Some days ago, Jeff Bezos announced that he will donate $10 billion to the Bezos Earth Fund, a foundation with the goal to, in Bezos’ own words, “work alongside others both to amplify known ways and to explore new ways to fighting the devastating impact of climate change on this planet we all share”. The reaction to Bezos’ announcement was not as positive as one may expect. But, why?
According to figures released by Amazon, the company produced 44 million metric tons of carbon in 2018. That is roughly what a small European country like Denmark or Switzerland produces in a year. To make things worse, Amazon has reportedly threatened to fire employees that have denounced Amazon’s disregard towards the company’s carbon footprint. Not to mention, that Amazon, through its Amazon Web Services, sells technology to oil companies to help them find oil wells.
But, even if we were to ignore Amazon’s recent apathy towards climate change, the foundation itself is not the most efficient way to mitigate climate change. When Vox’s writer Sigal Samuel interviewed nine experts about how billionaires should spend money to combat climate change, most of the interviewees agreed that the technology to combat climate change is already there. What we lack, they say, is the political will and the political support to exceed the influence of oil companies. Greta Thunberg’s climate activism, which has received more media attention than any technology to mitigate climate change, is a great example to prove that we lack political will and support. So, if it is clear enough that Bezos Earth Fund is not the most efficient way to combat climate change, why would Bezos donate $10 billion, 8% of his net worth, to this foundation?
To understand this announcement, we need to acknowledge the developed trend of donations and philanthropy. For the past few years, billionaires in the United States have been donating to multiple foundations. It is known that Bill Gates has helped fight malaria and HIV in Africa through his foundations, and that other billionaires such as Mark Zuckerberg and Warren Buffet have taken similar measures. Yet this philanthropy trend has two sides to it, and one of them has led to great controversy and debate. For those reasons, the trend received the term ‘philanthrocapitalism’.
There are two main concerns with regards to philanthropy, especially in the Unites States. To begin with, billionaires can avoid paying taxes by donating to these foundations and receiving tax deductions. But, the main concern with big philanthropy, and the one most debated, is the political influence that the foundations have over states functions.
The Stanford political theorist Rob Reich wrote a book with regards to philanthrocapitalism. He claims that people see the big philanthropy debate as a matter of individual concern, but that he believes and argues that big philanthropy poses a threat to democratic institutions, and thus it should be treated as a socio-political debate.
In his own words, Reich says that big philanthropy “is an exercise of power. It’s an attempt to direct your private assets for some public influence, often with a naked aspiration to change public policy. And, in a democratic setting, wherever power is exerted, it deserves our scrutiny, in order to understand whether it’s serving democratic purposes or undermining them”.
While it is true that big philanthropy has helped combat malaria and HIV as it is in the case of Bill Gates, it is also true, that The Gates Foundation has supported charter schools. And, who is Bill Gates to decide what and how students need to learn? In Reich’s own words, “what a large foundation represents is the exercise of the power of a wealthy person to direct private assets for some public influence. It’s a plutocratic element in a democratic setting”. To sum it up, there are advantages to big philanthropy, but this one also poses a threat to democratic institutions. So, what can we do in order to preserve the advantages without undermining democracy?
The first solution that one might consider is regulating foundations and charities from privatizing state functions and thus eliminating any possible threat to democratic institutions. However, there is a main concern with suggesting so. Despite the fact that state representatives are democratically elected, and hence they are to some extent justified in their actions, individuals have the right to have public influence over democratic institutions if they consider that the state is failing to, or inefficiently carrying out, state functions. To exemplify, if an NGO believes that the state is failing to provide vaccines to fight malaria and they decide to take actions about it, it would be very hard to argue against it. So, the main problem seems to be not foundations’ influence over state functions, but rather its plutocratic element in a democratic state. In other words, the problem is the influence billionaires exert over foundations.
In order to regulate the influence billionaires exert over foundations, Reich offers a possible solution to this problem. His solution is based upon two main changes. The first one involves changing the tax deduction system to one of tax credit. The main difference between these two is that in the former system, when an individual makes a donation, the amount of money that is deducted from their taxes is based upon their income tax. So, a billionaire, with a higher income tax rate, will have a higher tax deduction rate than a middle-class citizen even if the two make a donation of the same amount of money. Hence, the donation will cost more to the middle-class citizen. With a tax credit system, the percentage of tax deduction is constant regardless of an individual’s income tax. Secondly, Reich suggests a limit of 1000 US dollars to tax credit, so that billionaires cannot avoid paying their taxes.
Reich’s solution is great at solving the problem of tax deduction with big philanthropy. To some extent, it also helps solve the plutocratic aspect of the charities and foundations donation system by making sure that everyone has the same incentive to donate through the tax credit system. Yet, the plutocratic aspect still remains, because there is no limit to the amount of money that billionaires can donate to a foundation. Therefore, they will still exert great influence over foundations and charities and in accordance, over state functions.
So, if Reich’s suggestion is not enough to solve the problems with big philanthropy, I believe there is one possible remaining way to solve these problems pragmatically. I would suggest developing a legal framework that enforces billionaires, foundations and charities to be transparent, so that if they try to exert public influence over state functions and pose a threat to democratic institutions, it becomes public knowledge. Logically, this would only work if people become aware and critical about big philanthropy and its threat to democracy. So, maybe, we can start from there and begin questioning and criticising actions like the one taken by Jeff Bezos.
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