Failure of billionaire philanthropy

When I first thought of writing this I was trying to decide whether the appropriate title would be Failure of Capitalism  or simply Failure of Philanthropy. The first title was inspired by the many books and articles I have been reading saying that globalization and capitalism are the main causes for the rise of global income inequality. The result has been the rise of populism and populist leaders like Trump in America or authoritarian leaders like Putin in Russia. 

The reason I chose Trump and Putin is because those two were popularly elected and did not gain power through a military coup, revolution or a one party state. The question that intrigued me is that in a world where democracy and capitalism had supposedly defeated communism and totalitarianism, these populist leaders who have gone against valued democratic ideals, like freedom of the press, have maintained a solid core of supporters. Their type of governance is now spreading to countries like Brazil and Hungary. 

In the recent midterm elections in the United States Trump and his Republican Party suffered heavy losses. But, this was not a victory for old fashioned capitalism. The incoming Democrats are espousing a new form of socialism that includes universal health and attacking the influence of Big Business and banks on American politics. In fact, the youngest Democrat in Congress,  29-year-old Alexandria Cortez, calls herself a democratic socialist. 

Another political phenomenon which is on the rise globally is nationalism. This is the return to an old ideology. Why the resurgence? The answer is that nationalism is the populist response to globalization which is increasingly perceived as the cause for income inequality. The perception is that globalization has benefited the very few such as the less than 70 individuals whose wealth is equivalent to 50 percent of the world’s population. Imagine that 70 individuals have the same wealth as 3.5 billion people. 

The global elite is aware of this criticism; and their answer apparently is philanthropy. People like Bill Gates, Warren Buffet and Jeff Bezos in the United States and Jack Ma in China are devoting their billions in wealth and even their time to certain causes. In the United States, philanthropy has never been as high as it has been the last few years; and yet it did not prevent the rise of Trump and other populist leaders. Germany, the richest country in Europe, has seen the decline of popularity of Merkel, its long time leader. 

These questions have intrigued and puzzled me. One possible answer is that capitalism is actually disappearing. People have begun to lose faith in the market economy. The essence of capitalism is competition; but today business is becoming more and more dominated by a few giant corporations. Small businesses are literally getting killed by these giant corporations. Mom and pop stores have disappeared and replaced by malls and chain stores which are now in the process of being replaced by a handful of online companies like Amazon. Google and Facebook have virtually no competition. Cable TV networks were virtually semi monopolies. Now, their biggest competitor is Netflix which is looming as another monopoly. 

Even such services as education have displayed monopolistic behavior. Fifty years ago, the acknowledged top tier schools in the country were La Salle, Ateneo and UP Dilliman. Is the situation any different today? 

Somehow there must be a return to competition by strengthening anti-trust laws. Even technology companies have to be prevented from neutralizing potential long term rivals as Facebook did in when it acquired Instagram in 2012 and WhatsApp in 2014. 

What’s wrong with billionaire philanthropy?

These billionaires are actually the biggest architects of oligopolies like Bill Gates of Microsoft, Jeff Bezos of Amazon and Jack Ma of Alibaba. There are similar people in every so-called country in the world including the Philippines. 

I was watching a television interview late at night last week. The guest, whose name I cannot remember now, said something that really caught my attention. He said that these billionaire philanthropists will devote money and resources to causes like  homelessness and lack of classrooms; but the question they do not ask themselves is, what is the root cause of homelessness and poverty? These same billionaire philanthropists will oppose any increase in minimum wage even if there is solid evidence that the existing wage level is below what is needed for a fairly decent life for a family. They will also oppose any tax increase to provide funds for government assistance. The taxes they will support are sin taxes and fuel taxes which impose  equal tax burden on the rich and the poor. They will oppose increase in income taxes which is the more progressive tax structure. They will oppose any measure that is detrimental to their acquisition of more wealth and more power such as strengthening labor unions. That was a very enlightening television interview.

Can capitalism be saved?

One argument against oligopoly is that even in a capitalist system, it gives the consumer less power over the corporations. This goes against the essence of a market economy that says the markets dictate to the business sectors. Capitalism can only be saved if it goes “back to basic” of allowing more competition and returning the power back to the consumer. There are other proposals being advanced on how to save capitalism. One of the most promising is the increasing number of “Benefit Corporations” which is a traditional corporation with modified obligations committing it to a higher standards of purpose, accountability and transparency.

If we do not see a revolution in capitalism, then the world will be increasingly dominated by populism and socialism.

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Young Writers’ Hangout on Jan. 12 and 26 (1:30 pm-3 pm; stand-alone sessions) at Fully Booked BGC. For details and registration, email [email protected].

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Email: [email protected]