A look at why the personal agendas of wealthy philanthropists do not always serve the public good.
It seems that every time we experience a “gilded age,” the rich, perhaps worried that the pitchforks will soon be at the gates, increase their giving.
According to David Callahan, our guest on this week’s WhoWhatWhy podcast and the founder and editor of Inside Philanthropy, political polarization has divided the world of large-scale giving as never before.
Each side looks askance at the philanthropists on the other side. For those on the left, the Koch brothers are evil in their giving. For those on the right, George Soros is a symbol of all that is wrong with giving.
Callahan, also the author of The Cheating Culture, explains how the billionaire class, which, over the past 40 years has led the charge to shrink the size of government, now seeks to privatize public good. The super-rich aim to mobilize their wealth and their “I alone can fix it” philosophy to determine where dollars are needed in the public sphere.
Callahan reminds us that this has led to the delusion that the wealthy, no matter how that wealth is acquired, wield some special powers to determine what’s best. The delusion has been amplified by the current occupant of the White House.
All of this, Callahan says, has led to the virtual institutionalization of the wealth gap. What we need now, he argues, is less accumulated wealth dispensed by private individuals, and more redistribution of wealth under public auspices — allowing people to democratically select what goals and values they want to advance.
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| Jeff Schechtman: | Thanks for joining us on Radio WhoWhatWhy. I’m your host, Jeff Schechtman. To paraphrase Congresswoman Ilhan Omar, today, no matter what the subject, it’s all about the Benjamins. Be it politics, business, education, culture or family, follow the money is the mantra of our times. |
| My guest, David Callahan, has been following the money for years. He was prescient in seeing its corrosive impact on our culture 15 years ago when he wrote the seminal book The Cheating Culture, and talked about dishonesty in education and the growing importance of going to the right college. He even foreshadowed the example of The Apprentice to personify the beginning of a time when lying and cheating to get ahead in business was fast becoming the norm. | |
| Today he writes about ground zero in our new gilded age, the billionaires whose philanthropy is shaping or reshaping America and filling the vacuum left by the lack of government money, policy and will. It seems that just a quick glance at today’s headlines, from the college admissions scandal, to the lack of shame, to the public policy aimed to gutting benefits in favor of tax breaks, all tie back in one form or another to the totality of David’s work. | |
| David Callahan is the founder and editor of Inside Philanthropy. Previously he was a co-founder and senior fellow at Demos. He’s also an author, a lecturer whose books include The Cheating Culture and The Givers. It is my pleasure to welcome David Callahan to Radio WhoWhatWhy. David, thanks so much for joining us. | |
| David Callahan: | Great to be here. |
| Jeff Schechtman: | How do you see the link between what you’ve been writing about and the work that you’ve been doing for these years, the work that you wrote about 15 years ago when you talked about the corrosive impact of money and cheating in our culture, and how it relates to what you’re doing now with respect to philanthropy in this kind of new gilded age that we’re living in? |
| David Callahan: | Well, it all does come back to the Benjamins, as you said at the beginning of your remarks. In The Cheating Culture I looked at how economic and inequality, which has been widening over the past few decades, is playing out in our culture and how, when you have a society which is so focused on money, when there is such a gap between the winners and everybody else, bad things happen. |
| Bad things happen to our politics, as we know by looking at what’s happened with the impact of money in politics. Bad things happen to people with ethics. People are more willing to cut corners when the rewards at the very top are so big, and a lot of the people who are in the middle or at the bottom feel like hey, everybody at the top that cheated to get ahead, why not cheat yourself? | |
| And of course those themes of economic inequality and the effects of money relate closely to philanthropy, because this is a world where there’s not a lot of requirements to get in except that you’re rich or control a lot of money, so we have this new philanthropic elite which is wielding a tremendous amount of power using the wealth that they’ve accumulated over the past few decades. | |
| Jeff Schechtman: | And to the extent that they are doing that, how is that money being viewed in the world of philanthropy, particularly by people that have been in it for a long time who are looking at this almost as blood money? |
| David Callahan: | You know it really depends. I think that there’s a lot of wealthy people who are trying to do good things with their money. I mean a lot of progressive institutions are bankrolled by wealthy donors, as well as legacy foundations like Ford. |
| You know, a funny thing about this kind of conversation about philanthropy and going there is it’s a little bit of an a la carte alarmism, which is that you tend to pick on the billionaires who are on the other side, right? So like people on the left complain all the time about the Koch brothers or, you know, the Mercer family, and people on the right talk about George Soros or Tom Steyer, and to me it’s all problematic that people with so much money wield tremendous power in our public lives. | |
| Jeff Schechtman: | And of course part of it is that it seems that so much of that power that they wield nowadays especially is directed towards personal agendas as opposed to greater public good. Talk about that and whether there’s truth in that. |
| David Callahan: | It really depends. I mean I think if you look at George Soros’ philanthropy there’s a big focus on advancing the greater good, but it also really stems from his notion of what an open society is and what it requires, and he has been more interested in funding certain things, in other things, and his billion dollar philanthropic empire has really been molded and shaped by his own agenda. |
| I happen to be a fan of that agenda, but it is… I mean the fact that Soros has had such power is… I mean it should be alarming to anybody who’s worried about money in politics. | |
| I find it interesting that there’s a whole bunch of nonprofits that are focused on money in politics, but very few of them talk about philanthropy and how philanthropy and these tax deductible dollars are a form of money in politics that should also be receiving scrutiny. | |
| Jeff Schechtman: | The irony and the confusion I suppose in all of this, is that some of those people that are the largest philanthropists are also paying the least amount of taxes, and this idea that it’s private wealth that’s funding good as opposed to the traditional notion of government doing it is really turned an idea that for a long time was how we operated… It turned it on its head. |
| David Callahan: | Exactly. The wealthy have played a big role in helping downsize government over the past couple of decades through this kind of concerted conservative attack on government programs and this effort to reduce taxes. A lot of well-funded conservative think tanks and advocacy organizations have pushed that agenda to downsize government, and now, lo and behold, here we are with federal domestic discretionary spending at the lowest level in decades as measured by GDP, and all these billionaires are stepping forward as the saviors “Hey,we’re here to help” deal with all the shortfalls in government spending. |
| Well, a lot of their class helped create that problem to begin with, so there is a kind of irony of the privatization of public goods. | |
| Jeff Schechtman: | To what extent have we seen much philanthropy from younger billionaires and what does that bode for the future as you see it? |
| David Callahan: | Yeah. Well quite a bit of the sort of tech billionaires who are younger, like Mark Zuckerberg and downward from there, have been interested in philanthropy. You know, in the old model there was much more of that inclination to turn to philanthropy later in life when you had already made your fortune. You spent decades and decades building some industrial fortune and then you turned to philanthropy in your last few decades of life and then leave a big foundation in your wake. |
| Well, a lot of these younger people who are making money also want to start giving it away. On the one hand that’s a great thing, a nice impulse. On the other hand it can be problematic, because these people are also wielding power through the corporations they control and through their business positions, Mark Zuckerberg being a great example of that. He’s a major philanthropist, but also heads Facebook and has enormous power both through his company and through his philanthropy. | |
| Jeff Schechtman: | How does this then circle back today to the influence that it has on the larger culture with respect to money as we were talking about at the outset? How do you see that playing out today as these philanthropists become more powerful? |
| David Callahan: | I think that there has been in our culture in the past few decades, really from Reagan onward, this tendency to equate money with virtue, and if you’ve made a lot of money that must mean that you’re a highly effective person and that your intelligence and cleverness in making money, that that probably gives you special insights into other areas of business, like say in public education. |
| And I think that there’s this kind of, you know, esteem that billionaires are held in because of their business success that allows them to kind of step forward as problem solvers in other areas of life, and that’s problematic because a lot of these people don’t actually know anything about the areas they’re jumping into, A, and B, it makes normal people who don’t have a lot of money feel like “well, my voice doesn’t count because I’m just an ordinary citizen activist or advocate or a practitioner working on the ground.” | |
| I think that kind of inequality of voice, of civic voice, is very problematic in a society that’s supposedly built on egalitarian values. | |
| Jeff Schechtman: | As somebody that works and writes about the world of philanthropy, how do you see it being affected by this debate that we seem to be starting at least now, that goes to the very core of capitalism and really takes advantage of a kind of resentment that’s out there with respect to billionaires? |
| David Callahan: | It’s an overdue conversation. It’s high time that people started questioning the system which channels wealth almost exclusively to the very top and leaves everybody else treading water. The good news is that some billionaires themselves, like Ray Dalio, who runs the largest hedge fund in the world, also joined this kind of critical conversation, finally. |
| I mean, for those of us who have been talking about inequality and its insidious effects for decades, you know, it’s nice to have somebody like Ray Dalio come along and say: “Hey, capitalism is really not working for everyone.” But when the billionaire class starts to admit that the system where they’ve made all their money is not working for the rest of us, I think that’s a positive sign. | |
| I mean because these people are scared. They understand that inequality left unaddressed can produce a lot of instability in society. I mean quite apart from the human suffering of having so many people without their needs met, it can produce political instability, and I think that the 2016 election of Donald Trump was really a pretty jarring wake-up call to these people that, hey, the pitchforks could one day be arriving at the gates. | |
| Jeff Schechtman: | And is that what’s driving philanthropy to some extent at this point, that there’s this sense of “only I alone can fix it” among the billionaires? |
| David Callahan: | I think that there’s a lot of them who are worried about inequality, who recognize that the system that they’ve done well in is not a great system and they’re looking to find ways to fix it. Many of them are not interested in bigger structural reforms because they’re centrists, but they at least get that there’s a problem. |
| Interestingly, I think a number of these billionaires really do believe in government and they want government to be more effective. Michael Bloomberg is a good example, that he gives a lot of money trying to make government work better in cities around the country. | |
| A lot of billionaires were involved in supporting the Obama administration’s plan to strengthen the EPA to regulate climate change and greenhouse gas emissions. So it’s not that these people alone think that they can fix it. They understand that there needs to be partnerships with government which have often much greater power and resources, but it’s definitely a shift in their thinking just in the last five years, that there’s a greater sense of urgency among this wealthy class that we need to deal with some of these inequities in our society. | |
| Jeff Schechtman: | There seems to be almost two groups of billionaires in all of this. There’s got to be old school billionaires, people like Michael Bloomberg, who you mentioned, Marc Benioff here in San Francisco, who see it exactly the way you’re talking about it in partnership with government and in a more traditional way, and then a whole group that sees it very independently and very differently? |
| David Callahan: | Well, there’s certainly a group of very wealthy people who are out to destroy government as we know it, who want to dismantle the legacy of the New Deal and Great Society, who would like to kind of roll back government powers back to where it was say a hundred years ago or before, before we even had the income tax. |
| I mean that’s what the well-funded conservative effort to capture control of the judiciary is all about. I mean these people want to return to an era where government did not have the ability say to improve the minimum wage, because that was considered to be a violation of the rights of business. So there is a radical right wing agenda that is funded by some of the wealthiest people in this country, including the Koch brothers. | |
| But, as you say, there’s a whole other set of billionaires who are more progressive, and there’s even some very wealthy people quite far to the left who have inherited their money, who have never been in the business world, whose views are really quite progressive, who can be part of the solution. I think it’s very important that we not talk about the far upper classes in America in that kind of monochromatic way, that it is a pretty heterogeneous group. | |
| Jeff Schechtman: | Expand on that a little bit, because there’s also the argument made by people like Anand Giridharadas and others that somehow it’s all bad. |
| David Callahan: | Right. I think that there is a temptation to kind of paint the upper class with this broad brush and see them all as being part of the problem, and I think that that’s in many ways an easier message for people to digest and it resonates a lot. And the more realistic, the kind of more accurate picture of the upper class is more complicated. |
| You know that there’s people who are really driving the problem, the real bad guys like the Koch brothers, and then there’s people who are sort of complicit in the problem, a lot of the people on Wall Street who are turning a blind eye to systemic inequities, and pretending to like help solve inequities here and there. | |
| Then though there’s rich people who are really part of the solution, right, and who are funding a progressive infrastructure that has gained a lot of strength in recent years, who are funding efforts to roll back voter suppression and voter ID laws, who are trying to push back against predatory lenders or regulate Wall Street. | |
| So it just really runs the gamut. And if you work in the progressive world, chances are you’re getting money from a philanthropic institution that is powered even by a living donor or a staff of professionals who are stewarding the portion of some past donor. So you got to be careful to not paint with too broad of a brush here. | |
| Jeff Schechtman: | What about those that are investing money… those billionaires who are investing money in media and journalism? How do you see that? |
| David Callahan: | There’s a lot of these wealthy individuals who understand that a free press is a key pillar of a strong democracy and they’ve been very disturbed by the kind of collapse of newspapers and the lack of investigative reporting that goes on. So ProPublica, which is really now the leading nonprofit investigative reporting outfit, was bankrolled by Herb and Marion Sandler with an initial $10 million gift, and The Sandler Foundation has continued to support it. |
| Meanwhile, a number of other philanthropists have moved into this area, most recently Craig Newmark, whose internet site Craigslist helped destroy newspapers in the first place. He’s put a lot of money into this. Recently Craig Newmark put $20 million into supporting something called The Markup, which is a new watchdog site to challenge big tech and the power of these large technology companies and to try to hold them more accountable. | |
| Jeff Schechtman: | And of course that already is having internal problems. |
| David Callahan: | Yes. I mean it’s a very tricky business, being a… hiring journalists. Pierre Omidyar, the founder of eBay, another billionaire who supported investigative journalism through supporting First Look Media and The Intercept, which is a new publication that came along a couple years ago, edited by Glenn Greenwald, that does some pretty hard-hitting reporting. |
| Jeff Schechtman: | Talk a little bit about the broader culture, and I mentioned it at the outset, what you wrote about approximately 15 years ago and sort of the breakdown of the social order and this cheating culture. How do you see that today? Are we better off or worse off than we were 15 years ago? |
| David Callahan: | Well, I published The Cheating Culture, yeah, 15 years ago, making the argument that economic inequality produces insidious effects on people’s affects. Basically the people at the top have the hubristic attitude of “Hey, look I’m untouchable. I can do anything I want.” |
| Then when they cheat they often can get away with it and they live by a separate set of rules, and again and again wealthy wrongdoers walk away unpunished. Whether it’s the people who orchestrated the financial crisis of 2008 on Wall Street, or whether it’s the kingpins of the opioid epidemic and big pharma, you know, these people get a slap on the wrist again and again. | |
| I made those… The Cheating Culture came out before the financial crisis and before the opioid epidemic, but many of those dynamics were already clearly present. Now we’ve seen this sort of cheating culture metastasize similar to the point that we have a kind of perfect case study of a cheater who’s in the Oval Office, right? Like who’s gotten away again and again with a slap on the wrist for major financial wrongdoing, cheating the federal government of hundreds of millions of dollars in taxes, exploiting bankruptcy rules, not paying vendors, just the whole list of kind of financial malfeasance that Trump and his family has been engaged in. | |
| None of it stopped him from continuing to ascend upwards and get accolades in our culture, which again, as I said, tends to equate money with virtue. So it often doesn’t seem to matter how many rules you’ve broken or how many people you’ve hurt on your way to acquiring vast wealth. You’ll still get on the cover of magazines and you’ll still get your own TV show and you’ll still get… You can even get elected president. | |
| So it’s extremely discouraging and it has effects sort of down the food chain, because Americans look at cheaters at the top who get ahead or go unpunished and say: “Hey, that must be the way the system works, right? Like people cheat and get away with it. Why should I be the saint who dots every I and crosses every T when cheating pays?” | |
| Jeff Schechtman: | Perhaps that it has gotten so extreme that maybe this orgy of it that we seem to be in now represents some kind of apogee of it? |
| David Callahan: | One would hope so. But I thought the same thing in 2004, you know, when we had Martha Stewart on trial, we had the Enron executives going to trial, when we had the whole series of financial earnings fraud during the .com boom that had been revealed, when we had Barry Bonds- |
| Jeff Schechtman: | Michael Milken. |
| David Callahan: | … scandal in sports. And, you know, you would have thought that that would have been a high point, but it seems remarkably it has just gotten worse. |
| Jeff Schechtman: | To what extent do you think that philanthropy can help in this regard? Where can money go that addresses these broader cultural issues that we’re talking about? |
| David Callahan: | That is a very good question. I think ultimately the problem lies in economic inequality, and so to the extent that philanthropists and foundations can adjust the income gap through backing public policy measures, particularly to raise taxes on the wealthy and to limit the financial clout, political clout of Wall Street and of donors and of money in politics, that would all do a great step to addressing the underlying structural drivers here of the cheating culture. |
| I think that there are more immediate ways you can get at this problem. I think strengthening regulatory bodies like the SEC and the IRS and the FDA, whoever are the entities that are policing business and should in theory be cracking down on wrongdoing but often don’t have the resources, the IRS being a perfect example. | |
| How did the Trump family get away with evading some $400 million in taxes if you believe The New York Times reporting? Well, that reflects the fact that the IRS doesn’t really have the firepower often to go up against wealthy tax cheats who can hire the best lawyers and get away with gross, intolerable amounts of tax cheating. | |
| Jeff Schechtman: | Is there the danger that if in fact there is government policy… If you took all of Elizabeth Warren’s proposals and put them in effect, would that cut down on philanthropy, if you suddenly taxed the rich at an appropriate level? |
| David Callahan: | I doubt it. Maybe a little, but I mean the fact is that even if you significantly raise taxes on the rich, the structural factors driving the accumulation of great fortunes would remain largely in place, technology, globalization. A much higher tax rate on Mark Zuckerberg, even if he went from being worth $70 billion to being worth $40 billion, he would still have a phenomenal amount of money to give away. |
| But, you know, in general that’s the goal we should go for, is a society in which there’s less accumulation of vast wealth that then is given away by private individuals and more wealth that is channeled through government to address public needs in a way that reflects democratic values, where we as citizens decide how that surplus wealth is used as opposed to a handful of individuals who get to make those decisions. | |
| Jeff Schechtman: | David Callahan, I thank you so much for spending time with us today. |
| David Callahan: | It’s great to be here. Thanks for having me, Jeff. |
| Jeff Schechtman: | Thank you. And thank you for listening and for joining us here on Radio WhoWhatWhy. I hope you join us next week for another Radio WhoWhatWhy podcast. I’m Jeff Schechtman. |
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