I write about wealth inequality sometimes, it’s an important issue in the US (at least to me). The distribution of wealth is incredibly skewed. The US’ wealthiest people (400 of them) own more wealth than 61% of the country. I always wondered what would happen if some of them just gave up a bunch of their wealth to those less fortunate, and not in a controlled superficially-philanthropic way, but a massive Ebenezer Scrooge-ish dump of their assets. Mark Zuckerberg almost made my dream come true yesterday when he announced he was giving away 99% of his and his wife’s worth in Facebook stock, all $45 billion of it. Obviously the internet exploded for a bit, but then everyone took a step back and realized that while Mark Zuckerberg’s announcement seemed totally unprecedented and awesome, it’s more of a calculated “philanthrocapitalism” decision than a self-less act.
The important distinction is where/how the Zuckerberg’s wealth is going/being spent. They could have just donated it to charities of their choice (tax-deductible, even!) or just send everyone in America a check for about $140. They could have even made a Zuckerberg-Chan Foundation, a charitable nonprofit organization. They did none of these things. Instead they put all the money into an Limited Liability Company (LLC), this is where the altruism becomes very impure. Zuckerberg LLC is a private limited company, that is free to expand, restrict or totally eliminate legal and financial relationships, requirements and transactions. An LLC is not a non-profit – it does not operate like one and doesn’t have to follow the same rules. Non-profits can’t invest in for-profit companies, LLCs can. Non-profits can’t make political donations, LLCs can. Non-profits have to allocate a certain amount of their wealth every year to their charities. LCCs don’t. Zuckerberg still has as much control of his money as he did a week ago. That’s not to say his wealth won’t go to good causes, but it’s not necessarily a good sign (at best it’s neutral) that all the wealth is in an LLC, just as flexible and unmonitored as it was when it was all tied up in Facebook stock. I can’t read Zuckerberg’s mind, but I’m assuming he did this in order to still have majority control of these assets – which (in my humble opinion) doesn’t appear as charitable as he thinks.
Even if the rich and famous do try to distribute their wealth, there’s no major incentive to actually do it. Zuckerberg is a rare occurrence, and he didn’t even really go all the way. Mega-donations aren’t going to solve this growing problem, because it means we have to wait for the wealthy to get around to giving, and that’s assuming they allocate their wealth in the right places and in the right ways.
What do you think about Zuckerberg’s big announcement? Do you think the wealthy have a responsibility to give to the less fortunate?