[Note: the title of this letter owes its origins to a fundraising email blast I received from Indivisible, although they were more emphatic ($%*!).]
Today marks not only the end of having to eat turkey leftovers but the 13th #GivingTuesday, when Americans, and others from around the globe, get to demonstrate their generosity by contributing time or resources to nonprofit organizations.
Conspiracy Theory #1: If I didn’t know that GivingTuesday had its origins with the 92nd Street Y in New York, I might cynically argue that GivingTuesday is a public relations cover-up. Huge numbers of middle class, even poor Americans, ,partake in GivingTuesday, creating a halo effect that everyone in America is generous. But as a class, the ultra-rich are not.
Generosity is the act of giving more than is usual or expected. As is frequently reported, charitable giving by the ultra-rich has remained at a constant 1% of wealth, which as I’ll point out below, that fails the generosity test. In contrast, despite relatively stagnant wages and current inflation, working families continue to give, albeit in dwindling numbers. While financial pressures might explain some of this decline, I think it has more to do with the barrage of headlines about multimillion dollar gifts by the ultra-rich that must cause others to wonder what point is there to making a $25 or $250 gift. But many people still do make those gifts, because they give a damn.
In order to understand how Rhett Butlerish (“Frankly, my dear, I don’t give a damn”) the ultra-rich are, I need to go deep into the numbers.
Conspiracy Theory #2: We don’t teach math in school, or at least we allow students to graduate without learning math, so that they can’t understand how staggeringly rich the ultra-rich really are.
In 2011, the Occupy Movement coined the slogan “We are the 99%.” Today, thanks to the massive accumulation of wealth by the ultra-rich 0.1% over the last twelve years, people would be shouting “We are the 99.9%” because the real divide is now between the 0.1% and everyone else. Even within the 0.1%–the 150,000 US households with wealth that exceeds $40 million–there are huge differences (like $150 billion worth of difference). We, of course, read a lot about the 750 billionaires, but guess how many centimillionaires there are in the U.S. (that’s $100,000,000). C’mon, guess. Ten Thousand Centimillionaire households (20,000 people). Crazy. These Centimillionaires have the distinction of being under the public’s radar, but for those who study wealth they are a special subcategory of ultra-rich referred to as the Super Wealthy.
Now here’s the part that’s really hard to wrap one’s head around.
Total wealth held by just 750 billionaires $5,000,000,000,000 ($5 trillion!)
Total wealth held by 10,000 centimillionaires $10,000,000,000,000 ($10 trillion!)
Total wealth held by all of the 150,000 ultra-rich $15,000,000,000,000 ($15 trillion!)
(All numbers are approximate, change daily with stock market performance, and assumptions about what’s included in the wealth number vary among academics.)
It’s difficult to visualize a trillion dollars. But here’s how to visualize (using rice) Jeff Bezos’ wealth of $100+ billion (note: he’s projected to be a trillionaire this decade!). Another way to think about extreme wealth: GivingTuesday’s projected total haul of approximately $3 billion this year amounts to the estimated total income earned by the ultra-rich in just 2 hours.
Imagine that instead of relying on the ultra-rich philanthropic community to invest in making the world a better place, we had a wealth tax–of say 10%– on everything above $50 million. (That would leave the 99.9% untouched). This wealth tax would raise $750 billion per year, enough to cover the $715 billion price tag of the so-called progressive agenda put forward by people such as Elizabeth Warren and various nonprofit organizations–early education and affordable care, infrastructure and green new deal, debt-free college, tackling the opioid epidemic, and more.
And here’s the thing: given reasonable assumptions about investment returns, income taxes, discretionary spending and inflation, the tax would leave someone with $100 million still a centimillionaire, and someone with $1 billion with $940 million.
By the way…that wealth tax raises 50% more money for social investment than the total amount of money given to charity last year from all sources. But, alas, we don’t have a wealth tax to pay for everything we care about, so is it too much to expect the ultra-rich to support nonprofits, to give back to society, at a much higher level in lieu of the tax? History suggests this would be a good thing to do, as Guido Alfani writes in his New York Times essay, “What happens when the Super Rich are this Selfish? (It Isn’t Pretty.).”
The 1% of their wealth the ultra-rich give to nonprofits amounts to $150 billion in recent years, considerably less than what they could and should give, especially when viewed in light of the wealth tax suggested above. Moreover, much of what they do give goes to their private foundations or donor-advised funds, meaning the money slowly trickles down to the people who need it most over years. Even more disturbing is the fact that the public is actually picking up most of the tab for those charitable donations–costing taxpayers in excess of $75 billion a year! Congress, in its infinite wisdom, decided that we need to pay billionaires to get them to give money to charity!? [For more on the problem and proposed solution, my must read of the Month is The True Cost of Billionaire Philanthropy by the Institute for Policy Studies.]
On GivingTuesday 2015, Mark Zuckerberg and his wife Priscilla Chan announced that they would give away 99% of their wealth, $40 billion at the time. The latest figures show that Zuckerberg, age 49, is worth over $110 billion! If he made no more money during his lifetime and gave away $50 million every Tuesday, not just GivingTuesday, he wouldn’t fulfill his commitment until age 90! For the record, that annual sum of $2.5 billion in giving would be about half of what the CCC sets as the charitable standard for him to give.
There have been many studies showing that centimillionaires and billionaires are, relatively speaking, narcissistic individuals disconnected from society as a whole (yes, there are exceptions). Psychologists describe it as the “Dark Triad,” comprising “a constellation of interlinked personality traits — Machiavellianism, psychopathy, and narcissism.” While we might wish for them to give back more, it is unlikely to happen without government intervention. Public opinion is clear: We should require private foundations and donor-advised funds to distribute more, and we should tax the ultra-rich. The national election is 48 Tuesdays from now. It is essential that we – those of us who do care –invest now in nonprofits at the higher Charitable Standard to ensure that our democracy functions of, by and for the people.