The Philanthropy Con

The Philanthropy Con

Charity fosters hierarchy, empowers the wealthy, and undermines democracy.

Bill Gates visits the Liverpool School of Tropical Medicine in northwest England, January 2016. (Photo by Dave Thompson/AFP via Getty)

Last September Jeff Bezos announced that he would devote a small portion of his vastly undertaxed wealth—$2 billion of a fortune well over $100 billion—to start schools where “the child will be the customer.” One could hardly ask for a more illustrative example of how elite philanthropy undermines public institutions, provides cover for extractive capitalism, and enshrines a neoliberal vision of the world in which even childhood is understood as a commodity. But this analysis does not go far enough, because it does not make the positive case. Leftists need to be comfortable saying it: In a democracy, taxes are better than charity.

In principle, this is easy enough. Taxes are the currency of democracy, the only resources in our economy that are supposed to be dedicated to the public good, as determined by a democratic process. Taxation can undermine oligarchy; it is no coincidence that top-heavy tax cuts have become the perpetual legislative priority of the right. And taxes raise money on an order charity cannot, lifting millions of Americans out of poverty.

Reality, of course, is a different matter. The U.S. tax system does not afflict the rich or aid the poor nearly to the extent that it should, and the kleptocratic Republican Party is dedicated to making this problem even worse. And so the problem of taxes is a deep problem of the left: how to defend a democratic principle when its practice fails us.

 

Don’t let mythologizing about the founding fool you: conservative anti-tax rhetoric in the United States is an anti-democratic rhetoric. While American colonists opposed taxation without representation, they accepted taxation with representation, at least in the northern colonies. This is not to say tax policy was the subject of apolitical consensus, or that rich merchants cheerily handed over the keys of government to the laboring classes; on the contrary, there were ferocious debates over the who, what, and how much of taxation, a debate often focused on protecting the propertied. But, as the historian Robin Einhorn has demonstrated, in northern colonies, local and state governments did develop an effective, consistent taxing capacity.

In the South, however, slaveholders ensured that tax systems remained primitive. There could be no oversight of the master’s house, no implication that his power was anything less than absolute—and so meaningful property taxation was impossible. When southern elites were confronted with the possibility of laws made by a new national Congress, Virginian Patrick Henry gave voice to their fears. Congress would be able to impose a “grievous and enormous tax” on slaves, he argued, and thereby “compel owners to emancipate their slaves rather than pay the tax.”

The federal constitution limited the power of Congress to impose direct taxes, but within the slave states, the danger of democratic taxation persisted. Until the Civil War, a fundamental challenge facing Henry’s slaveholding successors in Virginia was to contain the power of a non-slaveholding majority they feared would tax slavery out of existence. So the plantation elite wrote and rewrote electoral rules in their favor, preventing reapportionment that would have taken account of population growth in the (mostly non-slaveholding) western part of the state; refusing full suffrage to poor white men; and, in 1850, holding a new state constitutional convention with representation accorded on a “mixed basis,” derived from each district’s population and its wealth. Nationally and locally, slaveholders knew that the government’s powers of taxation would threaten their oligarchy, if the majority were allowed to rule.

That fear still exists, in modified form, in our time. Rolling back the state’s capacity to tax income and wealth has been a central preoccupation of rich conservatives for decades—once again to the detriment of our democratic institutions. It is no coincidence that the party opposed to the estate tax also engages in voter suppression; it is the coherent platform of a pro-oligarchy party.

 

If democratic taxation endangers oligarchy, charity is fundamentally aristocratic. Charity fosters hierarchy, empowers the wealthy, and undermines democracy. However benevolent a philanthropist’s intentions, to donate money to others is to exert control over their lives. And because these decisions are necessarily made by those with the money to give, charity is an avenue by which the rich in particular assert their power. It is, by definition, arbitrary, determined by a donor’s whims. Charity can provide personal warmth, but not systemic fairness; it can be kind, but it cannot be just.

The humiliation of being a “charity case” is not limited to the poor. Private patronage demands deference, as those dependent upon wealthy benefactors know only too well. At the opening of the Koch Institute for Integrative Cancer Research at MIT, scientists, academics, and elected officials lined up to thank the billionaire namesake, David Koch, who had donated $100 million to the research endeavor. “We are tremendously proud to be on your team,” MIT president Dr. Susan Hockfield told Koch at the event. “I want to give my voice of deep gratitude to David Koch for his vision, counsel, and guidance,” said Dr. Robert Langer, a cancer researcher at the institute, whose professorship is also named after David Koch. “Your generosity transcends our typical understanding of benevolence,” added David Maher, then the mayor of Cambridge. “Please accept my gratitude for all that you are doing.” This is not a conversation between citizens; it is the bowing and scraping of servants in front of their masters.

For all of the deference philanthropists receive, the impact of charity is dwarfed by the capacity of tax-funded programs. The annual budget of the National Institutes of Health is about $37 billion, or about three-quarters of Charles Koch’s net worth. While David Koch emblazons his name on a cancer research center, his political organizations work to strip science funding from the federal budget and ensure the chemicals upon which his fortune is based are not regulated as carcinogens. In broader context, Koch’s donations look less like generosity and more like the destruction of public institutions and the accrual of private power.

Conservatives occasionally suggest that, in the absence of taxes, charitable donations would rise to an adequate level of provision. History demonstrates that this is emphatically not the case. Again, the antebellum South offers a telling example. Without adequate tax revenue, there was a dearth of public schooling in the region prior to the Civil War. Did this lead to an outpouring of charitable spending from plantation owners, funding a robust private school system for white children in the South? No, the result was widespread illiteracy. More than 25 percent of whites from the South were illiterate in 1870, compared to only 8 percent of those from non-southern states.

Charity alone cannot meet basic social needs, and pretending that it can undermines the publicly funded endeavors that make the economy fairer. The leaders of today’s major philanthropic enterprises know what their donors want to hear. At the Carnegie Foundation’s Summit on Improvement in Education, poor kids are told they need more “grit,” rather than that their parents deserve higher wages. A host of Silicon Valley–friendly nonprofits encourage women of color to “lean in” and learn to code, ignoring the reality that programming was once badly paid “women’s work.” History demonstrates that women are underpaid not because they lack particular skills, but because their labor is undervalued, no matter what work they do. Instead of recognizing systemic injustice, however, philanthropy all too often explains inequality as the result of an individual shortcoming. By identifying the problem as the choices the economy’s losers make, they can ignore solutions that would involve changing the rules the economy’s winners have imposed.

Charity is political, sometimes egregiously so. Economists have found that the nominally philanthropic foundations associated with major corporations channel their funding to the districts of influential policymakers. But a billionaire need not be so vociferous an opponent of government intervention as David Koch to undermine government efficacy. A report in The Lancet in 2009 found that the Gates Foundation’s “focus on malaria in areas where other diseases cause more human harm creates damaging perverse incentives for politicians, policy makers and health workers.” At the scale at which Gates operates, the foundation cannot help but reshape local priorities. The total assets of the Gates Foundation are larger than many African countries’ annual GDP. And if local people do not like the foundation’s work, they have no system of recourse. No one can vote Bill Gates out of office, because philanthropy is not a democracy. It is a modern aristocracy.

 

Yet when we think about where the money goes, it is taxes, not charity, that make us so very angry. It is easy to understand why. While we may not like how rich people spend money, we do not typically feel culpable for those decisions. But our government’s decisions—whether it’s funding a war or a welfare state—are made in our name.

There can be no doubt that our government is failing us. Any taxpayer would be right to feel revulsion and rage at the thought that some fraction of their paycheck traveled to the U.S. Treasury and from there to the purchase of cages for immigrant children. There is a moral value to being confronted with the harsh truth that all citizens (no matter their tax payments) are implicated in the behavior of their government. If our taxes remind us of the extent to which our government fails to live up to our aspirations, this, too, is part of their purpose in our democracy.

But the fiscal system is also a lever that can tip our government toward a stronger democracy. Our government is failing us in substantial part because it is far too much like charity. Too often, government today resembles a philanthropic venture accountable to its chief donors. Typically staid political scientists have taken to describing the United States as an oligarchy, even a plutocracy.

Progressive taxation is one of the few policies with the capacity to reverse extreme concentrations of wealth. Income taxation played a key role in limiting economic inequality in the decades after the Second World War, and the rollback of top marginal tax rates was a major contributor to the skyrocketing fortunes of the contemporary era. Progressive taxation is not just about top income tax rates, of course; we need a comprehensive progressive tax policy platform that would consider both individuals and businesses, and how we tax earnings, investments, and wealth. Perhaps most of all, the estate tax’s egalitarian implications are difficult to overstate; the racial wealth gap is a testament to centuries of bigotry in the U.S. economic system. Cuts to the estate tax allow more of those unfair gains to compound across generations—a kind of reverse reparations.

Reinstituting progressive taxation in a complex global economy presents technical challenges, but the problem is primarily one of political will. The very fact that wealthy people continue to advocate so vociferously for lower top marginal tax rates makes clear that, in spite of all the loopholes and limitations of our current system, the rates matter. Just as they fear voting rights and unions, oligarchs fear progressive taxation—even today, when these vital democratic tools have been profoundly weakened.

Alongside the privileges our tax system has provided to the rich, we have imported into our welfare system charity’s penchant for humiliating the poor. To be sure, for centuries welfare programs have often rested on the assumption that poverty is a personal failing. But the conservative war on “entitlements” brought new sophistication to this old tradition. Multiple states now require welfare recipients to pass drug tests, even though their rates of drug use are demonstrably much lower than the general population. We have insisted to a mother left quadriplegic by a hit-and-run driver that her family sell their cars, so as to be adequately indigent as to receive public benefits. We have, just this year, placed work requirements upon Medicaid.

The implied question that these policies ask is whether beneficiaries warrant our sympathy. Are they hard working enough, morally upright enough, destitute enough? These questions are patronizing—literally, the questions a patron asks of a supplicant.

Sympathy is a fine criterion for charity. It need not and should not be the standard for government benefits. Instead of worrying whether other people are worthy of being our dependents, we could ask what we must provide so that people have their independence: the independence that freedom from want provides. That was the logic behind Social Security and Medicare, two programs that are bureaucratic without being insulting to their recipients. The impressive voter participation rates of older people are in part a consequence of Social Security; until the program was established, a third of elderly people lived in poverty, and older Americans participated in politics less than the young. Entitlement programs do more than allow people to live with dignity. At their best, they can make better citizens.

By its nature, charity reinforces social inequities and encourages a deference to wealth incompatible with democratic citizenship. In a healthy democracy, taxes should be as “uncharitable” as possible: based in solidarity, not condescension for the poor and privilege for the rich. The first step is to recognize what opponents of democratic governance understood hundreds of years ago: that democratic taxation has within it the power of emancipation.


Vanessa Williamson is a senior fellow in Governance Studies at the Brookings Institution, and the author of Read My Lips: Why Americans Are Proud to Pay Taxes (Princeton University Press, 2017).


Duggan | University of California Press Gardels