When Mark Zuckerberg and his wife, Dr. Priscilla Chan, announced plans to devote most of their fortune to philanthropic causes they believe will improve the world for their daughter’s generation, a lot of people applauded their initiative.
Unsurprisingly, more than a few people also denounced it.
Money, or more specifically control over money, represents power: the power to make things happen. Lack of money does not necessarily mean lack of power, however, because in our society, votes are neither allocated nor legally transferred in connection with wealth. It is supposed to be one person, one vote. Contrast this with corporate governance, in which the more shares one holds, the more votes one gets. Few of us see anything undemocratic about that arrangement in business, even though we do not propose to assign votes for public office the same way.
One person, one vote is what community organizing is about: The idea is that if you can assemble enough votes, individuals who lack personal resources can, through the power of government, wrest dominion over money from those who have privately amassed it, and thus take over a large share of that power to make things happen.
The critics of the Chan Zuckerberg Initiative, at bottom, believe that they and their fellow voters - not the Facebook founder and his spouse - ought to have the power to eventually dispose of the wealth he amassed. You won’t have to look very hard to find those arguments widely propounded, even (or maybe especially) on Facebook itself.
The result illustrates a variation of the saying that “no good deed goes unpunished.” In our society, no good deed goes uncriticized. This is particularly true if the good-deed-doer is a person of some prominence and wealth, and if in the process of doing the good deed, the person in question might conceivably increase that wealth.
Smaller-scale versions of this debate play out all the time, all over the country. Down in the southern reaches of Miami-Dade County, developer Wayne Rosen bought a financially ailing golf course, planning to renovate and relaunch it. Property values in the surrounding subdivision, where homes cost $250,000 to $500,000 - not a lot by most south Florida standards, but high-end for the city of Homestead - would have benefitted. So would local residents, who Rosen said would have received most of the job opportunities related to the golf club. That claim was almost certainly true, since golf course jobs are generally not very lucrative, and Homestead is hard to reach from pretty much anywhere else.
Rosen said he planned to put $10 million of his family’s money into the project, and he sought another $3.5 million in low-interest loans to be issued via the city, using federal Department of Housing and Urban Development funds earmarked for community redevelopment. Homestead’s City Council approved the loans on a 4-2 vote, though the effort still needed approval from federal authorities.
Before that could happen, however, the Miami Herald reported on Rosen’s history of campaign contributions for members of the Homestead City Council who approved the plan. Like smart developers everywhere, Rosen pays attention to local politics and government officials, because nothing gets developed without their approval. The article also recounted Rosen’s history of other business dealings with leaders in the small city of 64,000. As the Herald noted, none of these transactions has ever been found to violate any laws or ethical rules.
Nonetheless, the article conveyed skepticism that a government-backed loan for the restoration of a golf course was an appropriate use of anti-poverty funds. When Rosen’s 10-year-old daughter read another outlet’s more directly critical rehash of the Herald story and asked her father why he was taking money away from poor people, Rosen simply walked away from the project. He told the city, and by extension the Herald, to keep the money; he will let the golf course lie brown and fallow instead.
The Herald has not announced any plans of its own to redevelop the golf course or to otherwise improve job prospects and real estate values in the city of Homestead.
A lot of the criticism of the Chan Zuckerberg plan is ill-informed. All the couple are really doing is earmarking their money for future causes and efforts they believe will be worthwhile. The assets are to be housed initially in a limited liability company, which is a fully taxable entity. Zuckerberg and Chan will pay income taxes associated with the LLC’s investment gains and profits. If they die while in possession of the LLC, its value will be included in their taxable estate. In reality their announcement, presented in the form of a letter to their newborn daughter, amounted to no more than a pledge to do good things with their wealth, regardless of whether those good things involve private enterprise, traditional charities or, conceivably, even partnering with government.
Yet critics said Zuckerberg and Chan really should not have the last word on how their wealth is deployed. Government - meaning the officials that critics can help elect - should get to make that decision. It is the basic argument that underlies our estate tax system, and it is founded on the assumption that the people who create great wealth are less qualified to decide how it can best be used than, say, people like Bernie Sanders, Elizabeth Warren or even Donald Trump, should he one day act in any official capacity. Under this logic, if Trump is worth billions, he is not qualified to decide how his own wealth should be used, but if he gets elected president, he would suddenly be in a position to deploy all the resources of the federal government.
Anyone who ever accomplishes anything of substance has to put up with the carping of critics who think they could have done it better. Yet those critics seldom actually make the attempt. Luckily for all of us, most of the time the people living lives of consequence are willing to deal with this ambient noise. Every now and then, however, someone like Wayne Rosen decides it just isn’t worth the aggravation, and all of us end up the poorer for it.
Posted by Larry M. Elkin, CPA, CFP®
Mexican President Enrique Pena Nieto (center) with Priscilla Chan and Mark Zuckerberg during the couple's 2014 visit.
Photo courtesy the Presidencia de la Republica Mexicana on Flickr.
When Mark Zuckerberg and his wife, Dr. Priscilla Chan, announced plans to devote most of their fortune to philanthropic causes they believe will improve the world for their daughter’s generation, a lot of people applauded their initiative.
Unsurprisingly, more than a few people also denounced it.
Money, or more specifically control over money, represents power: the power to make things happen. Lack of money does not necessarily mean lack of power, however, because in our society, votes are neither allocated nor legally transferred in connection with wealth. It is supposed to be one person, one vote. Contrast this with corporate governance, in which the more shares one holds, the more votes one gets. Few of us see anything undemocratic about that arrangement in business, even though we do not propose to assign votes for public office the same way.
One person, one vote is what community organizing is about: The idea is that if you can assemble enough votes, individuals who lack personal resources can, through the power of government, wrest dominion over money from those who have privately amassed it, and thus take over a large share of that power to make things happen.
The critics of the Chan Zuckerberg Initiative, at bottom, believe that they and their fellow voters - not the Facebook founder and his spouse - ought to have the power to eventually dispose of the wealth he amassed. You won’t have to look very hard to find those arguments widely propounded, even (or maybe especially) on Facebook itself.
The result illustrates a variation of the saying that “no good deed goes unpunished.” In our society, no good deed goes uncriticized. This is particularly true if the good-deed-doer is a person of some prominence and wealth, and if in the process of doing the good deed, the person in question might conceivably increase that wealth.
Smaller-scale versions of this debate play out all the time, all over the country. Down in the southern reaches of Miami-Dade County, developer Wayne Rosen bought a financially ailing golf course, planning to renovate and relaunch it. Property values in the surrounding subdivision, where homes cost $250,000 to $500,000 - not a lot by most south Florida standards, but high-end for the city of Homestead - would have benefitted. So would local residents, who Rosen said would have received most of the job opportunities related to the golf club. That claim was almost certainly true, since golf course jobs are generally not very lucrative, and Homestead is hard to reach from pretty much anywhere else.
Rosen said he planned to put $10 million of his family’s money into the project, and he sought another $3.5 million in low-interest loans to be issued via the city, using federal Department of Housing and Urban Development funds earmarked for community redevelopment. Homestead’s City Council approved the loans on a 4-2 vote, though the effort still needed approval from federal authorities.
Before that could happen, however, the Miami Herald reported on Rosen’s history of campaign contributions for members of the Homestead City Council who approved the plan. Like smart developers everywhere, Rosen pays attention to local politics and government officials, because nothing gets developed without their approval. The article also recounted Rosen’s history of other business dealings with leaders in the small city of 64,000. As the Herald noted, none of these transactions has ever been found to violate any laws or ethical rules.
Nonetheless, the article conveyed skepticism that a government-backed loan for the restoration of a golf course was an appropriate use of anti-poverty funds. When Rosen’s 10-year-old daughter read another outlet’s more directly critical rehash of the Herald story and asked her father why he was taking money away from poor people, Rosen simply walked away from the project. He told the city, and by extension the Herald, to keep the money; he will let the golf course lie brown and fallow instead.
The Herald has not announced any plans of its own to redevelop the golf course or to otherwise improve job prospects and real estate values in the city of Homestead.
A lot of the criticism of the Chan Zuckerberg plan is ill-informed. All the couple are really doing is earmarking their money for future causes and efforts they believe will be worthwhile. The assets are to be housed initially in a limited liability company, which is a fully taxable entity. Zuckerberg and Chan will pay income taxes associated with the LLC’s investment gains and profits. If they die while in possession of the LLC, its value will be included in their taxable estate. In reality their announcement, presented in the form of a letter to their newborn daughter, amounted to no more than a pledge to do good things with their wealth, regardless of whether those good things involve private enterprise, traditional charities or, conceivably, even partnering with government.
Yet critics said Zuckerberg and Chan really should not have the last word on how their wealth is deployed. Government - meaning the officials that critics can help elect - should get to make that decision. It is the basic argument that underlies our estate tax system, and it is founded on the assumption that the people who create great wealth are less qualified to decide how it can best be used than, say, people like Bernie Sanders, Elizabeth Warren or even Donald Trump, should he one day act in any official capacity. Under this logic, if Trump is worth billions, he is not qualified to decide how his own wealth should be used, but if he gets elected president, he would suddenly be in a position to deploy all the resources of the federal government.
Anyone who ever accomplishes anything of substance has to put up with the carping of critics who think they could have done it better. Yet those critics seldom actually make the attempt. Luckily for all of us, most of the time the people living lives of consequence are willing to deal with this ambient noise. Every now and then, however, someone like Wayne Rosen decides it just isn’t worth the aggravation, and all of us end up the poorer for it.
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