Zuckerbergs’ New Philanthropy Promotes Charity over Justice

In Fire in the Ashes, a reflection on twenty-five years’ of writing about the challenges for families and schools in very poor communities, Jonathan Kozol considers the difference between charity and justice: “(C)harity has never been a substitute, not in any amplitude, for systematic justice and systematic equity in public education… (T)he public schools themselves in neighborhoods of widespread destitution ought to have the rich resources, small classes, and well-prepared and well-rewarded teachers that would enable us to give every child the feast of learning…. Charity and chance… are not the way to educate the children of a genuine democracy.” (p. 204)

Public education serves more than 50 million children in cities, towns, suburbs, and rural areas across the United States.  Public schools are the quintessential institution of the 99 Percent.  But these days, the policy that shapes our public schools is being increasingly driven by the focused investment of the wealthy philanthropists in the One Percent. Charity—by which wealthy donors choose their favorite worthy causes— has driven hedge fund money to Eva Moskowitz’s Success Academies in New York City, invested Gates Foundation money in Hillsborough County, Florida to experiment with merit pay for teachers based on econometric measures, and resulted in Mark Zuckerberg’s $100 million gift to charterize a large number of schools in Newark, New Jersey.

Charity can be disruptive and experimental—try something new, see whether it works.  By its very definition, justice must be systemic, and it must embody the principles of adequate investment, equitable distribution of resources and opportunity, and stability.  Justice in the way we educate children across America can be achieved only if the institutions and laws of our society are framed to distribute distribute opportunity for all, not just for some who are especially “deserving” or whose parents know how to play the school choice game.  Public schools have historically shown themselves to be the optimal way to balance the needs of each particular child and family with the need to have a system that secures the rights and addresses the needs of all children.

What brings all this to mind this week is the establishment of a new mega-philanthropy by Mark Zuckerberg along with a new report from The Institute for Policy Studies, Billionaire Bonanza: The Forbes 400… and The Rest of Us.  Here are some of that report’s findings: “America’s 20 wealthiest people—a group that could fit comfortably in one single Gulfstream G650 luxury jet—now own more wealth than the bottom half of the American population combined, a total of 152 million people in 57 million households.  The Forbes 400 now own about as much wealth as the nation’s entire African American population—plus more than a third of the Latino population—combined.  The median American family has a net worth of $81,000.  The Forbes 400 own more wealth than 36 million of these typical American Families.”

The report’s authors, Huck Collins and Josh Hoxie, emphasize the shocking economic divide by race and ethnicity: “As of October 2015, the homeownership rate for white Americans stands at 71.9 percent.  By contrast, only 42.4 percent of African Americans own their own homes and only 46.1 percent of Latinos.  Ownership of corporate stocks, a valuable store and generator of wealth over time, appears even more skewed, with 55 percent of white households owning at least some stocks, but only 28 percent of African Americans and 17 percent of Latinos.” “An even more striking statistic: The wealthiest 100 members of the Forbes list alone own about as much wealth as the entire African American population of 42 million people.”

The authors explain some of the ways our society’s growing inequality matters: “According to research across several academic disciplines, extreme inequalities of income, wealth and opportunity undermine democracy, social cohesion, economic stability, (and) social mobility…. Extreme inequality corrodes our democratic system and public trust.  It leads to a breakdown in civic cohesion and social solidarity…. Too much inequality disenfranchises us, diminishing our vote at the ballot box and our voice in the public square.  Wealthy donors dominate our campaign finance and lawmaking systems….”

The authors list members of the Forbes Top 20, several of whom have been deeply involved in driving public policy in education—Bill Gates, Mark Zuckerberg, Michael Bloomberg and four different members of the Walton family.  Mark Zuckerberg stands out as this month’s example, because on December 1, after the birth of his first child, he set up what is described as a “limited liability corporation” as a way to distribute a mass of his fortune to charity during his own lifetime. Josh Hoxie describes how Zuckerberg’s new philanthropy will work:  “The Internal Revenue Code defines various kinds of tax exempt charitable entities and sets standards for their governance.  For example, all the tax returns of non-profits and charities are public and online.  If they make grants to other entities, those grants are reportable.  Directors’ names are disclosed and any hint of self-dealing or conflict of interest is a matter of record”  By contrast: “The records of an L.L.C. are completely private… Then there is the matter of lobbying and campaign contributions.  The L.L.C. can do both,” but “a regulated non-profit cannot enter the political realm without limits…  It looks like a vehicle for the Zuckerbergs to use as a plaything—to invest through and to promote their ideas—without having to sell their Facebook shares and pay tax.”

Notice that in their letter to their new daughter—in which they explain the establishment of their new L.L.C. as a “gift” in honor of her birth, Mark Zuckerberg and his wife profess a commitment to the common good, but at the same time, they reserve the right to define what’s good for the public: “Technological progress in every field means your life should be dramatically better than ours today.  We will do our part to make this happen, not only because we love you but also because we have a moral responsibility to all children in the next generation.  We believe all lives have equal value, and that includes the many more people who will live in future generations than live today.  Our society has an obligation to invest now to improve the lives of all those coming into this world…. But right now, we don’t always collectively direct our resources at the biggest opportunities and problems your generation will face.”

Surely we must give the Zuckerbergs credit for their generosity, but there is something else happening here. According to the Zuckerbergs, all people have equal value. But there is also the assumption that Mark Zuckerberg and his wife have so much value they can define what’s best for the rest of us.  This is, of course, the classic definition of charity.  And the Zuckerbergs explain what they will be promoting as far as their L.L.C.’s investments in education: “(S)tudents around the world will be able to use personalized learning tools over the internet, even if they don’t live near good schools.  Of course it will take more than technology to give everyone a fair start in life, but personalized learning can be one scalable way to give all children a better education and more equal opportunity.  We’re starting to build this technology now, and the results are already promising.”

In their report for the Institute of Policy Studies, Huck Collins and Josh Hoxie advocate for a very different idea about how the wealth of the Forbes 400 can be used by our society to create a promising future.  For those of us who may have forgotten what we learned in Civics Class, they explain the role of progressive taxation. Merely changing the current income tax rates for the highest earners, they write, would help society, reduce inequality, and  “have a negligible personal and economic impact on those households.” Congress could also tax capital gains as ordinary income and close one other loophole:  “One small yet particularly nefarious loophole in the capital gains tax gives hedge fund managers the ability to pay taxes on their income at the capital gains rate.”

Taxes empower the public while philanthropic investments empower individuals who can collect their non-taxed profits in foundations and L.L.C.s which they can personally guide and control.

Benjamin Barber, the political philosopher, describes the difference between public and private power: “Philanthropy is a form of private capital aimed at achieving public outcomes, but it cannot substitute for public resources and public will…. First a privatizing ideology rationalizes restricting public goods and public assets of the kind that might allow the public as a whole to rescue from their distress their fellow citizens who are in jeopardy; then the same privatizing ideology celebrates the wealthy philanthropists made possible by the market’s inequalities who earnestly step in to spend some fragment of their market fortunes to do what the public can no longer do for itself.  Better philanthropy than nothing, but far better than philanthropy is a democratic public capable of taking care of itself with its own pooled resources and its own prudent planning.  The private philanthropist does for others in the larger public what they have not been enabled to do for themselves as a public; democracy on the other hand, empowers the public to take care of itself.” (Consumed, p 131)

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