The richest people in the world also donated billions of dollars to charities in America and beyond during the pandemic. But with the size of their bank accounts growing almost as fast as the number of poor people in the world, the big question is: can money really be ethical?
Turns out the answer isn’t just a straightforward yes or no. Today’s Daily Dose tells you why.
THE 1% WITH A DIFFERENCE
Billionaires get richer. Some try to do good with their money.
Mac Kenzie Scott
One of the richest women on the planet follows in the footsteps of steel mogul Andrew Carnegie by donating her fortune during her lifetime. Scott, the ex-wife of Amazon founder Jeff Bezos, has donated more than 10% of the $ 59 billion she made from her shares in the company. Last year Scott donated $ 8.5 billion to hundreds of nonprofits that fight poverty and discrimination. Great, right? Not so fast, say the cynics. Scott’s fortune comes largely from a company criticized for treating workers and allegedly dodging millions in taxes, two issues she doesn’t really discuss.
Philanthropy is not just about giving money. After raising $ 4.4 billion, Trajano is Brazil’s richest businesswoman. She developed her fortune in the 1990s by transforming her parents’ home electronics store in São Paulo into a nationwide retail chain, Magazine Luiza, worth $ 25 billion. But Trajano has also worked with her employees to tackle violence against women in the workplace and at home, even setting up a hotline that victims can call to report abuse. In 2020, she launched a training program for black Brazilians to bring more racial diversity to Luiza magazine and help the government speed up its COVID-19 vaccination campaign.
The 34-year-old British economist is an unlikely pro-tax millionaire. Born into a working-class family in London, he made his first million dollars at the age of 24 trading stocks and betting on financial crises. Then he decided that making money by speculating on the bad fortune of other countries was not for him. He says donating money is not enough to help people and campaign for countries like the UK to raise taxes on the ultra-rich. “Billionaires often pay lower tax rates on their income than ordinary workers,” he told Reuters. “But I don’t think it will be enough to just tax their income. . . he needs taxes which apply to wealth.
and yet, and yet. . .
The gap between the haves and have-nots has never been greater. Can it be shrunk?
What is mine. . . To exploit
Billionaires are good at making money and taking risks. Do you know what else they’re great at? Play cat and mouse with the taxman. While the average American household pays around 14% in federal taxes, a ProPublica survey in June found that money giants Jeff Bezos, Michael Bloomberg, and Elon Musk paid little, if any, taxes. these last years. Worse yet, they don’t break any law. The tax system facilitates this loophole by requiring that only a fraction of a person’s wealth be taxable. Add some nifty bookkeeping to the mix (including deducting all those donations) and the bill is drastically reduced. Less taxes, however, means less money for public services like health and education.
And all those billions of donations? While constructive in the short term, this “throw money at a problem” approach can be problematic in the long term. First, it gives more power to the ultra-rich, not elected officials, to determine a country’s policies. Second, allowing tax-deductible donations only widens the wealth gap. But there’s another way to think about charitable giving, Stephen Penman, professor of financial accounting at Columbia University, tells OZY. In some countries, including the United States, authorities want the rich to donate money. “Instead of taking this money and putting it in hospitals or schools, they are asking the private sector to do it,” he says. “Is that an efficient way to do it, that’s another question. “
The beautiful way or. . .
There is very little that US President Joe Biden and Chinese President Xi Jinping agree on other than taxing the wealthiest people in their country. The US president proposed a sharp increase in the capital tax rate in April to specifically target the richest 1%. An other idea? Make sure that taxes are actually collected. In China, where a technological and manufacturing boom has given birth to a new cohort of billionaires, Xi thinks in the same direction. He urged the super-rich to give more back to society, while saying “reasonable adjustments to excessive income” will be made. “The question is not whether to take the money of the rich,” Penman told OZY, “but to spend it well, to allocate it well.”
HOW TO BE AN ETHICAL BILLIONAIRE
Because being charged and being good is possible.
Large sums of cash can be a force for good, if used correctly. Lots of money fuels innovation, Penman argues. But for philanthropic money to be classified as ethical in good faith, we have to ask ourselves what was done to get it, says Erin Bass, associate professor of management at the University of Nebraska Omaha. “The question is, what behaviors were necessary to make you a billionaire and whether these were ethical,” she told OZY. What then makes a very successful and ethical business? This is a great and innovative idea that is put into practice in a way that does not exploit workers or the environment.
What is ethics?
It’s a complex question, tells OZY Santiago Villani, a sociologist specializing in economics at the University of Buenos Aires. “There is no universal definition of ethical behavior,” he says. The challenge with extreme wealth, he believes, is that for some people to have a lot, others must have a little. “Capitalism feeds on inequalities,” he says. “Some own the capital and others only their labor. As long as workers are exploited at work, no matter how much billionaires donate, the system will continue to be unequal. “
Pay your share
Wealth does not flow naturally from rich to poor, which is why taxes are important. While some billionaires give back, discuss sustainable capitalism, and campaign for more levies, others are more radical. Abigail Disney (granddaughter of Roy Disney, who co-founded the company with Walt) wants to cap the amount of capital a single individual can own at $ 1 billion. The heir to the Disney empire, which is estimated at around $ 120 million and has donated $ 72 million, is bold. “I don’t really know how you couldn’t figure out how to live a really good life with $ 999 million,” she told The Guardian.
To be involved
Experts tell OZY that to be ethical billionaires must tackle the root causes of inequality – think gender and race discrimination and access to education, for example. Billionaire tech investor Robert F. Smith, America’s richest black person, donated $ 34 million to pay off student debt for the entire class of 2019 at Morehouse College, a college historically black from Atlanta. He said he was trying to level the playing field, but that decision may not have been entirely in good faith. Smith’s philanthropy is reported to have also helped him escape prosecution in a tax evasion case.