there isn’t some obvious fix that would make it not a huge mess that they could support to get my vote. More or less we are both paralyzed by the either incompetence or malicious cynicism of the previous politicians, all of who are out of power by now.
This is not the only structure that prevents democracy from holding politicians to account, if I want to hold a specific politician to account outside of the president I usually have to move and establish residency in a new geographic area, and doing so prevents me from holding others to account, outside of the presidential election.
This complaint basically reduces to “I, as a lone private individual, cannot hold the leadership of a millions-strong organization accountable.” Realistically, of course you can’t, the scale disparity is absurd. Any organization with access to a billion-dollar budget is virtually immune to the actions of a lone individual. The only way the individual wins that fight is by somehow picking up a big organization of their own and beating on the first organization with it.
The only way that any massive organization can be in any way accountable for anything is if there xist mechanisms capable of turning the broad, general discontent of many into a force capable of harming the organization. The more we strive to insulate powerful organizations (be they public or private) from popular discontent, the less accountable these organizations become.
Ultimately, if and when people as a whole become displeased enough with social security, they can remove from power anyone they blame for the problem and put into power someone who will change the situation to be more to their liking. You personally may not be satisfied with this, but the plain and simple reason is because not enough other people share your own dissatisfaction.
But even this less-than-perfect mechanism of translating the force of dissatisfaction into a change in the organization’s priorities does not work on a multibillionaire. Not except by staging an economy-crippling boycott to fry all his assets, or by breaking the law and resorting to mob violence, or by passing a law to expropriate his wealth.
@simon_jester: do you mean “broad, general discontent of many” like the 23% approval rating Congress has?
the 35% approval the way the nation is being governed?
the 33% that think there is the right amount of regulation?
or
the 56% that think the government has too much power?
source
Not true.
A billion dollar firm producing computers is affected by the actions of a lone individual. If he chooses to buy one fewer of their computers then, on average, they will produce one fewer. Lots of random noise in the signal, but that’s essentially what happens.
Rob,
“… philanthropy is also generously tax-advantaged. This means that all citizens lose out on revenue that would otherwise go to the treasury.”
I actually disagree with this on a more fundamental level. In actuality, the state decides on revenue needs and then backs into the tax system (and deficit percent) to deliver that revenue. It is thus not true that citizens lost out on revenue, any more than I lost out in revenue that the state chose not to tax low income earners. The overall system has already been repeatedly fine-tuned to balance who pays and how much is generated and spent.
Or perhaps I should be angry at the poor for not paying their fair share of my taxes?
This line of argumentation just seems to be trying to ignite envy and spite among taxpayers.
My take on the issue is that the state and its representatives (primarily unelected bureaucrats), has way more than enough control over how twenty to forty percent of our money is spent. I welcome that millions of decentralized philanthropists get a say in how some other money is spent.
A single, total, coercive plan is rarely best for open ended, dynamic issues which require adaptability and course correction.
I’m just summarizing your argument because I think it’s interesting and want to make sure I’m thinking correctly:
1) Given political constraints, “the rich” will pay X amount of tax dollars. If we try and tax them more we’ll likely lose out in the political process.
2) There are numerous ways we could structure the tax code to get to X
2a) We could have higher marginal tax rates and lots of deductions
2b) We could have lower marginal tax rates with fewer deductions
2c) etc. with infinity different tax structures that all produce X
3) Eliminating charitable deductions will more likely move us from 2a to 2b. Not actually increase X in the long run.
I am not sure about #1 (I expressed no opinion on it) but I agree with the rest. Eliminating charitable deductions moves us from 2a to 2b.
Disagree. Have a look at the long literature on tax expenditures. If you still think tax deductions are no different than deciding not to tax people at a higher rate, insofar as both approaches forgo potential revenue, please explain.
What is there to explain? It seems self-evident. If you think your link relates in some way to this question, please explain.
@Rob Reich,
Let me share a story. As a professional I designed and priced insurance products. One day the Marketing President asked if I could give her bigger discounts for advertising. I answered “yes, how large would you like?” She answered as large as I could give her as customers LOVE discounts.
I replied that all I had to do was raise rates by double and then offer a 50% discount for virtually anything that sounded appealing. There is no difference in the premium with a base rate twice as high and a fifty percent discount and the current base rate and no discount.
The same is true of a tax plan. When Congress designs a plan they consider both the total amount of the plan and the structure of who pays what. The two are decided together. They are not independent factors, any more than the size of my discount and the base rate are in insurance. The deduction basically determines who pays more or less, not how much is collected in total.
It may seem that if congress enacted a tax reduction entirely based on creating a new deduction, that this would make your argument right. But I would disagree even then. What Congress is doing is lowering taxes and deciding who pays Less at the same time.
“Moreover, as a citizen you have the civic standing to affect the distribution of tax dollars insofar as you can hold public officials to account through elections.”
So in other words, extremely little standing to no standing at all, depending upon the scale of governance in question. (i.e. I have some marginal influence on how my local tax dollars are spent, but less so at the state level, and no agency whatsoever at the federal)
Thank you for showing up here to respond!
I can’t speak for Scott, but my reaction to your response is to question your point (A). In any non-totalitarian society, there’s some point where we should say “this is a private act that doesn’t deserve scrutiny.” Then, there’s a continuum where we can say “this deserves some scrutiny but not too much” – e.g. someone buying food from Walmart instead of the local farmer’s market, where it has some effects on the world but is still well within the individual’s rights to make. If we brought the full weight of social and governmental power down on that spectrum, we’d become a totalitarian society. I maintain that philanthropy – any philanthropy to legal causes – is on that spectrum. Non-totalitarian democracy must tolerate it. If we have billionaires, we must allow for billionaire philanthropists.
Yes, in the abstract we can well talk about philanthropy’s effects on our society. But if we’re doing that in the current social climate, we should take care to maintain at every point that it should be legal. It’s like discussing in 1917 how bad pacifism is – maybe it’s really bad, but the Sedition Act that’s about to outlaw it is even worse!
There’s a distinction I don’t see people making here. Philanthropy that supports researchers trying to solve medical and technological problems seems obviously benign (as long as the research isn’t bioweapons and such). Philanthropy that supports workers or companies manufacturing necessary items that are then given to the poor seems also obviously benign. If tax incentives effectively subsidize these kinds of philanthropy, at most I can imagine people grumbling that they have better uses for the money.
Philanthropy that supports lobbyists, political writers, and such—philanthropy devoted to pushing certain political views—is quite a different matter and not obviously benign. I can very much sympathize with people saying “The IRS should not be subsidizing my political opponents’ views and it is offensive that they are!”. I also think “Political charity deserves scrutiny rather than deference and gratitude” seems quite a reasonable position.
Then there are grey areas. Is the Salvation Army a political organization? How about the Catholic Church? It is probably difficult (and political) to codify the distinction between political and benign charities. The most obvious solution for the tax code is to treat all charities the same. Leave the scrutiny up to individuals.
A tax incentive that gave each person $X for donating to charity each year would be one resolution. If a bunch of people donate to political charities, then the result is actually rather “democratic”—it’s directly analogous to voting. That seems reasonably close to what we currently have, except I think you only get $X if you donate some multiple of $X. If everyone were explicitly given $X for charity each year, that then raises questions like “Can I create the localdeity enrichment fund and donate my $X to that very worthy cause?” (UBI supporters would say yes.) Of course, another solution is to set X=0 and forget the whole thing.
Long-running political foundations are a different matter. What is the tax situation around that?
Political activity is not tax-deductible. There are things that are partway between loopholes and edge cases – funding the Center For Education About The Free Market or something – but I would rather people figure out ways to close the loopholes than throw the baby out with the bathwater.
Remember that the entire political ecosystem is tiny, and its philanthropic component is basically a rounding error in philanthropy as a whole.
Ok, then, are there any examples of charities Rob Reich asserts are funded too much by philanthropy? (And I assume “Benign cause X gets 33% more dollars than it should” is not the major complaint.) Looking at the Amazon book page, I see “undermine democratic values”, “conversion of private assets into public influence”, “form of power”, “influence policy”. That sounds a lot like it’s talking about donations that have a political effect, whether the law classifies them as political or not. Perhaps Rob Reich thinks the political classification covers too little?
One quoted review says: “Everyone sees the impact of big donors on political campaigns―but what about unelected big donors quietly experimenting with our schools and neighborhoods with taxpayer-subsidized money?” That sounds decidedly in the grey area: most people probably think donating to education is good, but a donation of “$X to implement specific educational policy Y” has policy strings attached to it. Insert scenario where elites think educational policy Y is good for keeping the proles down, or something. (I have seen various people claim that rich industrialists from the 1800s funded much of the push for modern public schooling and that it was designed to create good, obedient factory workers.) Also, if there’s a central body that has $N million marked out for projects that support a nice-sounding general mission, if they have an opaque process for approving or rejecting grants, then they might be able to selectively approve projects that advance their political agenda.
Does Rob Reich think that these types of things occur enough to have a general call for scrutiny?
> Philanthropy that supports lobbyists, political writers, and such—philanthropy devoted to pushing certain political views—is quite a different matter and not obviously benign.
Your argument is so convincing that it’s already the law. Political charity is not tax-deductible.
But that necessarily involves scrutiny, since someone has to decide whether an organisation is sufficiently apolitical to deserve the deduction.
Yeah, someone does. I’m not against ordinary scrutiny applied to the tax status of charities.
I feel that this point is mostly subsumed in Reich’s point B, but most of the discussion here has been people objecting to Reich’s point A as an isolated demand for rigor.
>The most obvious solution for the tax code is to treat all charities the same. Leave the scrutiny up to individuals.
To me the most obvious solution is to replace the income (and corporate) taxes with a progressive consumption tax.
This seems like an odd thing to say. We’ve had philanthropy supporting diverse views and lobbyists for generations now in the West, e.g. anti-abolitionism, universal adult suffrage, environmental movements, and generally we’re agreed that these are good things, aren’t we? I mean it may not be intuitively obvious, but countries that have banned diversity of views, e.g. the old communist countries, did pretty badly.
I mean it’s not obvious that deliberately infecting people with a little bit of a dead virus is a great idea for public health, but at some point you’ve gotta say “well it may be counter-intuitive but hey, the evidence shows that it works!”
Yeah, that would be my position as well.
I would also add that from my point of view, current levels of wealth inequality are indefensible and should be reduced, but it is clear that will not happen any time soon. And as long as we have multibilionares, it is much better when they devote substantial part of their wealth to charitable causes rather than to giant yachts or something like that.
In what way are they indefensible? Wealth is consumption deferred for your benefit-invested in productivity enhancing activities that increase your wages. You would rather it was all spent steering real resources away from things you want and towards super-yachts?
Um, I do not have a problem with an existence of wealth (duh), only with its extremely unequal distribution.
And before you ask, I do not think that everyone should get the same amount of wealth, only that currently existing inequality should be reduced.
AZ,
I would actually argue the opposite. There is nothing in my understanding of markets which would suggest that more equality of wealth, all else equal, is either desirable or good.
In a world where
1) I can advance my interests and go into debt and have negative wealth (borrowing for my future to go to school, Or start a business), and
2) someone else can generate a hundred billion dollars by creating products and services which delight consumers and make billions of people better off than they otherwise would be, then
3) we have made the world better on average even though inequality has increased.
This scenario would be even more true if instead of generating hundreds of billions, the entrepreneurs generated trillions and inequality got even higher. The point is that in a non zero sum world (and free market economics definitely must always be seen as non zero sum), it is not just possible, but commonplace to see rising inequality and rising widescale prosperity. Indeed. This is the broad tale of the last 250 years globally, since Smith (a moral philosopher!) laid out how economics can work.
You would be correct in stating that in some specific cases that inequality can correspond to a worse situation. This would be true when one person takes from another, or privileges her position relative to another. But if this is the case, the problem isn’t with wealth inequality (which is a mathematical relationship with no moral standing) but the nature of the institutions which promote or allow zero sum activities of this nature.
I agree with the general point you are making, but is it clear that inequality has generally risen over the past 250 years? I don’t know if it has increased or decreased in terms of income or wealth, but in utility terms I expect it has shrunk by a lot, since even poor people in the developed world can afford color television, and CD players, and lots of calories.
The difference between eating gourmet food and McDonalds is surely smaller than the difference between feasting on beef and living at risk of starvation.
How, in principle, do you think the appropriate level should be determined?
Let me suggest two rather different approaches:
1. Utilitarianism, or something similar. Wealth inequality serves a useful function, putting capital in the hands of those who have demonstrated skill in allocating it, rewarding effort, and the like. But diminishing marginal utility of income implies that if redistribution were costless, redistribution from rich to poor would produce a utility gain. Balance the two to find an optimum.
2. Entitlement. If I produce valuable goods or services that other people want to buy, I am entitled to the resulting income. If I make a bet with you and win, I am entitled to the resulting income. I’m thinking now of Nozick’s distinction between entitlement and desert. I don’t deserve to win the bet — perhaps it was on a coin toss, so pure luck — but I got the money by a legitimate act, so am entitled to it.
Obviously the application of either of these approaches is complicated — in exactly what sense did Jeff Bezos produce the value that others get from Amazon — but I think they represent two rather different approaches, both of which appeal to human intuition.
David,
Yes, I agree with your take on the issue 100%. Prosperity has increased 30x or more, yet inequality has actually gone down in every meaningful way.
@DavidFriedman
I am hardcore consequentialist, so option 1 is correct. On the relation between consequentialism and utilitarianism, see Stanford Encyclopedia of Philosophy: “Persistent opponents posed plenty of problems for classic utilitarianism. Each objection led some utilitarians to give up some of the original claims of classic utilitarianism. By dropping one or more of those claims, descendants of utilitarianism can construct a wide variety of moral theories. Advocates of these theories often call them consequentialism rather than utilitarianism so that their theories will not be subject to refutation by association with the classic utilitarian theory.”
Also, I appreciate that you pointed out that it is far from clear whether wealth inequality increased in the last 250 years. On one hand, we have a phenomenon of negative wealth, which indeed probably increased as a consequence of increased supply of credit. On the other hand, data from Piketty at al. suggest that the middle class now holds substantial share of aggregate wealth, mainly in the form of housing, which was not the case in the 19th century. We do not have reliable data for the 18th century, as far as I know.
Which is why I wrote:
Perhaps only what is subsidised should also be scrutinised. People are still free to do a wide range of things, it’s just that they do it out of their own pocket.
I think the big place to draw the dividing line is when the philanthropist’s actions are likely to force public policy decisions on governments.
Buying a bajillion mosquito nets for malaria-infected countries doesn’t drastically change the priorities of those countries’ governments, since “not die of malaria” is on pretty much everyone’s list of things they want to do.
But telling a large city’s school system “we will give you a big pile of money if you alter your policies [i]thusly[/i]” pushes at the line rather more. That particular change might or might not be popular- or advisable- in the absence of pressure from the philanthropist’s pocketbook. The wealthy donor is in effect turning the livelihood and future prospects of many thousands of Americans into his own private experiment, which may or may not work as hoped and planned.
And that is where it makes sense to accuse the philanthropist of arrogating power to themselves when it would rightly belong to the voters.
I can think of plenty of examples where something like this does change the priorities of the governments. For instance, imagine a government that mismanages its country so bad that lots of people are dying. If you save dying people, you may relieve pressure on the government that may otherwise lead to it changing its policies.
In theory, but given how generally feckless and vicious a government has to be to NOT prioritize “prevent deaths from cheaply preventable disease,” the odds are good that the net outcome of “someone else steps in to do it” won’t be much worse than the outcome of “existing government does it.”
Incompetent, vicious, and corrupt governments, even when they try to respond to incentives, often fail. Money earmarked does not get spent, idiots appointed through nepotism simply fail to do their jobs, and the brute squad of the government is all too likely to get distracted and go do something else instead.
So I don’t concern myself much with the idea that giving medical supplies to an impoverished country destroys the incentive that would cause them to create that medical infrastructure itself. Since we don’t observe corrupt, feckless governments doing this in real life when [i]NOT[/i] supplied with resources, starving the idiot-government of resources probably won’t bring about the desired goal.
If you analyze an action in absence of factor X, it can look irrational. That is not an argument that it is bad to do it when factor X actually is present.
This is just anti-experiment bias and could be used against any kind of innovation. Do they only have enough malaria nets for one village and not the other? That sounds like an experiment…(Of course, the difference is that none of these billionaire education ventures will actually work. But maybe someday we might get a crop of billionaires with sense.)
Democratically-elected representatives always have the option of refusing the money. I don’t see how offering someone an extra option that they are under no coercion to accept can harm them.
How did you find the motivation to write a book while believing that writing has so little influence?
One important motivation to write a book is to get clear about one’s own thoughts. Leaving this aside, very few scholarly authors write with an expectation that their books will be read outside a small circle of others, and even then, it’s a very low probability that a book influences the way others think. Most scholarship amounts to dust. Seems to me that’s a realist’s assessment of the probability that one’s writing has influence.
This is “willful obtuseness”, to borrow a phrase, disguised as humility.
You don’t write a book like Just Giving (or title it “Just Giving – Why Philanthropy is Failing Democracy and How it Can Do Better”) without the expectation that your voice is going to reach, and hopefully influence the thinking of, a lot of people on an important political topic. You know this book won’t amount to dust, and your intention is clearly that it won’t. Your voice is much more powerful than mine because of your hardly trivial fame.
Even if most political writing does “amount to dust”, well, so do most charitable donations. That was precisely Scott’s point, that literature is dominated by the most famous authors, and their output may not align with the best interests of society, precisely as charitable giving is dominated by the “plutocrats” and may not align with the socially ideal distribution of money.
It is a fundamentally political act, no less so than donating to “The Foundation for Taxing Charity”, and if we as a society have a claim on how rich people dispose of their resources of money (earned by expenditure of their other resources) then we ought to have just as much interest in how famous authors spend their resources of time in writing words.
Or perhaps we should just cap all political book sales at 1000. After all, it’s not fair that you get to reach many thousands of people with your writing, while the audience for my political views would be comparatively tiny. This should be plenty of sales to let you get clear about your thoughts, if that is your true motivation.
It seems hard to square this explanation with your first comment in this thread, in which you express your indignation that someone wrote about billionaire philanthropy without having read your book first.
This is an incorrect reading of the comment. He was annoyed that Scott wrote about his book without reading it.
Scott didn’t write about Reich’s book without reading it. “Against Against Billionaire Philanthropy” is not about Reich’s book. It doesn’t even mention Reich’s book. (It does mention Reich, and discusses his ideas, the sources for which are an article Reich wrote and an interview Reich gave.)
Twitter (may as well be the definition of “public-facing or other-regarding influence”) says you have over 11,000 followers on the account you’re using to tweet about your new book. That’s more than 50 times as many followers as I have. (Twitter follower inequality is crazy! Of course, it is enhanced by certain regressive policies, such as tenure, which allow academics who already have a disproportionately large number of followers free time to accumulate even more. Naturally you won’t see many academics using the power offered by their Twitter accounts to talk about the importance of tenure abolition, but oh well.)
Anyway, shouldn’t you welcome scrutiny of how you’re exercising that power?
Is writing on Twitter the same kind of power as money is? Not at all. Try being a megacorp with a billion-dollar advertising budget. Then try being someone on Twitter, displeased with said corporation, who wants their many followers to know.
What is this to say, can you clarify?
I think I get what Scott means when he says this is proving too much, literally any act that’s not masturbatory will fit here, thereby creating a case that every private activity must be scrutinized and transparent.
Yeah, the current set of policies that encourage & subsidize philanthropy is imperfect. The current set of policies that encourage and subsidize anything (say, business creation, public parks, roads, recycling, R&D) is imperfect. Therefore…we should criticize business creation, public parks, roads, recycling, R&D, etc. and stop subsidizing them?
Isolated demand for rigor sounds about right, along with a healthy dose of copenhagen interpretation of ethics as applied to politics: although philanthropy does good, it doesn’t do good perfectly, so the state needs to stop subsidizing and/or regulate the heck out of it. And of course, since you personally “profit” from philanthropy by getting a taxes subsidy after donating (nevermind that the dollar amount of tax deduction is paltry compared to the dollar amount of philanthropy), that makes philanthropy a much more monstrous act.
Well said– this is what I was trying to get at below, but quicker and clearer.
In fairness to Reich, “deserves scrutiny rather than deference and gratitude” is a vague statement and it doesn’t seem that he advocates 100% government control over giving. Also, maybe he thinks it goes without saying as applied to assets that *aren’t* directed toward the public interest (I would disagree with him there but it’s not an unheard of position).
It makes at least a little sense to say that if government control of spending is inherently worth preserving, and if we treat the government as having 100% control over tax dollars and 0% control of what private individuals keep after taxes, then as a matter of structure it ought to have X% control of donations where X is somewhere in between.
Sure, this applies to any activity that has an effect on other people. These activities should be and are scrutinized, though — with the exception of philanthropy. For a book to have some degree of influence on other people:
-A publisher needs to agree to publish it
-Bookstores need to agree to stock it
-People need to actually buy it
-The content needs to be compelling enough to actually affect readers
This curation process implicitly applies democratic scrutiny to the act of writing and publishing a book. You might object that the first two steps can be skipped if you’re rich enough — and I agree. Billionaire authors should be treated with greater scrutiny than regular authors for this reason.
Fixed it for you.
Only elites read books?
There are multiple gates. Some are kept by experts. The last and most important are kept by the market.
The publishers, the reviewers, the books chains, all the first part of the chain, are part of the elite, yes.
After it’s passed elite review, then the books go to broader audiences. With the advent of self publishing that’s changing, but it’s going to take years to build the same audience.
Okay, I don’t understand your point.
I already agreed that some of the scrutiny applied to books is done by experts. But there is also democratic scrutiny. If the book is in some sense insufficient, the masses won’t buy it, read it, or be influenced by it.
There is frankly even an argument to be made that publishers and sellers are democratic agents in this context. If they make the wrong call on enough books, the market will respond by putting them out of business and replacing them with new publishers and sellers. Contrast this with billionaire philanthropists, whose income isn’t derived from their philanthropy and therefore can’t be used as a check on it. (I don’t think I’m willing to fully commit to this argument, though, given that publishers in real life are quite large and unlikely to go out of business.)
Isn’t the democratic check on billionaire philanthropy whether or not people want their help? You can fund a soup kitchen but you can’t make people show up and eat soup. You can fund vaccines in Africa, but you can’t make people get stuck.
Can you give me an example of billionaire philanthropy that people can’t reject the same way they can decline to read your book?
My point is books, until recently, where shaped by the publishing industry, who decided what books to publish. This whole process is very murky and completely untransparent.
And I don’t think the existence of that elite scrutiny, them deciding what we should read, is good.
Charities face a lot more scrutiny when they receive donation from the tax agency and the charity overseer than publishers do over which books they publish.
Also, what Conrad Honcho said. People don’t have to accept free malaria nets, free food, or free housing, if they don’t want to.
You’re conflating the charities themselves with the billionaires. Given that many charities exist and serve real needs, there’s no democratic feedback on billionaires’ choice of charities to support. With the malaria example: maybe Americans are upset about American-created wealth being transferred overseas. Or maybe they’re upset about donations to charities that also proselytize, like the Salvation Army. Or maybe they’re upset that some corrupt, ineffective, or harmful charity is being propped up by massive donations. These Americans have no recourse other than government action.
The choices of charities billionaires have for charities that are tax-deductible are all charities that are registered in the US and accepted as such by the IRS. Even when they create their own foundation, they have to register it with the government. Oversight of charities already exists.
Many Americans are probably also upset by books that promote religions, communism, socialism, feminism, Ayn Rand, and many other things. So what?
If a person sends their own money abroad, it’s nobody’s business. You live in a free capitalistic society with enshrined freedom of speech, deal with it.
What about Americans upset about the corrupt, ineffective, or harmful
charitygovernment is being propped up by massivedonationstaxation and debt.Don’t they need the recourse of private organizations of their choice?
Yes, oversight of charities exists, but again, it isn’t the charities that are the problem.
Books are subject to the whims of the market. Individual Americans may be upset by books, and they can respond by not buying those books. If enough Americans feel this way, those books will be removed from the market and their effects dulled. If enough Americans are upset at their government, they can replace their politicians. But it doesn’t matter how many Americans are upset at a billionaire’s donations; they are completely insulated from democratic response. My point isn’t that these other things are Always Good And Pure. It’s that, when they aren’t, the people affected by them have some kind of recourse as a group. For philanthropy, that isn’t the case. (Note that it can be the case for an individual charity — if it doesn’t get enough donations, it will cease to exist. Unless, that is, a billionaire decides to override the will of the market and prop it up himself.)
It is most definitely my business how billionaires choose to spend their money, and it’s yours too. With that amount of capital, they can shape the world. I live in the world, so I care about who shapes it and how.
@Act_II
How much wealth does render its owner’s actions “your business”? 1B? 1M? 1M + some social capital? When does it become acceptable to scrutinize someone’s personal actions and usage of money?
If the charities aren’t the problem, why is it a problem from whom they get the money? Why does it matter so much that the get large donations from a single individual, if it’s a legal charity? If you don’t object to the charity itself, as we’ve established the charity does have oversight, why should it matter how the charity gets funds, as long as it’s a true voluntary donations (no quid pro quo)?
How anybody chooses to spend their money is your or my business to the same extent what kind of books are written is your or my business. As long as the charity does not do illegal stuff (promote crimes, extremism, etc), or the books are not illegal (a book of child pornography, for example), there’s nothing we can do about stuff we don’t like, nor should we be able to. That’s what freedom is for.
@B_Epstein
I don’t mean this in an insulting way, but I have no interest in asinine line-drawing games. It’s my business when it can non-trivially impact my life. I don’t need an exact numerical value to know that billionaires meet the bar.
@ana53294
Charities serve all sorts of different purposes. Some charities are even at odds with others (for example, Autism Speaks and ASAN). Choosing to elevate some charities and neglect others means some causes will receive disproportionately more attention. This is fine and natural when society in general agrees on which causes deserve attention (either through voting or market forces), but billionaire philanthropy distorts the process toward the preferences of a small number of individuals with lots of capital.
Writers also choose to elevate some causes over others by spending a lot of time and effort on writing a book. Darwin spent years travelling on a ship getting peanuts to write a book.
Charity and book writing are not democratic in the same way: not everybody gets a vote. Your vote and its size will depend on your willingness and ability to sacrifice.
Some people have a disproportionate effect on the market of ideas by spending years writing a book, like Karl Marx.
And it’s not like it’s just billionaires who have a bigger effect than other people. Religious people donate to charity more than double what secular people do. Should we tax religious people’s donation or subject them to scrutiny because they distort the marketplace of ideas by donating?
Act II,
Allowing people who denigrate property rights on the internet effects me. I believe it threatens human prosperity for all time going forward. This topic is really, really important with huge ramifications for not just me, but the human race.
So, can I draw the line on making what you write on blogs subject to my business?
@ana
That isn’t the point, though. Writers don’t get to choose what impact their book will have. Ultimately, they can try to make their point, but society is only impacted with the consent of the market.
I wouldn’t advocate taxing only religious people’s donations, but it’s absolutely worth being critical of this overall trend and skeptical that its effects are good for society.
@Swami
Lol. You guys really like your gotchas. Sure, if you want, it’s your business! Good thing every one of my comments is being subjected to criticism and scrutiny!
More seriously, this line of reasoning is totally irrelevant. You’re mixing up individual concerns with mass concerns (a common problem with libertarians, I’ve found) and demanding exact pinpointed lines in the sand when they aren’t needed.
Equally true for charitable donations. The Koch Brothers or Soros can offer to fund organizations that push their views or university chairs for people they approve of, but those efforts only impact society if other people are convinced of those views as a result. The sponsor doesn’t get to choose what impact his efforts will have any more than the author does.
@DavidFriedman
Glad you brought this up. Ideally, this would be true. A charity that has failed to convince the population at large that it needs to exist should indeed fade into the night. BUT when big donors get involved, they can keep unpopular charities running long past their expiration date. And this matters because the work of charity is more than persuasion. For example, a charity could keep sending aid to a controversial foreign country, or keep building churches, or keep building private schools, or keep doing any number of things that shape society in little ways without requiring broad consent, as long as the money keeps flowing.
A wealthy enough writer can certainly avoid market forces for a while, but in the end, they can only do so much. If the book isn’t compelling, it’s not going to stick around.
Are you not acquainted with the sorites paradox?
If a billionaire builds a hospital that only offers homeopathic cures, because he wants to promote homeopathy, and the hospital keeps bleeding money, because patients don’t come, how is that having a big impact? If a billionaire funds a university that promotes liberal values in an illiberal country, how does that have an impact? If a church keeps sending missionaries and spends money on building churches in a country nobody goes to church too, how does that have impact?
If patients come, then some people want homeopathic cures. Or liberal universities, or to be converted to a church. And the billionaire is funding that opportunity, because he wants more of that in the world.
Sure, it may be wasteful to fund a hospital nobody goes to. But I don’t see the differenc between that and spending that money on yachts and hookers (if anything, building a hospital is virtuous, even if homeopathy is misguided).
Same as for books. People choose to read a book. If a writer finds writers, it’s because there are people who wanted to read that message. If people accept charity rather than reject it, they have free will (I am not counting edge cases of charity, like projects to buy and free slaves, where the slaves didn’t have a choice; in 99.9% of the cases, people can choose to reject charity).
People choose to accept charity. They have agency. A hospital, a university, or a church not remaining empty means there are people who want that.
All true.
But I thought the concern was not that the charity could keep spending money but that the expenditure would shape society, hence impact other people. That happens only to the extent that some people get persuaded, for instance that people go to the churches that are built, become more religious, and vote to (say) ban abortion.
@Ghillie Dhu
Yes, I’m acquainted with it, though not by that name. It’s a perfect illustration of why demanding lines is a bad argument. Sometimes, as with heaps, an exact dividing line just doesn’t exist. But “heap” is obviously a real and meaningful category, because people actually use it in real life with no trouble. Asking for an exact line misunderstands the nature of the problem.
@ana53294, @DavidFriedman
I have two problems with this.
One, as I said earlier, the problem isn’t necessarily with the charities themselves but the allocation of resources between them. If there are two churches that organize voter registration drives and bus people to the polls, but one has billionaire funding and the other has to rely on local donations, the first one is going to be better able to affect politics despite not necessarily reflecting the desires of the area.
Two, charities provide necessary services but have an opportunity cost. If you get sick, you’re going to go to the nearest hospital unless you’ve specifically researched it, and possibly be harmed if they’re pushing alternative medicine (which is legal). If you’re homeless, you’re going to go to a shelter, even if they won’t take in your LGBT friend and keep preaching to you the whole time. This is exploitation, not consent. Ideally, people would give money to competing charities to provide services properly; however, the distortionary effect of money means that a billionaire-funded charity can outcompete local alternatives regardless of the quality of service they provide.
How does billionaires donating to charity prevent people from donating?
If the billionaire funded charity provides better service than the non billionaire funded one, why is giving people a better option?
If a person goes to a hospital that pushes alternative medicine without knowing, does it matter who funded it? I do think transparency matters, but usually religious organizations that fund a charity are not silent about it.
If you discussed how some charities sometimes outcompete market provided options (free hospitals vs paid hospitals), I would agree that’s an issue. Long term charity can prevent private profitable solutions from emerging. Schools and hospitals are frequently non-profit anyway, though.
@ana
Obviously it doesn’t prevent donations. Billionaires can easily out-donate communities of people. My point was, this means their favored charities can out-compete other charities even if they provide a worse service.
A hospital funded publicly is accountable to the public, so people who receive bad care can go through the local government. With a private hospital, their recourse is at most a lawsuit or going to go to the press — and neither option is much threat to an organization with deep pockets. The question isn’t free vs paid; it’s a question of accountability to democratic forces. A public hospital is accountable through the government; a private hospital is accountable through the market; a charity funded locally is also accountable through the market (though less so); a charity funded by a billionaire is not accountable at all.
I disagree. If there is to be scrutiny of private activity only if they’re “too big” and not otherwise, a line must be drawn somewhere; the point of the paradox of the heap is that there’s no Schelling point for where to draw the line.
There’s no Schelling point about what is the maximum safe speed to drive at, but legistators can still draw lines. Schelling mechanisms aren’t the only co rodination mechanisms.
Why is it exploitation? Both you and they are benefiting by the transaction, and your LGBT friend is no worse off than if the shelter didn’t exist.
Is your position that it’s all right to help nobody, but someone who helps some people and not others is behaving badly?
What does “outcompete” mean in this context?
Charity A provides hungry people with rice and beans, because the people organizing it don’t want people to be hungry.
Charity B provides hungry people with rice, beans, and hamburger, because the people organizing it don’t want people to be hungry and have more money than the other group.
Charity B is “outcompeting” charity A — if they have enough food for all the hungry people, nobody goes to A. Is that a bad thing? The hungry people are getting fed better, the people who had been donating to charity A have their objective accomplished without having to keep donating.
I agree that Rob’s statements like these in two interpretations:
In the first interpretation, it’s true of just about all human activity. I would make the following translations to make it more easily interpretable to a Libertarian-oriented crowd (a crowd, to borrow Rob’s words, principally interested in “private morality”). I hope these are charitable translations that Rob would agree with:
1: [X represents an exercise of power,] -> [X has the potential for externalities,]
2: [and power deserves scrutiny] -> [so we should check if those externalities do in fact exist.]
3: [rather than deference and gratitude] -> [Some of those externalities may in fact be bad rather than the good ones we always hear about]
In the second interpretation, it is an attempt to dispel the aura of goodness surrounding X. I would translate it as “Just because ‘charity’ sounds nice doesn’t mean it is.”
I agree with my translations of Rob’s words, and yet even after making the translation I squirm with worry when I read Rob’s actual words. I worry that Rob is attempting to shroud Philanthropy in a veil of negative connotation rather than simply dispel the current positive aura around it.
I find myself agreeing with Scott that this line of reasoning is probably true of just about all of human activity; all human activity has the potential for externalities and when we analyze them we should do our best to dispel their shrouds of connotations so we can think clearly about them. This is the point of the first section of Scott’s argument, that if what you have to say about X also applies to your writing being used to criticize X, you must be careful with your words lest Scott’s powerful keyboard turn those words against you.
I’m not seeing the distinction. Philanthropy and writing both represent a big commitment (primarily money in one case, primarily time in another) toward some “other-regarding” cause. The donor in both cases is partly compensated with status and influence– arguably more so, proportionally, for writing. Are you arguing that philanthropy is dangerous because people want money more than writing? Donating more of what people want… oh the horror!
Marginal tax rate on the mean dollar that someone gives to charity instead is what? No way it’s more than 50%; a quick skim of the tax code suggests it’s more like 30%. I don’t know about you, but I’d rather even a relatively poorly directed charity got $2 or $3 than that the US government got $1. Heck, make it $1 and $1 and my answer stays the same.
Proves too much, unless you’re literally a communist. X = “writing” works. X = “open source software” works. X = “clean energy research” works. X = “government” works (uh oh). X = “literally any business that doesn’t capture all the value it creates” works (spoiler alert: Econ 101 says this is pretty much all of them).
Overall your argument gives off the weird impression that you’d be totally fine with rich folks’ charitable giving going to utterly selfish uses instead, but once they decide to be public-spirited it’s suddenly dangerous and needs to be regulated. The government has no a priori right to these dollars (or at least to ~70 cents of them). In this sense Against Against Billionaire Philanthropy strikes me as an extremely on-point response to your position.
On further reflection, this is just repeating points that Scott already made, so it isn’t likely to advance the argument.
It seems like Reich is starting from different assumptions than most of us here– he isn’t thinking in terms of benefits/harms but of *control*. This is an unfair reduction of Reich’s position, but suppose the government had a sacred right to a certain degree of control over every dollar of GDP. Then that would explain why Reich is so concerned about how philanthropy is currently structured– it violates that sacred right with respect to the dollars that are given to charity.
What I’m not clear on is whether this is purely a philosophical position, or if there’s some evidence that would convince Reich that, on balance, philanthropy ought not to be regulated more than it currently is.
The assumption that government deserves some “control” over a fraction of GDP makes some sense, if you assume as Reich seems to be doing, that the government is a perfect instrument of democracy that faithfully and unerringly carries out the mandates of its citizens.
But I don’t think this interpretation quite holds water: tax subsidies can be though of as government using its sacred right of control to encourage a certain activity, be it R&D, startups, or philanthropy. So we’re back to Reich arguing that philanthropy shouldn’t be encouraged or subsidized by the state, adding “control” here doesn’t seem to add any explanatory power to his stance.
Nor does it quite mesh with:
The subsidies framing is interesting– I hadn’t thought about that. But I think it’s still possible to fit that within the model of “control”. I take Reich as arguing that large, unconditional subsidies to nonprofits represent an abdication of control that government can and should be exercising with more scrutiny.
gbdub made a similar point about the scrutiny-without-tax-breaks in a comment below. My response is that taxes aren’t the be-all-and-end-all of government control in the economy; government also does things like environmental and anti-monopoly regulation, and we can take Reich as advocating for a philanthropy analogue of that.
On the other hand I totally agree with you that Reich’s argument amounts to an isolated demand for rigor. It involves taking an extremely cynical view of one part of the system (philanthropy and its motivations) and an extremely rainbows-and-unicorns view of another part of the system (how the government makes decisions and allocates money).
Scott’s analogy to books is an invitation for you discern between standard private uses of money and philanthropy. If you want to strictly scrutinize philanthropy without such a distinction, you fall into totalitarianism.
The answer “it’s tax-preferenced” is not sufficient, because many, many things are tax preferenced for a variety of narrow reasons. Philanthropy has a comparatively strong reason: only spending that is proximately in the public’s interest qualifies, and tax deductions only return a slice of the spent funds.
For reasons that I hope are obvious, vague allusions to “power” without strict explanations of terms are also not sufficient.
And len makes a great point above – tax advantaging philanthropy is, itself a democratic control on spending! We have democratically decided we like charity and subsidize it to get more of it.
Let me condense and translate this:
“People deciding all on their own on what to do with their money is bad. Only money that is taken by force and redistributed by the kind, wise, moral people in government (you may have noticed how much wiser, kinder etc. people in government are than average people) is legitimate. People deciding to do with their own money what they want is an exercise in power; governments telling people what to do under threat of prosecution is freedom.”
(in passing, let me observe Robert Reich? Is this nominative determinism or what?)
…I am grateful for the author for confirming that this is the point of his book.
What I would dearly love to see is Scott’s counter-argument to this from first principles. If you think it’s okay for the government to say “Excuse me, we don’t think it okay for you to save this money and spend it on yourself and your family”, why on earth is it illegitimate for the government to say “Excuse me, we don’t think it okay for you to save and spend this money on someone else and his family.”?
Also, let me add that the author’s attempt to exempt book-writing is weak. If the state – sorry, if “society” – has a legitimate concern about the effects of philanthropy, why can’t it have a legitimate concern on the spread of certain ideas?
Basic premises have a way of working themselves out to their logical conclusions.
That would pretty much be the Consequentialist FAQ, probably with some of his later writing on Contractualism thrown in as well. He believes that a government that collects tax revenue has good consequences and most people support it. Having the government strictly regulate philanthropy would have bad consequences and most people would not support it.
I’m genuinely not surprised that someone had the answer, with citation, to hand. I love this place 🙂
I will say that I find that answer utterly dispiriting. It’s relying on the idea that “people agree” and that he says such-and-such a use of power over individuals is bad, but this is good.
It is all to easy, however, to see the winds changing and government, actually existing government, deciding to agree with Robert Reich and nationalise all funds going to the “Help Starving Refugee Women and Children” charities (it’s an exercise in power, ultimately determined to help one political party/side) and instead fund the Great Wall Of Trump. Because, y’see, the Starving etc. charities only help one political side, and people who aren’t even citizens, but the Great Wall is protecting All American Citizens.
Please tell me I’ve pulled that scenario out of thin air.
This is the problem with all the specious talk about “we” you get from chaps like Reich. There is no “we” here. “We” in practice means whoever has the power at that point, and, again, have you seen who is in power at the moment?
The Ottoman Empire did more or less the equivalent when they confiscate the waqfs, I think in the 19th century.
Naked strawmanning.
Nope. Sarcasm.
Ah, so useless snark not intended as a persuasive argument, only a drive-by-smear. Much better.
How is it a smear? Reich literally writes, right here,
Emphasis added.
And also:
How is that not saying that money taken by government for redistribution is great, money spent by private individuals is bad? Or at least suspect?
Not useless at all, this is pointing out an assumption being made- namely that we should trust the government more than we should trust billionaires, on multiple metrics that matter here- kindness, wisdom, etc..
The assumption that basically the government is the voter/we can trust the government to do what we want (good things), so money going to individuals’ pet projects that should go to the government is bad.
Not that this is Rob’s main thrust, but it is important imo and pulling attention to it with a little snark in a place where people will get it makes the article more enjoyable to read (again imo)
Ah, you beat me to it. Well played.
I was thinking that the nominative determinism was that people named Rob Reich want to “rob the rich”, but your version works too.
Isn’t all spending an exercise of power as well as many other categories of human activities? Does all spending deserve scrutiny? That seems like a lot of work. It’s really hard to account for how 22 trillion dollars is spent. And it seems like philanthropy actually gets more scrutiny than most forms of spending.
Yes. As does all work, and all speech, if you buy into the premise on which this whole argument is sold. This is why I think it is so awful.
People think I’m being flippant about saying that it logically follows to regulate speech. I’m dead serious: can’t you just see Reich demanding full taxation, or even complete confiscation (sorry “resistance) to political charities he thinks are bad (sorry, “undemocratic”) while leaving those alone he thinks are good? Sure, you still have free speech, you just don’t have the right to collect or raise funds to make much use of it, while your opponents have no such restrictions.
If we’re going to engage with people’s arguments in good faith, it seems to me we’ve got to go on what they say and not what we can imagine them saying. As far as I can tell (and I could be wrong), I see nowhere in Reich’s book anything consistent with what you can imagine Reich demanding.
Reich is more or less a political scientist with an ethics bent, and a lot of experience looking at philanthropy, maybe especially in the U.S. He’s looking at how large foundations came to be, how they’re run, what their larger impact on other social systems is, and how they might be run better. His arguments look pretty modest and don’t seem to be advancing any kind of big regulatory agenda.
There’s a game of telephone that seems to go on here sometimes, where Scott has a strong negative emotional reaction to something he’s read, he extrapolates a slippery slope sense of threat from it and then his readers further extrapolate the sense of threat from that sense of threat without reference to the original material.
Fear of creeping totalitarianism or government overreach has a very high degree of salience in this group, I get that. But to take Reich’s book as yet more evidence of those things seems like a pretty big stretch to me, and in that sense, this kind of very general-level post from Scott rather than a more detailed book review feels like feeding the sharks of our more paranoid natures (not speaking about individuals here but about the paranoid natures we all have in us).
I disagree. He fundamentally sees unregulated ‘power’ as being in conflict with the goals of democratic society, which he claims to know (with a lot of hubris and lack of respect for diversity of goals).
By connecting his argument on charity to very abstract claims (like the problematic nature of unregulated power), Reich is not making modest arguments that only apply to charity, but universal arguments that have far reaching consequences when you do apply them to other situations. Reich made no argument as to why his abstract claims don’t apply to other situations, thereby implicitly advocating more regulation in those situations.
Extrapolating a threat is perfectly sensible, because many goals are in conflict. If Mary cares a lot about A and Bob cares a lot about B, but you can have more A at the expense of B, then Mary is not a threat to Bob merely if she directly argues for less B, but also if she is not committed to protecting B.
Indifference is often a threat.
Also, if someone makes arguments that, when applied consistently, would make them oppose B, yet they don’t say so, it is perfectly sensible to worry that they either oppose or are willing to destroy B (to get more A) and by making their arguments, are trying to build up a consensus for an ideology which (implicitly) rejects or is indifferent to B and which if turned into law, will explicitly harm B.
A good faith interpretation of Reich not addressing the statist implications of his argument, or addressing some of the many downsides to more regulation, is that he is being deceptive to push people into his desired direction, even though he actually believes in some of these downsides.
In itself that legitimatizes being paranoid at what Reich’s actual desired balance between concerns is, as he himself refuses to tell us.
I’m not sure I understand your objection (B). Why shouldn’t we want to spend a modest amount of potential tax revenue (which is not nearly as good as actual tax revenue) as leverage, to encourage people to commit a comparatively larger portion of their resources to beneficial causes ? It seems like a very cost-effective solution: we forego a tiny portion of potential tax revenue, but in exchange, we effectively receive free money (in the form of labor, etc.) from people who demonstrably can afford it. So, instead of putting a second story on their yacht, they’re buying mosquito nets. What’s wrong with that ?
I can foresee several objections (I’m not trying to strawman you, these are just things I’ve heard other people say):
Q: Doesn’t this just encourage people to launder money ?
A: Yes, of course, which is why we shouldn’t just give tax breaks to anyone who declares himself to be a charity. We should verify that a charity has some objective other than “put more money in the managers’ pockets”, and that it is effective at whatever it is it’s trying to do. I absolutely agree that “big philanthropy” should be closely monitored.
Q: Wouldn’t this encourage people to waste money on obviously stupid pursuits, like rescuing cute kittens instead of lifting third-world nations out of poverty ?
A: Who decides whether a cause is worthy ? Is it just you ? If not, and you propose some democratic way of allocating money, what’s better than just letting anyone donate to any cause he wants to ? It’s like direct democracy, only without any red tape !
Q: We don’t need to stimulate philanthropy, people would donate money anyway just out of the goodness of their hearts.
A: AFAIK this is empirically untrue, though I could be wrong. People donate more when they perceive a potential gain. This is true of most activities, in fact.
And when we’re talking about billionaire philanthropy, this is free labor/money/management from people who have demonstrated an extreme level of effectiveness at pursuits they choose to undertake.
Proposed compromise: charitable donations remain tax-deductible, but whenever you donate money to charity, 20% of your donation goes into a common pot. The common pot is divided evenly between all voters, who can individually decide what charity their portion goes to, as some political candidates have proposed.
This seems unnecessarily complicated.
Bugmaster, you’ve already lost. When you grant the government has the right – sorry, that “we” have the right – to regulate how people dispose of the product of their labour, you’ve granted Reich his fundamental premise. After that, it’s just a matter of pull and push.
Do you believe that people should be able to freely buy plutonium on the open market ? If not, then IMO the “matter of pull and push” is still important. If yes, then I think your political philosophy leads to certain… unfortunate… externalities.
> Do you believe that people should be able to freely buy plutonium on the open market ?
Yes.
Next question?
@Garrett:
Do you foresee any negative consequences that might possibly result in a society where everyone is free to buy plutonium on an open market ?
I think this is a misleading example. Showing up with a book that no-one cares about and asking them to pay attention to you is more analogous to waving two dollars around and wondering why no-one wants to do what you say. If you have enough money to pay people to “undertake your preferred projects”, as you say, that is more comparable to being the author of a book successful enough to get people to pay attention. Sure, maybe most authors can’t get people to pay attention to them (although some can) — but most people don’t have enough money to persuade others to do much at all (although some do). At the far end of this spectrum, we have the ultra wealthy billionaires and the extremely influential authors. Now, it appears to me that the balance is skewed way in favor of the authors here. Last I checked, Bill Gates isn’t inspiring communist revolutions. Matter of fact, if you’re a successful enough author, the government will compel people, against their will, to study and engage with your ideas as part of their education.
I work for a service that comes under the definition of a charity. I’d love to get a freshly-minted sample of Scott’s writing in my email once a week. Unfortunately, having to pay the electricity bill to power the PC to get the email to read the freshly-minted article can’t be done by offering first-go at reading the article to the electricity supply company, so yes you’ll do better by sending us money instead.
If you do send us money, I will write you a very nice, lightly personalised so it doesn’t sound like a form letter of grateful acknowledgement in return (that’s part of my job). So yes, exchanging writing for money! Send us enough spondulicks and my boss may even give you that return phone call 🙂
There is a definite point there. For instance, (and pardon the crudity of the language), I am very fucking pissed off that George Soros gave money to set up a foundation which then, in the name of its aim to encourage social liberalisation, interfered in the domestic political matters of my country by awarding funding to various groups wanting to repeal the Eighth Amendment of our constitution. I would be very happy if Mr. Soros kept his money in his pocket and his foundation (which is operating without his personal oversight on every decision, I do understand that) kept its nose out of our business.
However, (a) people do have the rights to lobby for policies that I personally disagree with, as I have the right to support policies they don’t like (b) people have the right to set up foundations and give money towards aims they hold to be valuable and worthy (c) should Mr. Soros keep his money in his pocket and not divert some of it towards charitable purposes, then that money may go to solid-gold bath taps on his fifth luxury super-yacht or whatever, but the good it could have been doing will go undone since it’s unlikely government can step in and replace private philanthropy or charity on that scale. Nobody likes paying more taxes, and ‘doing good’ money comes out of taxes. And no, that money which would have been tied up in the foundation will not all go to the treasury instead; a good chunk of it will go into some tax-efficient investment vehicle so the billionaire can buy a sixth luxury super yacht or his kids can inherit it in due time and afford their fourth divorce and sixth stint in rehab.
I agree that people shouldn’t be able to use philanthropy to aggrandise themselves or wield excessive social power. But the problem remains – block their avenues to do so via public works, and they still have all that spare dough that they can plough into running ad campaigns or buying politicians to advance their interests. Really vain billionaire Joseph Q. Vanitas may not be able to donate to the local hospital to have the Joseph Q. Vanitas Trichology Wing (speciality: hair implants for elderly billionaires) built, so instead he’ll just splurge on the Vanitas Building as the latest eyesore in the middle of the city built by the trendiest starchitect. You haven’t solved the problem of “exercising private power in democracy” by reducing philanthropy.
Personally, I think conspicuous consumption is underrated. You need a plumber to install them solid-gold taps, y’know.
You need a plumber to install them solid-gold taps, y’know.
Luckily, we know a guy 🙂
Its hard to spend money without doing some good to somebody somewhere — the question is to whom and how much. You need builders to build gold palaces as well.
@Rob Reich
Yes, people are a lot less willing to do what you ask of them if it is merely a sacrifice on their part, rather than a quid-pro-quo, where you pay for their sacrifice with a sacrifice of your own, which benefits them.
This particular criticism is a fully general critique of capitalism or even the very idea of relationships where people make sacrifices for each other. So you are again doing the very same thing that Scott notes in his review, selectively making a criticism that would have radical implications if you’d apply it generally, yet without acknowledging or addressing those implications.
Judging by Scott’s review, you see equality as one of the main goals, which suggests that you are part of a certain subculture which sees that as one of the most important goals and one that we should see as an ideal to be fully realized, even at rather great detriment to other goals/ideals. However, very many people see that goal as less important than this subculture, while seeing other goals/ideals as more important. Many of those goals/ideals are in conflict, even within that subculture (for example, diversity conflicts with equality).
It is rather common that people selectively recognize certain goals and/or overvalue them, thereby falsely asserting a universal support for a certain balance between goals and/or falsely implicitly asserting that other goals are not compromised. The result is a manipulative argument.
Your assertion that support for a flourishing democratic society means that we should see your criticisms are sufficient to enact change, appears to me to be such a manipulative argument.
Yes, just like the spending that people do to produce goods is tax-advantaged in a lot of ways. My commute to work is tax-advantaged, for example, but not my trip to a museum or when I travel for sports, even though both museums and sport is often seen as a societal good.
Criticism of all these choices is fine, but not because they are undemocratic, because our semi-democratic system decided to exempt these things from taxation, which makes it tautologically justified if you accept our our semi-democratic system as legitimate.
Ultimately, your criticism seems to boil down to an assertion that ‘our’ stated ideals don’t match what we actually do. Yet it is not obvious that the stated ideals are what people actually want from law. There are very many reasons why people can express certain ideals, yet not want them made into law. For example, they might want to push individuals into making more egalitarian decisions. Such manipulation can actually allow for less egalitarian laws, as law is then less necessary to correct outcomes that are insufficiently egalitarian.
Scrutiny is fine. The issue is that you claim to reason from a consensus that doesn’t actually exist.
When you talk about people using their money to influence people and institutions through charity, I have to ask how this is any different from people using their money to influence people and institutions through any other means?
I mean, I understand part of the answer is ‘charity is subsidized so it makes the state complicit,’ but that’s your point B. I’m addressing your point A on its own merits, we could talk about B separately.
If you want to buy a bunch of shares of a company or give a big, low-interest loan to a start-up, they will take you seriously. If you want to acquire or create a company that pursues some public-facing function, such as manufacturing cheap solar panels or publishing news articles pushing your political ideals, you can do so if you have enough money, and even operate at a loss if you feel like it. You can start up PACs and think tanks to push your preferred policies and politicians, you can buy out private museums and schools or found new ones and do whatever you want with them.
So, in practice, what is the difference between money exerting its power through charity, and money exerting its power through any other means? (aside from your point B, as I said)
Because I agree that extreme wealth inequality and the ability for those with wealth to exercise outsized power over society is inherently undemocratic, dangerous, and deserving of scrutiny.
But when Scott says you are subjecting charity to an isolated demand for rigor, I think it is because of distinctions like this – all expenditures of fund by the wealthy have these problems, so why are we spending so much time interrogating charity specifically, when it seems like it’s one of the least bad versions of this problem, and one of the last we’d want to devote our time and energy to fixing, if we were making a list?
Now, one answer to that question might be ‘You don’t have to devote your time and energy to interrogating charity if you want to focus on interrogating some other undemocratic use of money instead. But I’m focusing on it because I’m an expert on charity and I’m interested in charity and I want to influence the field of charity, so I’m focusing y efforts on this tiny portion of the larger problem, and others who are interested in the world of charity are free to engage with me.’
That’s an answer I’d actually agree with – specialization of knowledge, interests, and domains is pretty much necessary for people to operate in the complex modern world. However, if that’s your reasoning, then I think it’s incumbent upon you to make this distinction clear in your rhetoric, at least if you don’t want people like Scott to get annoyed. This might be as simple as changing ‘philanthropy represents an exercise of power, and power deserves scrutiny rather than deference and gratitude’ to ‘like all expenditures of funds by the wealthy, philanthropy represents an exercise of power, and power deserves scrutiny rather than deference and gratitude.’
As a Marxist, this was 100% my reaction as well. Any sort of disproportionate economic power will tend to translate into disproportionate political power. There is really no clear distinction between things that are “political” and things that are “economic.” Money is the power to command social labor. It is inherently 1 dollar = 1 vote. It is difficult to square that with the “democratic” vision of 1 person = 1 vote unless every person has the same amount of dollars. To the extent that we are willing to let our economic system diverge from complete equality of outcome (perhaps because there are other priorities that we think we can accomplish more effectively by doing so, such as efficiency), we should acknowledge that it is just as many paces that we take away from pure democracy. Perhaps our society shouldn’t be 100% democratic. I don’t know. But let’s be honest that this trade-off is happening, and must inevitably happen…and charity is just one (and by no means the most outrageous) example of this principle in action.
I do: no; anything that doesn’t necessarily entail a single solution for everybody (i.e., public goods) is none of the demos’ business.
+1 Marxist with that reaction. Should we form a club? It’s a bit like when people complain about foreign millionaires owning, say, banks or rentals. And I ask them why they think it would be different if they were being exploited by domestic millionaires instead?
I tend to come down on the side of end the subsidies to charity just so that nobody has to argue about whether something is or is not a charity any more. And on a more serious note, as Scott notes this amount is basically a rounding error in the amount of charity being given. Perhaps that amount is not worth as much as public faith in the collective institutions, which is lost when government basically is choosing which things are okay and which aren’t?
@citizencokane
A 100% democratic society means that the majority gets to decide who your life/sexual partner is, what you get to study, what job you get to do, what hobbies you get to do, etc.
Imagine the kind of advice you get from strangers about what you should do with your life, but now made into law.
This seems quite horrific to me.
Isn’t this a good thing? Left to its own devices, voting gives undue weight to the views of swing voters. Any counterweight to that is prima facie a good thing.
On the other hand, it’s hard to square the idea that everyone is equal with a political system that lets say 90% of the population run roughshod over the other 10%.
Well if pure democracy means complete equality of outcome then I’m all for staying as far away from that totalitarian nightmare as possible. Give me impure democracy with respect for individual rights and protection of minorities and people having the freedom to pursue their own versions of the good life. Hell, I’d take real world democracies with all their faults first. I suspect that if you ever seriously think about what complete equality of outcome would mean, you’d feel the same.
I think this “isolated demand for rigor” critique is being overused and that Reich is indeed, as you say, “focusing on it because I’m an expert on charity and I’m interested in charity and I want to influence the field of charity.” It’s both a specific instance of something he’s interested in more broadly (impact of non-democratic institutional power on democracy, say) and a specific instance that he’s just interested in, like how herpetologists often study one kind of lizard for awhile.
I mean, “isolated demand for rigor” makes sense to me if two people are arguing and one side is demanding a level of scrupulousness and evidence from their opponent that they aren’t bringing to their own side of the argument. But as a way to critique the interests of academics, it strikes me as very odd.
Like would an article arguing for better clinical trials for depression treatments be making an isolated demand for rigor because it wasn’t simultaneously arguing for better research on nutrition? We get to talk about one thing at a time. We get to pick our corners to try to improve. Because one thing may benefit from more scrutiny or accountability or transparency doesn’t mean other things don’t as well. This seems like a very weak argument to me (not you Darwin, obviously).
If it is making arguments for better clinical trials for depression that are equally applicable to research on nutrition, then yes. If it is making arguments that are specific to clinical trials for depression, but not relevant to research on nutrition, then no.
There is a difference between writing an article/book that focuses on rules tailored to a specific niche versus one that focuses on general rules (where the latter may still use one or more specific niches as examples).
My strong impression, based on Scott’s and Reich’s writings here, is that Reich tends to operate on a very abstract level that involves making general claims, yet claims to be operating on the niche level.
I think that this is inconsistent, at best.
The issue is not just that Reich makes isolated demands for rigor, but that his demands appear fairly moderate merely by virtue of not being applied consistently and because he doesn’t actually follow through.
For example, his argument implies that all philanthropy should be done through the government, yet he doesn’t draw that conclusion, but doesn’t explain why he doesn’t, either. Does he have secret arguments/beliefs that convinced him that not all philanthropy should be through the government, but that he refuses to share???
By applying his reasoning more consistently and fully, Reich would be forced to either admit that his arguments as stated demand a revolution, or to explain why his principles have limits to them, with prevent them from being applied so universally.
But we already live in a democratic society, which has decided – democratically – to give tax advantages to charitable giving across the board. We have specifically rejected an approach where philanthropy is only permitted or only encouraged when it passes an ad hoc balancing of relative social costs and benefits – rather our law itself reflects a judgement by the people that the benefits of broad charitable flourishing outweigh the costs.
Now, they may be mistaken on that view, but it’s a nonsense to say it’s not democratic.
According to the IRS’s aggregate tax data, taxpayers claimed $256 billion in charitable contribution deductions in 2017. Given top marginal rates, $100 billion is probably a reasonable upper limit on the amount of tax revenue foregone as a result of these deductions. I’ve seen even smaller estimates from sources hostile to the the charitable contribution deduction.
In that same year, the combined spending of federal, state, and local governments in the US was about $7 trillion. Why is it so important to you that the government have control over that last $60-100 billion? It’s not like taxpayers can get a 1:1 tax credit for charitable donations. Depending on marginal rates, they have to donate $2-3 to charity for a $1 reduction in tax liabilities, so nobody’s going to do it just to spite you.
From where I sit, $2-3 to charity for every $1 forgone by the government looks like a pretty good deal, especially since these donations fund a diverse array of causes to which the government is unlikely to devote much money. I think it’s important not to put all our eggs in one basket, and this seems like a reasonable way to decentralize and diversify the allocation of social welfare spending. Why would you not want society to have more insurance against Trump and the Republicans’ budget allocations?
Well said, as usual BB!
“I think it’s important not to put all our eggs in one basket, and this seems like a reasonable way to decentralize and diversify the allocation of social welfare spending. Why would you not want society to have more insurance against Trump and the Republicans’ budget allocations?”
Reich’s arguments really reduce down to a defense of master planning. He wants a master plan, and wants to eliminate or reduce the power for decentralized activity. This (Reich’s assumption) is so completely against how I think, and how I understand progress has advanced in modern society, that I find it bizarre that anyone with good intentions could believe this was a good idea. Perhaps it is just a lack of imagination on my part, though.
Master planning is a terrible idea in 99.9% of all cases (albeit not in all). It lacks feedback, lacks adequate criticism, fails to diversify values and perspectives, is awful at discovery and requires coercion and the suppression of freedom. Granted, if Mongols surround your city, a master plan may be needed. But the master planners see Mongol hordes everywhere. Now even in philanthropists.
Thanks for your comment.
Again, I have a lot of respect for you. When I wrote the original billionaire philanthropy post, the number one comment I got on the draft from reviewers I respect in various charitable organizations was “Oh, Rob Reich! He’s great!” I was happy to take your advice to read your book, and I tried as hard as I could to be fair to you, including sending you a draft of this review, asking for your thoughts, and trying to hammer out the places we disagreed before posting it. After a while you stopped responding to my requests for clarification, which is totally fair and you obviously have no duty to keep humoring me.
But I’m saying this to plead innocent to the “willfully” part of your “willfully obtuse” accusation. I am trying as hard as I can to understand where your work is coming from. Unfortunately, I haven’t succeeded. And from the inside, being an obtuse person reading a great book feels a lot like being a non-obtuse person reading a confusing book.
I am not sure I buy your argument that donating money gives you power but writing books doesn’t. I have never written a book, but I have this blog, and this has occasionally led to powerful people seeking me out, asking me for advice, and taking me seriously – much more than my charitable donations have. I’m sure that people who are more popular and have more politically-relevant writing do even better in this regard. Milton Friedman, Paul Krugman, Al Franken, or Rush Limbaugh might be good examples – I understand they did more than just write books, but the public communication was a big part of their rise to power, and the other parts (research, radio shows, etc) also seem worrying to treat as inherently political actions the way you describe this. I understand that at least one billionaire foundation takes advice from you because they appreciated Just Giving, which suggests you’re not a stranger to having power over the distribution of resources resources because of your writing work.
And having power because people respect you and listen to your advice is only one form of having power. Karl Marx’s books had more power than all the billionaire donations in history combined. It’s possible that your theory of which actions are or aren’t political makes some distinction between power you gain through networking/influence and power you gain by doing something with a direct effect on society, but I don’t think the book explained that distinction (it’s been a while since I read it, let me know if I’m wrong)
But I feel like these arguments that books are powerful still stays too deep in your frame of thinking. I just don’t buy the general idea that if anything affects society, that puts it in a guilty-until-proven-innocent realm of deserving state scrutiny (where scrutiny remains undefined and unbounded). It seems like you think otherwise, and deeply enough that you don’t really feel like it requires separate justification.
Again, I don’t think we disagree in our end conclusion, which is that charity is probably a net benefit, but that it might be useful to reexamine the tax law and foundation law around it and see if we can make it fairer and more equitable. But I continue to think that the route you use to get there, your philosophy of what is vs. isn’t “a political action” and what implications that has, is at the very least worryingly vague, and maybe not stable under reflective equilibrium.
Did they say anything specific about how he is great?
Scott, thanks for the additional comment. I admire you and your work a great deal, which is why I was (and still am) confused about the review and our apparent lack of a common framework for thinking about philanthropy.
A few background thoughts, and then let me try and pinpoint my confusion.
1. On the broad spectrum of people who think about and practice philanthropy, I think we are separated by a few small degrees. Most philanthropy is done with the heart, not the head.
2. I served for many years on the board of GiveWell, I’ve hosted Peter Singer and written in response to him, I understand effective altruism pretty well, and I have a great deal of sympathy for it. I am personally invested in seeing EA grow in popularity.
3. Part of our correspondence was to discern whether your disagreement with the book was about tone or about content. Or both.
If you agree with my conclusions, it seems reasonable to think that your main disagreements are about tone.
You dislike the dark cloud I place over the current practice of philanthropy, the idea that wealthy billionaires are up to something worth scrutinizing. The tone of the book was of course deliberate, aiming to convince people of the basic idea that philanthropy has a political dimension. It’s a mistake in my view to assess philanthropy only through the lens of private morality, giving for example EA-advice to donors. We should also assess philanthropy’s political dimensions, which are many. The simple version expressed here already: philanthropy is an exercise of power that deserves scrutiny not default deference and gratitude; and the array of public policies that structure philanthropy and give it the particular shape it has in the United States also deserve our scrutiny, policies such as default perpetuity, tax subsidies, low transparency requirements, etc.
The positive argument in the book is that philanthropy in a discovery mode serves the omnipresent need of democratic societies for long-time-horizon risk capital that seeks experimental and innovation solutions to social problems. So public policies and norms should orient philanthropy toward discovery, and that would redeem the power of big donors.
4. In some cases, it would be better for the world, and for democracy, if rich people didn’t give their money away. Some philanthropy neither makes the world a better place nor supports democratic ideals and institutions. You want an example? Try out Dylan Matthews’ take. The world would be better off, and democracy would be better off, if certain rich people bought yachts and paid taxes on the private consumption.
One main argument of my book is to reject the counterfactual default of many people, including on this thread, that any and all philanthropy is praiseworthy, even when wasteful or ineffective, when compared to the alternative of buying more stuff.
I believe you may agree with me about this. True?
5. I don’t think your problem at the end of the day is about tone, however. I think you disagree with the idea that democratic ideals are ever an appropriate evaluative framework for thinking about better and worse philanthropy. Instead, you just ask the question offered to us by private morality: good philanthropy is that which improves human welfare (or maybe animal welfare, or maybe preserves future generations); bad philanthropy is that which does none of that. Insofar as philanthropy deserves scrutiny, just apply a EA consequentialist framework, and wash and repeat.
So on substance, our disagreement is about democracy and to a lesser extent about the public/private divide.
What value, if any, do you attach to democratic institutions? I assume your answer is that they are strictly instrumental, valuable only insofar as they contribute to improving welfare.
By contrast, I think there are intrinsic as well as instrumental reasons to value democracy. This is not an argument that the intrinsic reasons to value democracy trump all circumstances in which non-democratic means can produce good in the world. I am happy to go pretty far down that route, which is why I think you and I are separated by small degree in the big picture of philanthropy.
As for the public/private divide, you see philanthropy as firmly in the realm of private activity and that there’s some hidden totalitarian spectre looming behind my work insofar as I see philanthropy having political dimensions that give citizens reason to scrutinize donors.
Maybe you accept that tax subsidies for philanthropy give it a political dimension, and then you want to focus the argument on my claims about philanthropic power even in the absence of tax concessions.
That enormous private philanthropic assets constitute a form of public power doesn’t seem remotely controversial to me. When Diane Ravitch says that Bill Gates is the nation’s unelected school superintendent, she’s not entirely wrong. And that can be true even if you agree with the Gates Foundation’s approach to education reform.
The entire opening narrative about the establishment of the Rockefeller Foundation was meant to illustrate this as well.
6. I’ll end with an observation on the clever first half of your review, substituting “author” for “donors” and “book-writing” for “philanthropy.”
You say writing a book is an exercise of power insofar as authors aim to have influence over others. I say billionaire donors exercise power by directing their private assets to some public influence. My response is that we should avoid default gratitude to big donors and instead direct scrutiny toward their philanthropic projects/causes, and ask whether they support or subvert democratic ideals and institutions, support or subvert human welfare.
As a class, authors are nowhere near as powerful as big donors. In this respect your analogy fails.
A small number of authors, and a small number of books, do of course have significant public influence. In this respect, your analogy succeeds.
But no author writes a book and expects gratitude in return. If the book is read at all, they expect (and receive) scrutiny and criticism. And praise only if the argument is any good. This is precisely what I say should be given to philanthropists.
So by extension, I think your critical review of Just Giving actually turns out to support the very argument I make about philanthropy.
Dylan Matthews does not claim that this example is worse than spending on yachts. He mentions the possibility in passing, but he does not argue for it, or even claim that he believes it.
Yes, I want an example. It is damning that you cannot give a single example. If you want scrutiny, why don’t you lead by example and apply scrutiny?
1 and 2: I agree that we agree on most things, and I’m grateful for all of the good work you’ve done for EA and many other causes.
3: “Philanthropy is an exercise of power that deserves scrutiny not default deference and gratitude”.
I feel like we’re stuck in a loop with this one, but I’ll repeat my concern one more time and then move on.
Everything is “an exercise of power”. Writing a book is an exercise of power, since you are using your privilege (Stanford professor with good writing skills) to change the world (encourage people to give money differently). Ordering lunch is an exercise of power, changing the GDP and the unemployment rate and the balance of agricultural production in different industries. Instead of the binary question “is this an exercise of power or not” (whose answer is always yes), we should be asking different questions, like “how much of an exercise of power is this?” or “is this exercise of power worrying?”
Likewise, everything “deserves scrutiny”. I would hate to be the shmuck who says on the record that something doesn’t “deserve scrutiny” and should pass completely unreflected upon. Does writing books deserve scrutiny? No? You’re saying we should just not care at all what books people write? Even if they write Mein Kampf? Does ordering lunch deserve scrutiny? Michael Bloomberg and his soda tax brigade seem to think it does.
And I still don’t have a good handle on whether you’re using “deserves scrutiny” to mean “deserves government scrutiny”. This is a much higher bar. Books deserve scrutiny from readers and reviewers. I’m much less sure they deserve scrutiny from the government.
All these phrases like “is an exercise of power” and “deserves scrutiny” hide important questions like “how dangerous an exercise of power is this?” and “how much scrutiny does it deserve?”
To me, philanthropy is one of the less dangerously power-exercising among human activities, and deserves a pretty low level of scrutiny compared to other things.
Part of my argument for this is that typically philanthropy is Pareto-optimal – the recipient of philanthropy has the same options they had before, plus some extra ones. For example, if a philanthropist builds a new art museum, you have all the same options you had before, plus the option of going to the art museum. This seems like a harmless kind of exerting power if anything does, and is certainly less worrying than things like writing books.
It seems like one of our cruxes here is your belief that philanthropy is often net-negative, which I’ll get into more below.
I also disagree that philanthropists don’t deserve gratitude. I have had so many people help me throughout my life – my parents helping pay for my medical school tuition is the clearest example – and I am absolutely grateful to them and can’t even imagine what it would be like to be the kind of person who wasn’t. I’ve had friends who have gotten scholarships (or been able to stay afloat during hard times) because of more impersonal philanthropy, the type billionaires and foundations might fund, and I am super-grateful to those billionaires and foundations for helping keep my friends safe and happy. I think Bill Gates has saved tens of millions of lives, and as a human being who wants the best for other human beings and a better world in general, I am incredibly grateful to Bill Gates. I have no desire to subject any of these people to anything, let alone some kind of harsh criticism. It feels like rewarding their immense and unprompted generosity with backstabbing and ingratitude. I feel a certain horror when I imagine my parents offering to help get me through medical school, and me responding with “I accept your gift, but I refuse to feel gratitude, and also your attempt to exercise power over me requires scrutiny”. I do think it takes a lot of reasoning and philosophy to say whether that horror should be translated wholesale to the case of a billionaire funding public health or a foundation sponsoring an art museum, but I think it makes a good starting point for other considerations to move us away from in one or another direction.
4. The Dylan Matthews link here confuses me, because in 90% of the article he’s making the argument that although the Stanford gift might have been nonzero good, other charities would have been much better. Of course I agree with that, but this seems a far cry from “it would have been better to spend it on yachts”. The only place where Matthews even approaches an argument like that is his section on “maybe training elites is bad”. That argument seems kind of sloppy – if sending new people to Stanford is bad, because they might use their newfound elite status to perpetrate harm, why is sending the current number of people to Stanford good? Isn’t the real takeaway that Stanford shouldn’t be teaching anyone at all? Given that you are a Stanford professor, I doubt you endorse that conclusion.
I agree that one of our major cruxes is whether inefficient charity is just wasteful (ie does some good but wastes the chance to do much more good) or actively harmful.
I think that most typical uses of charity in First World countries – art museums, symphonies, churches, scholarships, etc – are at worst wasteful (and at best do small but positive amounts of good).
I agree there are some categories of charity that are harmful. One that comes to mind is doing something badly (eg making a charitable hospital but then providing negligent medical care). This doesn’t seem that relevant to me – it ought to be governed by the same rules surrounding medical care as for-profit companies. It’s bad, but it isn’t bad qua charity.
Another kind is typified by the people who give aid to developing countries that ends up in the hands of dictators. I agree this is bad, though I think it shares some of the features of the case above, and it doesn’t seem to be what you are mostly talking about.
Another kind is typified by people who use charity to advocate for bad political positions. I think people generally bring up the Koch brothers here. I agree that charity should be kept as separate from politics as is possible given the difficulty of designing laws around this. But I also think that probably for every charity advocating bad politics, there’s another advocating good politics, and that overall it balances out or ends up slightly ahead. I also think this is a pretty small amount of charity.
Another kind is typified by people who give strings-attached donations that alter the way people run their schools or other public systems. I continue to agree with the discussion of that I wrong here (search for “Zuckerberg”).
I agree all of these have risks of being harmful, but they seem much less important and common on net than the good parts, and they also don’t seem to be much of what you discuss in the book (except maybe the last category).
One thing I often ask people who make this argument, is whether certain forms of charity are so bad that the government should also stop funding them. For example, charitable spending on art museums is wasteful – so should the government stop funding the arts? Sending poor people to good colleges might just make them into genocidal elites – so should the government cancel Pell Grants? So far I have never had anyone take me up on this. Usually people say that they want the government to spend more money on things like art museums and Pell Grants, and less on all the other stuff like corporate welfare and the military. But if art museums and scholarships are unusually effective government spending, and unusually ineffective charitable spending, that seems like a very strong argument against redistributing the marginal dollar from charity to the government.
“One main argument of my book is to reject the counterfactual default of many people, including on this thread, that any and all philanthropy is praiseworthy, even when wasteful or ineffective, when compared to the alternative of buying more stuff. I believe you may agree with me about this. True?”
I’m not sure I do. I think if a rich person pays for a free-admission public art museum instead of a yacht, then I would obviously prefer he do something better with the money, but I still think it’s better than the yacht. “Praiseworthy” is a complicated concept and probably depends instrumentally on whether failing to praise him would cause him to donate to EA or buy the yacht. I think in current conditions I would consider it slightly praiseworthy. I generally think this xkcd has the right idea.
If somebody told me that mocking and insulting people who donate to help cancer patients would cause those people to donate to help malaria patients instead, I might hold my nose and mock and insult them, but I wouldn’t be happy about it, and it wouldn’t seem like an obvious moral truth that I should.
5. “What value, if any, do you attach to democratic institutions? I assume your answer is that they are strictly instrumental, valuable only insofar as they contribute to improving welfare. By contrast, I think there are intrinsic as well as instrumental reasons to value democracy. This is not an argument that the intrinsic reasons to value democracy trump all circumstances in which non-democratic means can produce good in the world. I am happy to go pretty far down that route, which is why I think you and I are separated by small degree in the big picture of philanthropy.”
I agree you have described me fairly and that this is another crux.
I think that when you imagine “more democracy”, you think of it as replacing other -ocracies, like plutocracy or autocracy, whereas when I imagine “more democracy”, it is replacing the private sphere. The reductio ad absurdum I keep using – deciding what you have for lunch – is a good example. Right now is totally undemocratic – if the entirety of America wants me to have ham for lunch, I can still have turkey. But I wouldn’t want to democratize it! In general, I prefer things to be in the private sphere. I’m not a capital-L libertarian – I’m not saying nothing can ever be in the public sphere – but usually I would say things like that you need to show some kind of grave danger or deep injustice before the government can take some function over from individuals.
Philanthropy, whose failure mode is “people are better off, but not as much better off as we would like”, seems like a clear case of something that is not a grave danger or deep injustice. Your own framing seems to be that something is fair game for the public sphere if it is “an exercise of power” or “deserves scrutiny”. Again, I think this is such a low bar that it applies to almost anything. When I say this sounds totalitarian, I’m not accusing you personally of supporting totalitarianism. But preferring to have as many things as possible be democratic (ie moved from the private to the public sphere), and having very low standards for what makes something legitimate government business, seems to naturally end with everything moved from the private to the public sphere (or at least arbitrarily many things), and to me that’s what totalitarianism is.
I think possibly if we wanted to explore this further we would need a better agreement on what “in the public sphere” means. I don’t think I have a great sense of my position on this, and maybe if you do that would help.
6. I think one of our cruxes here is your sentence “As a class, authors are nowhere near as powerful as big donors. In this respect your analogy fails.”
You’ve said something like this a few times now, and I want to make it clear I just completely disagree with this, on the object level, unrelated to anything else that’s going on. My guess is Karl Marx alone changed the world more than every single billionaire donor throughout history combined. The same is probably true of George Orwell, Harriet Beecher Stowe, and maybe even Upton Sinclair. Neither Koch brother did half as much for libertarianism as Ayn Rand, and Chomsky does more than Soros can to justify God’s ways to man. Aleksandr Solzhenitsyn did more damage to the Soviet Union than the entire assembled armies of Wealth and Capitalism. And I’m handicapping myself by limiting my examples to modernity – otherwise we get Confucius, Aristotle, and Mohammed.
What did any billionaire do that can compare to any of these people? Heck, the whole reason either of are having this discussion is because Peter Singer wrote a book and within a few years half a dozen billionaires were marching to his tune. All that billionaires can do is make this or that art museum, or cure this or that disease, or if they’re really lucky elect this or that congressman. People who write good books can change the entire system of the world!
“A small number of authors, and a small number of books, do of course have significant public influence. In this respect, your analogy succeeds.”
I think you’re comparing apples to oranges here. Apples to apples would be the average donor vs. the average author – the guy who gives $1000 to his church vs. the guy who writes a mediocre scholarly text. Oranges to oranges would be a top donor vs. a top author – Bill Gates vs. Karl Marx. The authors seem to at least hold their own in both categories. It’s only by comparing a median author to a superbillionaire in the top 0.0001% of donors that you can make the donors look more powerful.
“But no author writes a book and expects gratitude in return. If the book is read at all, they expect (and receive) scrutiny and criticism. And praise only if the argument is any good. This is precisely what I say should be given to philanthropists.”
I am grateful to authors who have written great books that I love. I feel a medium amount of gratitude to authors who have written mediocre books that at least passed the time on a rainy afternoon. As for authors who wrote really bad books, I feel a tiny amount of gratitude to them for at least making an effort and trying to do a hard thing.
I think this is how I feel to philanthropists as well. I’m deeply grateful to philanthropists who have done really good work, like Bill Gates, Dustin Moskovitz, and Cari Tuna. I’m moderately grateful to philanthropists who have done okay work, like people who fund scholarships for underprivileged children. And as for philanthropists who just donate to the local art museum, well, I like art, and I’m very slightly better off than if they had spent their money on a yacht that I was not allowed to ride, and so I still have very slightly positive feelings towards them. Maybe I think less of their intelligence, because they couldn’t figure out that there were better things to spend it on. But I don’t endorse liking them less than I like someone who spent the money on themselves.
I think it’s fair to feel both gratitude that somebody made a sacrifice to help others, and to wonder whether they did so as effectively as they could have. I don’t see as strong a conflict between these two drives as you seem to. I’m imagining some soldier who runs into enemy lines with a bazooka, killing himself so that his platoon can escape. As a tactician, I might say his choice of weapon was poor and he should have used a flamethrower instead. At the same time, as a human being, I can appreciate the nobility of his action. To me these two ways of thinking go hand in hand, and both come from the same place (a place of sincerely wanting to win the war). There’s a strategic question of whether the propaganda branch of the military should praise him (and so encourage more heroism) or condemn him (and so encourage more thoughtful choice of weapons), but when I’m at home not designing propaganda I just feel both gratitude and disappointment simultaneously without any contradiction.
(I’m not saying donating money is heroic in the same way that sacrificing your life would be, I’m just using it as an analogy for how I think about praise.)
I definitely want to question donations and see if we can all work together to make them as good and well-targeted as possible. But I see this as a role for people like Dylan Matthews and not as part of the public sphere. I also think it’s important to do this in a spirit of “it’s great that you’re donating money, but…” and making sure we’re not doing collateral damage and convincing people to just buy yachts instead. I also think a major difference from you is that I feel like right now we’re probably erring too much to the criticism side already and need to remember to occasionally show some gratitude at all – the recent response to Jeff Bezos’ global warming donation (which as far as I can tell was 100% negative and vitriolic even though global warming is a pretty good cause to donate to in the grand scheme of things) is probably coloring my opinion here.
Well, this is just trivially untrue. You now can’t build a science museum or a park or an apartment building on that land. If I spend money on gun control advocacy, my end goal is to restrict your gun rights. Every choice has a cost, and people who are affected by those costs should have some proportional say in them (in contrast to your lunch example, where your choice of sandwich only affects you and maybe some poor turkey or pig.) This is doubly true in the case of billionaire philanthropy, where the wealth they’re using to make these decisions was created by the masses in the first place.
At the risk of nitpicking:
I think there’s a big disconnect here. The number of charities on opposing political sides could well be the same, but that doesn’t mean they’re equally powerful or well-funded. In an ideal political ecosystem, the relative success of these charities would be determined by the popularity of their causes. In the real world, it’s determined by the relative wealth of their donors. Basically, philanthropy is yet another area where wealth distorts democracy; instead of being a reflection of the overall populace, political charities are mainly a reflection of the wealthy populace.
I actually agree with you and disagree with Dr. Reich about the power of books vs philanthropy. I think you’re missing something really important, though. You seem to think he’s suggesting we apply a special critical lens to philanthropy that we don’t apply to anything else; in fact, I think he’s suggesting we stop exempting philanthropy from the critical lens we already apply to everything else. Yes, even books. The books you named became so popular and influential through democratic mandate; they succeeded because the market liked what they had to offer. If the people as a class don’t like a book, they won’t as a class be affected by it. There is no such democratic feedback system for philanthropy. This doesn’t mean philanthropy is A Bad Thing, but it makes the analogy ill-formed.
(To head off a potential objection — it’s easier for the wealthy to become authors, but at the end of the day, a book’s influence is by definition determined democratically, by its popularity and the persuasiveness of its contents.)
I think the comparison you made between your parents and billionaires also reveals a big disconnect. It seems like you really want to view billionaires as people making a sacrifice from the goodness of their hearts, almost like a parasocial relationship. But (a) the amount of money they give is not really a sacrifice, considering there’s essentially no earthly way to spend it all on themselves, and (b) their motivation could very easily be self-serving, and it’s not ungrateful to wonder about that. Billionaires are strangers with tons of money who like to spend that money to shape the world. Fawning over them uncritically for it is irrational. To drive the point home: you like to make statements like “Bill Gates saved ten million lives,” but those statements aren’t actually true! Bill Gates probably hasn’t saved any lives; he’s paid other people to save lives and you’re giving him the credit for their work. Bill Gates certainly deserves credit for what he’s done, but you’re collapsing all these layers of money and labor and heroism across tons of people in order to pattern-match the guy at the top to people you know personally. The people you know personally are probably pure altruists, and you can know that with reasonable certainty. But you don’t know other philanthropists personally, so it seems dangerous to just assume pure altruism.
For the philanthropist to build an art museum, he’d have to have the rights to the land; given that he does, you didn’t have those options before he built it either.
Act,
“
I guess I might argue that “Pareto optimal” might not be exactly the proper term, but certainly it is a positive sum situation from a Kaldor Hicks definition. We are collectively better off with the art museum, even though the apartment building or science museum now need to be somewhere else.
“
I am not sure why you assume this is true. I am massively affected when the girl I have a crush on chooses another for her boyfriend. But nobody believes it would be wise for me to have a proportional say in her decision.
A properly functioning society has to determine what types of harms are acceptable, and which types are not, and who gets a say in what. In general, successful societies permit pecuniary harms, harm caused by open competition according to the rules, harms caused by sharing true facts, harms used by official bodies in retaliation to unjust harms, and so on.
I actually have created a list of the at least twenty types of harms possible in human interaction. It is impossible to eliminate all harms, as some are essentially contradictory (the harm caused by restriction of freedom vs the harm caused by using the freedom to punch someone).
A billionaire made via a reasonably free market did not get wealth created by others. She captured a piece of the producers surplus created by her insight, investment, delayed consumption, effort and managerial expertise. She created consumer surplus and made the world, in total, per Kaldor Hicks, a much better place and was rewarded in producer surplus.
@Ghillie Due
Suppose the land is valued at $X and it costs $Y to build the improvement of my choice on it. If I have $X+Y in my budget, I have the option of purchasing the land and using it. Once the art museum is built, the value of the land increases to $X+Z; now buying the land and using it is $X+Y+Z, larger than my budget. (And of course the cost of using it for my purpose might increase as well.) “I” of course could refer to an individual, a government, or some other organization.
@Swami
The difference is important, though. Some people become better-off and others become worse-off. Even if the net is positive, why should billionaires get to decide who gets the short end of it? This type of tradeoff is common and unavoidable, but at least under many circumstances there is societal consent involved in which side to pick (and where there isn’t, that’s also a problem).
Good point. My instinct is to argue you that in this example, you DID have a say; you had the opportunity to persuade this girl to date you, but she used her much larger say (since she has a much higher stake than you in her own romantic life) to override yours. However, I don’t think this is especially accurate to how dating works, so instead I’ll amend my statement. Any population affected by a decision should have a say in that decision proportional to the effect. (For example, Scott’s choice of lunch might have negligible effects on the local economy, so other people’s say should also be negligible. But if a businessman wants to build a pollutant-emitting factory near a water source, the people who have to drink that water should be able to collectively veto.) I think it mostly holds up in individual interactions, but as your example shows, interpersonal relationships play by different rules than intrasocietal ones.
Nobody makes a billion dollars on their own. Billionaires are created by:
-economic conditions they had no hand in bringing about
-infrastructure built by the state
-effective use of other people’s labor
-luck
-frequently, unethical business tactics
People don’t live or work in a vacuum.
I agree with your comment that some harms are unavoidable and functioning societies need to decide which ones are acceptable. The point of my post is that, in practice, the wealthy have a disproportionate effect on those decisions relative to society at large. This includes philanthropy, which is why we should treat it just the same as any other activity with societal impacts.
I’m not sure that tracks, but I need to work through the hypothetical to better identify where.
1) Billionaire philanthropist owns a parcel of land on which he wants to build an art museum; he values the land with the art museum on it at $X+Z.
2) You’re willing to buy the unimproved land from him for $X in order to build a science museum at cost $Y.
3) If it will cost him more than $Z to build the art museum, he’ll sell you the land for $X; once he’s already built it, you’d have to pony up $X+Z.
I think the crux of it is that you only ever had the option of buying the land for $X if that was more valuable to the owner than using it to build an art museum. But that’s true of all assets, not just land, and it’s true of any intended use, not just philanthropic projects (replace “art museum” above with “factory”, “mansion”, or “wildlife preserve” and see that none of the logic changes).
@Ghillie Dhu
Remember that the land could be held by a third party initially. The billionaire doesn’t start off owning all land. Yes, this logic applies to much more than philanthropic projects! Land increases in value when it is improved — there’s even an industry around buying, improving, and reselling land. This aside wasn’t intended to single out philanthropy as unique, but to refute Scott’s claim that nobody’s options are reduced (which would in fact imply that philanthropy is unique).
@Everyone who is not Act II
One assumption of Pareto efficiency is that only market exchanges are available. But in the real world we have options that are available that are non-market interactions. And the reduction of these options can indeed make people worse off.
The slight of hand in these “economic efficiency” argument, as typical, is the equivocation of economic value and utility.
Act,
I am having trouble following your argument here. We agree that in positive sum social improvements that it is possible for some to be harmed (a Kaldor Hicks improvement — where the winning parties could in theory hypothetically reimburse the losers thus creating a Pareto improvement). I think we agree that societal consent (though not necessarily formal) is preferred. I see this as done over time via the institutions, laws,norms, court precedents and so on.
I don’t see where it is a good idea to change the burden of proof (for harms widely considered by society as acceptable) when being applied to billionaires. An ice cream vendor should have the same right to open a competing store front as an ice cream store owned by Bill Gates. And if people have a right to open ice cream stores, in general they should have a right to open a thousand ice cream stores.
“Any population affected by a decision should have a say in that decision proportional to the effect.”
As a rule of thumb, I would agree only if it was consensually agreed in advance. I would say that society should determine in advance what kinds of harms it wants to be concerned with (via representative government, court cases, informal norms, and social evolution). It should not second guess decisions after the fact based on their impact. The same rule of thumb should be applied consistently aka the rule of law.
If you feel different, then you should try to convince us of your theory. If you can convince us to try your ideas. I will work against them. If I lose, I will consider whether to stay in that society/locale or exit it, or whether to protest and try to change it back. Good luck.
“Nobody makes a billion dollars on their own.”
Nobody does anything on their own in a market economy which is pretty much by definition composed of division of labor and voluntary exchange. And in every case, our outcomes are codependent on economic conditions, private and public infrastructure, consensual arrangements with suppliers, employees, investors, etc, and zillions of other codependent variables among 7 billion independent actors with distinct goals and designs.
Markets are complex adaptive systems, and billionaires created within markets are those who added more value, adjusted for supply and demand, than most of us. The biggest difference between me and Bill Gates is that he added a hell of a lot more economic value to the world than I did (and I contributed quite a bit). I would suggest we send a thank you card to Bill, but we have effectively already done so by recognizing him with his wealth.
Wealth in a market economy, is roughly a more sophisticated form of social capital as earned in forager tribes for those making outstanding contributions. Foragers have members with high statuses prestige as recognized informally by others. Markets convert the informal social capital of hunters and gatherers into formal dollars and cents.
You seem to have disdain for billionaires. I have respect for their contributions. I believe society would be better off with more billionaires, and with the billionaires becoming trillionaires.
We obviously differ in our outlooks, but it is rewarding to discuss the issue with someone with such a different perspective.
Thanks.
True but irrelevant; if you and the billionaire are both interested in buying the land from the current owner, you’re willing to pay $X and he’s willing to pay $X+Z-(cost to build art museum), you still end up with the land if $Z<(cost to build art museum) and he ends up with it otherwise.
This is false, at least if by democracy you mean a system where decisions are decided by votes. Voting gives disproportionate power to the swing voters, the say 4% who can take a vote from 48% to 52% and thus determine what laws get passed (assuming a 50% threshold of course, adjust if needed). A democracy can neglect the interests of significant shares of its voting populace indefinitely.
I’m not anti-democracy, every other governing system has worse faults. But I do think that counter-balances are important.
Not all philanthropy is praiseworthy, but having a social norm that praises self-sacrifice for good intentions is quite obviously useful.
Imagine the charity shows otherwise: “And here we have John Smuck, who just donated $5000 to the fight against cancer, thereby subverting the democratic process by denying the government tax dollars and undemocratically allocating it selfishly to find a cure for a disease that he’ll likely die of! Can we have a round of boos for this guy?”
5. Assigning intrinsic value to democracy or any government (that is to say, having government as an end-goal in itself) seems to be about a half step short of totalitarianism on a pretty slippery slope.
Across history, the impact by authors as a class have greatly exceeded the impact of donors and philanthropers as a class.
To me, it seems that you are arguing for something more dangerous and insidious than mere removal of tax subsidies or greater regulation around philanthropy. You are arguing for removing the norm that philanthropy (and attempts for doing good in general) be met with gratitude, and that gratitude replaced with suspicion. That is also asking for a reduction in trust levels in society, with massive impact beyond mere philanthropy. It seems to me that Chesterton’s fence has not been given sufficient consideration here.
It’s not my main motive, but I hope that people who find my writing informative or entertaining will feel gratitude, and some appear to.
A single counterexample is sufficient to make your statement false.
My interpretation of science fiction fandom is that the driving energy is the gain from putting authors in contact with readers. Seen from the point of view of his neighbors, the average author is nobody special. To his fans, he’s a hero, someone they would very much like to meet and talk with. Being treated as a hero is, for many of us, intensely pleasurable, status being one of the things humans value.
Gaining status is not the only reason for charity, but I agree that it is one reason. Ditto for writing books.
Wealth is the spoils of (economic) success, and philanthropy is the (shittiest of the) spoils of wealth. We are interested in allowing wealthy people to do what they want with their money, since this is what it means to be wealthy. If rich people are strictly limited in how they can spend their wealth, it is as if they have been issued so many food stamps, as if they are on the government dole, at the behest of the state, and all they have beyond the poor is a (stronger) guarantee against hunger. Whereas in fact wealth is supposed to amount to a certain amount of societal control, qua being wealth.
A utilitarian would agree with this on the basis that he still demands that human beings carry out his will, and those humans will only do so when properly incentivized. Furthermore, he would concede that different people provide highly disproportionate contributions, with some being the interchangable labourers, acting out the will of their bosses, and others being the geniuses that create the systems and institutions through which society thrives. If we merely reward the genius the same way as the labourer, we fail to incentivize his contribution. To place a hard cap on the possible reward is to declare our indifference among the highest ranks of contributions, as if we think the greatest of them no better than the least.
Non-utilitarians are typically willing to concede this as a matter of fact, taking the stance that a person should be able to live their life however they want by default. That intervention needs to justify itself, not non-intervention. This standpoint is I think the one scott takes when he mocks your work, as it relates to books, but we needn’t take it in order wealth.
Having decided to allow wealth to accumulate, and furthermore requiring that it not be mere monopoly money, we can still place limitations on its spending. Here is where we decide to tax certain things, and therefore to not taxes more preferable things, to ban certain things, and to invest public money in other things. Given that a rich person might spend their money on any legal thing they desire, we offer to give them a reward if they choose to invest it in certain things in the public interest.
This latter paragraph is the reasoning of the “Against Against” post. Yes, perhaps the rich don’t always direct their charity in the ideal direction – but we can all agree that expensives yatchs are among the poorest possible uses of their money (from the public standpoint). The OP instead grapples with the earlier paragraphs, as “what limitations should the rich suffer on their wealth?”.
Given the reasoning of the second paragraphs, we cannot limit them to their own private interest. Because of the sorts of things that can be done with large amounts of money, once you ban public interests, you begin to apply a hard cap on how much useful wealth a person can accumulate. Having bought enough manors, yatchs, planes, having hired the most expensive chefs to cook the finest dishes for ttheir every meal, where else might a person direct their money? There is one answer, really, which we can divide into two further subcategories: they might invest it in a company. In the first case, they might expect to make their money back (and then some, presumably); in the second case they would not. This latter kind is, in general, charity.
Notice that starting companies is how it is that the new systems and institutions that make our society better are created, which is how we justified wealth accumulation in the utilitarian case. Such a company will of course take a great amount of money to make, and we have missed the point if we expect individuals to beg the state aparatus for this funding. Instead, we expect to follow a simple feedback loop: the genius starts a company, becomes successful, gets more money, and uses it to start more companies. Rather than being incidental, this the preferred mode of wealth creation and use.
We can still argue about which sorts of companies we would prefer them to create. Immediately, it seems that charitable organizations are likely to be preferable: whereas a profitable corporation aims to extract wealth, and oftentimes falls into rent seeking behaviour, a charitable organization typically directs itself squarely towards benefiting the public. But perhaps this is not the whole story. Profit seeking corporations might only effect our lives incidentally, whereas charities affect them totally. But this does not seem to be the case, as our every waking hour seems to be spent using the products of corporations, from waking up in a bed we purchased, to the roads funded by a the public fund but built by a private contractor, to every other aspect of our lives. Charity, in fact, seems to be the exception, since the majority of people think of charity as something they give, not that they recieve.
Another argument against charity is this: since a corporation can only ever pursue those things that will lead to profit, it is necessarily beholden to the public, and therefore has no power itself. It is like a peon, a servant. A charity, on the other hand, needn’t seek profit, and can in fact be a continual money sink; it can pursue things that no one is interested in, and in fact are against their preferred interest, so long as its benefactor continues to have spare funds. This might seem like an insidious problem, but it must be extremely rare, if it happens at all. If I am spending gobs of money, I must be trying to benefit someone in doing it. Two parties are considered: private interest – myself or someone close to me – and the public at large. The first is the case of the profit seeking corporation, the second of the charity.
Consider political donations: we know that some people who make them are trying to improve the government and society, but botch it up, and thereby make society worse off. But we shouldn’t forget those companies that use political donations to their own individual ends, against the interest of the public! On reflection, we see this as an argument against allowing private money to subvert the democratic process, and not an argument against the charitable subcase of this, nor against charity in general. I think you would find that this can be applied more generally. Where charitable spending is bad, spending money in the same way towards private ends is surely much worse. We might consider limiting this sort of spending, as per paragraph 4. We have not managed to demonstrate a problem with charity in general.
Charity can have a paternalistic component to it, where the charitable person gives what they think the other person needs, rather than what they want.
This runs into the same problems as central planning. Judgment of what the other wants can be quite poor, including being biased by selfishness. The market is quite good at making people give others what they desire, ‘punishing’ selfishness by being outcompeted.
This means that more selfish charity, where people donate to things they benefit from (like a museum that they like to visit), may actually be better at actually satisfying demand, although with the downside that it helps those who are similar to the giver more.
>Conclusion: even if we eliminated all tax subsidies, we’d still be left with big philanthropy as an exercise of power. So it would still deserve our scrutiny.
Does this not generalise to any private spending whatsoever? Once you have eliminated the tax subsidy spending on a philanthropic cause is effectively just spending. If big charitable spending justifies scrutiny, why limit to charitable spending?
Is spending big on a hobby not an exercise of power? Or on a yacht? Or in buying a business, or buying land, or hiring a security guard? How does it differ from spending on, say, a hospital? All are exercises of power. I am dubious that you can draw a meaningful distinction here. If you can say that some of can be judged to not be an exercise of power, then who draws the distinction?
And once you allow government oversight of big private spending, say over $10m, why not over $5m? Or $1m? Bit by bit you can justify government scrutiny of all private spending and I am not happy with that at all.
I agree with you, but to be fair, I think we do need at least some scrutiny over some private spending. For example, if I go out tomorrow and buy 10 kilos of plutonium, then perhaps the government should take some interest in my activities (however innocuous they may turn out to be). I also think that we should regulate vendors to some extent. For a non-nuclear example, if my company sells alcoholic beverages, it would be in the public’s interest for the government to occasionally inspect my wares, just to make sure they aren’t full of methanol. Sure, we could theoretically wait for people to start dying from drinking my antifreeze-laden booze and let the market take care of things, but that seems like a rather costly solution, in the long term.
Is a reasonable reading of Reich’s argument is that he is concerned that too little scrutiny is currently being placed on charitable activities compared to those which are commercial? Perhaps we already have, in Reich’s view, sufficient controls/scrutiny on commercial activities, but not enough on charitable ones, hence the argument for more on charity in particular?
I feel like this book/thread/argument is grasping at the surface of a more fundamental question abut how we order society, and manage the power people have over each other. It feels like not quite the right questions are being asked.
I don’t think Reich is looking at the whole world and asking “what shall we regulate more or less?” He’s got a multi-decade interest in the ethics and politics of philanthropic giving and philanthropic institutions. He’s asking “What’s been the influence of these large giving institutions on our democracy?” and “How might their role be improved? (and here’s what I mean by improved…).”
He’s an academic with a specialization looking at his corner of society. So he’s not comparing scrutiny on philanthropy to scrutiny elsewhere. He’s looking at the system he’s interested in and asking how it could be made better based on things he values.
No, that is not in any way reasonable. If he means something so simple, he should say it. Since he doesn’t say it, he means something different (if anything).
I’m utterly perplexed by this claim since Scott’s faux-review is almost entirely comprised of political statements e.g. “Books appear at odds with democracy, for they represent, by definition and by law, the expression of plutocratic voices directed to public education.” And Scott’s concerns seem explicitly political: e.g. worrying that these arguments prove too much and support totalitarian over-reach (my gloss of course).
Yeah, I had the same reaction.
I.
So now you have gone and read the blog. A proper review of the actual writing. What’s more, it contains great humor and cleverness. It’s also willfully obtuse.
Words as used to communicate with others are definitionally the direction of private ideas to some public-facing or other-regarding influence. Philathropic donation is in one respect other-regarding – philanthropists want others to act (and perhaps be influence by) the donations that they give. But is donating the same kind of power that writing is? Not at all. Try showing up to an exchange of ideas by paying the individuals present in an attempt to persuade them to believe something you assert. Then show up in the same setting with a persuasive written argument and see what happens. Try sending a Professor designing their curriculum a check and see if they take you seriously. Then try sending your book and ask to be cited.
Leaving this entirely aside, your comment shows that you’re only willing to think of charity from the perspective of political power. But the review’s very purpose is to criticize the very political power frame in evaluating philanthropy.
Basic ideas that animate the review:
A. All economic activity – including philanthropy and book writing – represent the direction of private assets toward some public-facing or other-regarding influence. In this respect, all economic activity represents an exercise of power, and power deserves scrutiny only insofar as it causes demonstrable externalities.
B. In many, but not all, liberal democratic societies, activities surrounding the exchange of ideas are generously tax-advantaged. This means that all citizens lose out on revenue that would otherwise go to the treasury.
Conclusion: even if we eliminated all tax subsidies, we’d still be left with idea exchanges as an exercise of power. So while it would still deserve our scrutiny in terms of checking for obvious externalities, the argument is true of all activities pertaining to the economy or influencing ideology. Sometimes the exercise of that power should be resisted (e.g. advocating for a policy that may reduce philanthropic giving to causes that massively improve human wellbeing). In other places it might be welcomed. What is the framework by which we can distinguish between written power that is welcome and that which is to be resisted? The answer is found in the goals or ideals of a sound moral reasoning (“Victorian Sufi Buddha Lite” for ordinary discourse, consequentialism for policies).
I would have thought that the identification of a sound moral reasoning framework as the grounds on which to referee good from bad arguments is where you would object. As someone with affinity for democratic ideals and political power frames, perhaps you think moral reasoning has no special status at all. You might not care about private moral or consequentialist approaches to problem-solving. You care about analyzing how groups wield power (and maybe the wellbeing of the public). But not a hint of this frame appears in the comment.
The set of argumentative norms that currently exist to structure debate surrounding philanthropic giving are indefensible — it lacks charity, adherence to logic, and a focus on consequences. That accounts for the review’s critical tone.
The review also is a staunch defense of the role that writing should play in a society with sound moral reasoning. Writing is not just remedial, something to be dispensed with if only we could achieve truth. To play this role, policies and norms would have to change.
II.
I hope I have steered the conversation in a true and necessary direction, for I do not think I have been particularly kind in my rewriting of your words, Rob. I am still unconvinced that your argument applies to charitable giving in a way that does not apply to nearly all of human activity, and therefore your argument “proves too much”. All economic activity involves a use of power and creates externalities in one form or another and therefore falls under the same argumentative domain you carve out for philanthropy. In your terms, economic activity involves “the direction of private assets toward some public-facing or other-regarding influence” to some degree. Economic activity, when viewed as a use of power, almost never perfectly aligns with the stated desires of the public and it almost always causes people to do things. Should every economic activity therefore be the subject of “Public Skepticism”?
I am squeamish when I read your argument since putting all actions under “public skepticism” sounds like it could be disastrous depending on what exactly that means. I interpret public skepticism in one of two ways: conversationally (i.e. “It can be the subject of public discourse”) or in a regulatory manner (i.e. “We should regulate it under the auspice of the public interest”). These interpretations both seem partially true. In the conversational case, I merely disagree with your word choice; all activities can be the subject of public discourse, but I don’t really think of this as public skepticism. The regulatory interpretation is also partially true since we do in fact regulate some activities and most people agree that this is good (that some regulation is good, not that the particular regulation we have is good). But in the extreme, it is obviously totalitarian (since all regulation of all activities is bad). Perhaps these two frames are personal limits of mine and Rob has another more clarifying interpretation of his words that alleviates my squeamishness (e.g. ways in which his arguments do not apply to all of human activity or a hidden third interpretation that I am not seeing).
The word ‘skepticism’ also implies that we should merely look at the downsides of non-democratic choices. Yet they can also be better than democratic choices.
I find this statement poor. You are asserting that no one could defend this set of policies? I certainly would and I am sure many others would as well.
Tax law is designed to tax net inflows. That’s why we deduct business expenses. Charity is properly excluded from income since you receive no direct benefit from it. It is no one’s business what you donate your own money to or for how long. Government can raise however much revenue it wants to, charity is in no way preventing it from doing this. I.e. it can offset charitable deductions with higher rates or anything else, just like it offsets a failure to tax your benefit from your own labor (mowing your own lawn, raising your own children) with income taxes.
Indefensible does not mean that you can’t argue for a thing. It means that the arguments don’t justify the thing. Of course this is a statement of opinion, not fact.
Pretty much. In both cases, it is power only to the extent that some other people go along — read and are persuaded by the book, accept money from the philanthropy and do things it wants them to do. In both cases it affects people who have not agreed to go along. The philanthropy might subsidize research that supports some public policy that will be imposed on me. The book might persuade people to behave differently in ways that affect me, perhaps by supporting public policies that I don’t like.
Books may be more powerful. Do you think it’s clear that the Koch Brothers have a greater long term influence than Ayn Rand? Soros than George Bernard Shaw?
It is an exercise of power in the sense in which your going to the grocery store represents an exercise of power. You offer to buy certain things, that gives other people an incentive to produce those things. You don’t seem to be distinguishing (I haven’t read your book, am going by your comment here) between exercising power in the sense of forcing other people to do things and exercising it in the sense of offering other people deals they may accept.
Of course, philanthropy does exercise power in a different sense — if the Ford Foundation funds research which purports to show that population growth is a terrible threat, that may result in China imposing a one child policy and, among other things, forcing some women to have abortions.
But that is equally true of books, magazines, teaching, any human activity that affects what other people believe. It is quite obviously true of the book of yours that you are defending. Do you regard writing it as an exercise of power? Does it deserve scrutiny in the sense you are arguing for charity — should you be allowed to write and publish the book only if it is decided that it serves democracy?
You don’t say here what your argument is against foundations surviving their founders. There is certainly a practical argument from the standpoint of the founder — there is little reason to think that Ford or Rockefeller would approve of how their money is now being used. When my parents set up a foundation, one of the terms was that, a certain number of years after the last of the founders died, it should stop using their name — and it did. But you appear to want to take that decision out of the hands of the donor, who might have a successor he trusted to continue spending the money as he wished. Why?
And the Koch Brothers, as I understand it, are libertarians because their father was persuaded by Robert LeFevre, a charismatic and somewhat nutty libertarian pacifist, friend of Heinlein’s, and partial model for Prof in The Moon is a Harsh Mistress.
Books may well be more powerful than philanthropic activity, but they gain their power from people reading them and being persuaded by them, iow partly, at least, from their relevance or merit. The power in philanthropy, on the other hand, scales more or less with the sums involved (and how well-planned the spending is). So that for a very wealthy philanthropist to influence society, they can spend money, but for a very talented author to influence society, they at least need to do it by persuading a lot of people.
How did billionaire philanthropists such as Bezos, Gates, etc. obtain the money they are now spending on philanthropy in the first place?
I would say talent, hard work and a great deal of luck.
But I don’t think it’s good to let person A influence society more than person B because person A is better able to amass fortunes. Whereas it may be good to let person A influence society more than person B if person A has more persuasive arguments, or ideas better suited to the times.
How about, getting back to books, if person A’s ideas are no better, but he is a much more talented writer?
@Simultan
If the ability to amass fortunes is correlated with being able to make decisions that serve people’s desires, then logically, the rich person is better capable of influencing society to better serve people’s desires.
Of course, the question can be asked whether the rich person will actually seek to serve people’s desires, rather than his own, when spending his money, rather than when he is paid to serve others.
I suppose you mean talented as in good at persuading people. Yes, that would be an interfering factor. (I can think of some others too – having a wealthy publisher, being already famous, having English as a native language – though these are more related to the book’s spread and less to its contents.)
But at least with books merit is part of the equation. I think that, especially in the long run, looking at the Western canon, say, merit tends to win out. Schopenhauer agrees:
“Seneca says, in an incomparably beautiful remark, that merit is followed by fame as unfailingly as the body is followed by its shadow, but, like the shadow, sometimes walks in front of it and sometimes behind it, and, after having explained this, adds: ‘Even if envy has imposed silence on your contemporaries, those will come who judge without resentment and without favour.’”
You preempted my response! If there were a positive correlation between people’s ability to accrue wealth and their willingness and ability to carry out effective philanthropy, then I think the allegory would be stronger. I don’t really see it, but I am open to being convinced. (That still leaves all the philanthropists who did not earn but inherit their wealth, though.)
And the same is true with the ability of the Koch Brothers or Soros to persuade people of their ideas by spending money doing so.
Do you mean that their ability to amass wealth (or to expand it at least) correlates with the goodness of the ideas that they spread?
Or that their success in using their wealth to spread them has such a correlation?
That wasn’t what I meant, although I suppose there is some correlation — you are more likely to make money if you have a more accurate picture of the world.
But what I meant was that true ideas are, ceteris paribus, more convincing than false ideas, so easier to spread. Not as much easier as one would like — easy to understand ideas are also easier to spread, and not necessarily truer.
I have a problem with scrutinizing philanthropy as an exercise of power because it moves resources or influences decisions. By this criteria, every way that someone spends money is an exercise of power. Everything someone does diverts resources. Spending on luxuries is an exercise of power. Investing is an exercise of power. I don’t think that philanthropy can deserve greater scrutiny than either of these.
I’m also unsure how much less scrutiny philanthropy gets than investing. Publicly held companies do have stockholder control and some transparency. Most large charities have transparency as well. There are black box charities where it is unclear exactly what is going on. There are also privately held companies that are just as obscure.
Spending on personal consumption is an exercise of power that gets less scrutiny than charity. It seems that it has to be proven not just harmful, but malicious for personal consumption to be meaningfully condemned. Purchasing diamonds indirectly from slave driving warlords gets a pass for personal consumption.
Hi, M. Reich
Can you expand on “Philanthropy is not just remedial, something to be dispensed with if only we could achieve social justice”?
Assuming we could achieve utopia, what need would there be for philanthropy?
The ability to scrutinize power IS power, measured on a larger scale.
If there is someone who is required to scrutinize what power private individuals exercise with the surplus value they have been credited with (for example, making sure that actively harmful 501(c) organizations don’t get funded), then there must be someone who scrutinizes their decisions (to make sure that organizations aren’t designated as ‘actively harmful’ because they offend or fail to bribe the official in charge), and they need their own scrutiny, and we have an infinite recursion that needs to be broken out somewhere.
This infinite recursion has, in fact, already faulted: When the US courts ruled that 501(c) organizations could also be devices of partisan politics without limits, many partisan political organizations became charities on paper in order to benefit from government subsidies to charity, causing much controversy.
But you explicitly claim that even without the subsidy, we should still restrict the exercise of power. I therefore ask directly: What person can be trusted to decide which books to allow to be published, and which donations are allowed to be made?
well, I agree that charities shouldn’t be tax advantaged, any more than any other kind of spending. But money expended in any manner gives power, that’s the whole point of money; that’s why people strive to gain it.
If people gain their money without breaking any laws, and spend it without breaking any laws, you have no right to criticize what they do with it– if they spend it on stamp collecting or giving scholarships to left handed Lithuanians. Loudly and publicly criticizing their private decisions on how to spend their own money is nothing more than bullying, and the opening round of attempted theft. You want control–veto power over how they spend their money. with the implied or explicit threat of loudly denigrating and demonizing them if they don’t knuckle under– and if that doesn’t work, drumming up a mob (oh precious democracy) and taking it away by force. That’s real popular these days, but it is still despicable.