Back in 1994, when Bill Gates was childless and worth only $6bn, he told me his children, when they arrived, would inherit none of his money.
“I just don’t think,” he explained, “it’s all that helpful to inherit large wealth. I guess it’s a personal philosophy, you have to judge. Everybody spends a lot of time thinking what’s good for their kids, I’m sure. And in my case I have decided that having a substantial amount of wealth is more negative than positive.”
But, I objected, people change their minds when confronted by real children. “I don’t think I will. But you’re right. I accept that that’s consistent with what others have told me. But I think there’s a little bit of philosophy in this that will not be changed. And I have some friends who feel the same way.” Now, in 2019, Gates is worth (says Forbes) $94bn, he has three children and seems to be sticking to his “little bit of philosophy”. In fact, he’s spreading the word.
In 2010, along with super-investor Warren Buffett (net worth $81bn), he launched the Giving Pledge campaign, which commits signatories to giving away most of their money.
There are now more than 150 pledgers, including Apple’s Tim Cook, Oracle’s Larry Ellison, Facebook’s Mark Zuckerberg, Tesla’s Elon Musk and so on. The total net worth of the list is $731bn, of which $365bn has been pledged. Will they stick to these pledges in the current climate? Apple recently took a huge hit on its share price when iPhone sales fell below expectations, and Facebook is in the midst of a perfect reputational storm. Will they all feel less generous when their silicon backs are against the digital wall? It is reported that in the last quarter of 2018, Zuckerberg halted his plans to sell off shares to fund his philanthropy. Facebook has not said why.
Nevertheless, these are big numbers – $365bn is roughly the GDP of Nigeria or Israel. They are evidence, first, of the staggering wealth created by the digital revolution and, secondly, of the impulse to apply much of that wealth to good causes.
But is this the same giving impulse that was drummed into Gates by his brilliant, philanthropic mother, Mary Maxwell Gates, a director of the First Interstate Bank of Washington and a driving force in the United Way of America charity organisation? The question is topical because of the early death last year, aged 65, of Paul Allen, who co-founded Microsoft with Gates.
Allen left Microsoft in 2000. He was worth about $20bn when he died from cancer-related causes in October 2018 and, like his business partner, he had been an old-school giver. He put $2bn into science, technology, wildlife, education, the arts and community services. The Paul G Allen Family Foundation will continue his work after his death. The two Microsoft founders, in continuing a very American philanthropic tradition, extended the obligation into the new business landscape of tech.
The process has now become much more systematic. Following the example of Gates and Buffett, giving has been codified and simplified for the rulers of Silicon Valley. There’s now a Silicon Valley Community Foundation (SVCF), which scoops up the excess cash that floods the tech capital of the world and pays it out to a shortlist of good causes.
Furthermore, not being a tech philanthropist can raise serious questions about your status as a Valley god. Take Steve Jobs. He is, perhaps, the greatest tech name, a silicon saint to the true believers. But after his death in 2011, awkward questions were asked: why did he not follow the example of Bill Gates and give it all away? Why did he seem positively to avoid the flamboyant giving of his peers?
In fairness, he did do a few things here and there, but nothing on the scale of Gates. And he was both whimsical and unsystematic in his giving. He started the Steven P Jobs Foundation in 1986, but closed it just over a year later.
“He clearly didn’t have the time,” said Mark Vermilion, who ran the foundation, adding that Jobs was interested in backing nutrition and vegetarianism programmes rather than social entrepreneurialism.
This moral pressure to do the right thing is intensified by the surreal sums involved. Jeff Bezos, the founder of Amazon, is now worth around $140bn. But what’s it all for? OK, he’s a family man with a divorce to contend with, but he’d have to have ten million kids (the population of Hungary; GDP also $140bn) to claim he had a pressing domestic need for that kind of cash.
In fact, a rather ruthless column by Dr Harold Pollack in the New York Times in May 2018 did come up with some serious suggestions for what Bezos (who owns the Washington Post) should do with his money. He could finance maths teaching for two million high school students forever; he could build eight Massachusetts Institute of Technology-sized universities; he could give every newborn in America $1,000, again forever. And so on.
It was a brilliant dramatisation of the absurdity of this level of personal wealth. Five months later Bezos pledged $2bn to create the Day One Fund for starting pre-schools and helping homeless families. A coincidence? Maybe.
****
This raises the tricky issue of motivation. Was Bezos emotionally blackmailed into giving? Does it matter? Well, in the sense that the cash gets given either way, obviously not. But there is a social historical difference. Gates, by upbringing, is old school, raised by an attorney and a banker who were both philanthropists. He gives because of a general moral obligation to make the world a better place. With the new givers, there always tends to be a less elevated reason.
In the present climate, that is the need to combat the wave of suspicion, anxiety and downright loathing that has swept over the tech giants. Tax avoidance on a huge scale, privacy invasions, dodgy employment practices, monopolistic overreach and concern about the effects of their products have superseded the idealistic wonder of the internet’s formative years. Silicon Valley has been expelled from the Eden of public approval and its inhabitants are now wandering the wilderness looking for ways of getting back in. Is it possible they are no better than the robber barons of the past?
In 2015 Mark Zuckerberg confronted this problem via a 2,200 word letter to his daughter, Max, which he thoughtfully read out on video. Beneath a picture of himself, baby and wife, he intoned: “Like all parents, we want you to grow up in a better world than ours today.” Leaving aside the long parade of secular pieties, the point of the letter was the announcement that “We will give 99 per cent of our Facebook shares – currently about $45bn – during our lives to advance this mission.” So we get to the Gates position but via wild virtue signalling rather than the self-deprecatory “I guess it’s a personal philosophy.”
There is a further and much more aggressive form of the Valley’s pursuit of virtue. This involves a radical redefinition of philanthropy in such a way that aligns more closely with the Valley’s view of itself and its mission.
In this context Steve Jobs can be rescued by pointing to the ways in which the iPhone and the iPad have helped people respond more quickly to disasters. A slightly breathless 2011 article in the Harvard Business Review, written shortly before Jobs’s death, made the point. Without Jobs, Dan Pallotta argued, “We’d still be waiting for a cell phone on which we could actually read e-mail and surf the web. ‘We’ includes students, doctors, nurses, aid workers, charity leaders, social workers, and so on… We’d be a decade or more away from the iPad, which has ushered in an era of reading electronically that promises to save a Sherwood Forest-worth of trees and all of the energy associated with trucking them around.”
In other words, just being a successful technocrat is a philanthropic act. This is a precarious and rather over-specialised argument. For a start any business can claim as much – it employs people and it helps customers, say, wash their clothes or sit in comfortable armchairs. The difference, Pallotta implies, is that the products of tech are uniquely good for the whole world at once. This has yet to be proved.
****
There is, however, a sense in which any company is a philanthropic act. Capitalism, properly executed, harnesses greed for the common good. The catch for the tech bosses is that properly executed capitalism would compete away excess profits and concentrations of private wealth. A true philanthropic act would then be a real sacrifice.
Now the argument that tech is a moral good is being extended to the wilder non-profit (for the moment) projects of the technocracy. Both Jeff Bezos and Elon Musk have space projects: Blue Origin and SpaceX. These are costly but not strictly non-profit, because both may have profitable applications such as space tourism, mining or colonisation.
But some of the rhetoric of private sector space pioneering is practical and philanthropic. “The future of humanity,” says Musk, “is going to bifurcate in two directions [sic]: either it’s going to become multi-planetary, or it’s going to remain confined to one planet and eventually there’s going to be an extinction event.”
Bezos has said, rather more prosaically, “The only way that I can see to deploy this much financial resource is by converting my Amazon winnings into space travel,” adding that Blue Origin would be “incredibly important for civilisation in the long term”.
Harold Pollack in his New York Times article called this “a terrible response” to the problem of great wealth because there are so many earthbound opportunities for improving the human condition here and now.
Musk has a slightly better defence in his pursuit of a multiplanetary human destiny and a much better one for Tesla cars. There is no doubt we have to stop burning fossil fuels and electric cars are probably the next step. Tesla, chaotic though its business plan appears to be, has been a leader in this.
Of course, whatever good comes of these projects, the reality is they’re happening because these guys love rockets and cars. Nothing wrong with that – so do I – but, again, it is not giving in the strict moral sense of an obligation arising from success, but rather a by-product of that success.
In truth, a strict moral sense is seldom behind philanthropy. Companies do it as a form of advertising or damage limitation. Zuckerberg gave $100m to schools a week before the movie The Social Network, about Facebook’s founding, came out in 2010. The movie did not show young Mark in a flattering light. Another coincidence? Maybe.
****
An Elon Musk SpaceX rocket – the rhetoric is philanthropic, but it could also generate revenue
Individuals may give for similar reasons, but also as a way of gaining privileged access. Then there’s tax. The SVCF, with assets of more than $13bn, is one of the biggest charitable foundations in the world, but ran into trouble last year when a portfolio of allegations involving sex, bullying and racism surfaced. But there’s also the matter of Donor-Advised Funds, or DAFs. Basically, this is a tax-efficient way of giving away money to a fund while retaining some control over how the money is invested and to whom donations are made.
This further muddies the ethical waters. In 2014 the action-camera firm GoPro became a public company, making it worth $3bn. Immediately the founder, Nicholas Woodman, announced he was giving away $500m of his own stock as a DAF to the SVCF in the form of a new foundation. Four years later, the only beneficiary of the foundation that could be found by the New York Times was the Bonny Doon Art, Wine and Brew Festival.
Woodman must have avoided capital gains tax on that $500m and was able to claim a charitable deduction on the donation. Also, GoPro stock plummeted after his donation so the true benefit to him was enormous. Thanks to the DAF his donations can be secret or, indeed, non-existent.
Woodman did absolutely nothing wrong but the case shows how the tax system is one more thing that can pollute the moral purity of giving. It can also politicise the whole process. The Trump administration is attempting to abolish requirements on non-profits revealing the names of donors. Since the politically mighty but secretive Mercer family have used DAFs to hide what they are doing (they donated to Trump’s 2016 election campaign and Breitbart News), it is clear Trump wants to spread the fiscal love to other plutocratic supporters.
If tax is the primary or even the secondary motive of a donation, then it is obvious why some givers may want to conceal their donations. Tax avoidance is one of the main reasons why people have come to dislike the tech companies; more of it at the individual level would just make matters worse.
But why, you may ask, if these companies are so concerned about the condition of humanity, do they go to such extraordinary lengths to avoid paying their own corporate taxes? The sums avoided are staggering – the EU’s competition commissioner, Margrethe Vestager, concluded that Apple should pay back €13bn plus interest because it its dubious avoidance policies.
But a little local skirmish in San Francisco makes the point. The city council wants to impose a tax on local companies to help the homeless. Twitter boss Jack Dorsey complained the tax was unfair. Amazon led a successful struggle against a similar tax in Seattle. They fight because they don’t like government getting the credit. That, of course, is not a principled position, it is pure self-interest.
****
The story of tech giving from Gates-ian purity to tax fixes, business-as-philanthropy, reputation management and secret funds mirrors the story of the digital revolution as a whole. It began as a left-wing hippie and hacker project and quickly became, thanks to the discovery of advertising as a viable source of profits, a corporate technocracy. Latterly, because of tax avoidance, privacy scandals and a dawning awareness of the scale of surveillance involved, it seems more accurate to call it a corporate kleptocracy.
From high moral purpose to dubious dealings is, perhaps, the usual process of company evolution. The arc of the corporate universe is short but it bends towards dodgy. Tech is not what it was when I discussed his children’s inheritance with Bill Gates. It has lost its innocence and been expelled from Paradise. Maybe there’s a “little bit of philosophy” left but I doubt that it will be a big player in the near future we are so eagerly constructing.
Bryan Appleyard writes for the Sunday Times
Content from our partners
Related
