SMALLER DIFFERENCE BETWEEN RICH AND POOR
How to beat poverty
1. Rules against tax evaders
Back in the day opponents of tax havens were largely ignored. But since Obama openly argued against these types of legal tax evasions (commonly referred to as just tax evasions), more and more governments are fighting it. So too the OECD (Organization for Economic Co-operation and Development), who have started with regulations against the systems which take away billions of profits from society.
2. Improving development aid
Development aid is getting more efficient and sustainable in many cases. Poor countries are becoming more prudent with how the money is spent, corruption is combatted, and with better technology and data we can more accurately track the effects of aid. A large part of development aid is now being spent to improve trade or support SME’s. this improves the living circumstances of poor people in the long run.
3. The rise of fair trade
Fair-trade now only makes up a small part of global trade, but as the world is becoming smaller through innovations such as the internet, so too does the distance between consumer and producer, and a lot of unfair trade is eliminated in the middle. The consumers too are recognizing that fair-trade coffee or chocolate tastes better because it isn’t being plucked by slaves. And consumer pressure ultimately leads to better working and living conditions.
4. Effective altruism
There is nothing wrong with donating money to existing development organizations or working for them as a volunteer. What is also fun is starting your own do-good-project, an emerging trend. There are even organizations which follow your altruism closely and make sure it comes to fruition. That’s what we call effective altruism.
5. Super-rich with a conscience
Even the super-rich (42 people together own just as much as the poorest 3.7 billion) seem to realize that their enormous wealth comes with a moral obligation to do something for a better world, Roeland Muskens details how below.
Don’t fight poverty, but wealth!
The assets of the richest one percent (or rather 0.1% or even 0.01%) of the population are still growing. The eight richest people on the world own as much as the poorest half of the global population, so reported Oxfam last year. While the world seems to applaud when a multibillionaire decides to give away a part of their fortune, but we should ask the question whether it is possible at all to ethically gather a capital of let’s say 100 million euros. Can this be done fair and ethically? And why is nothing being done against this?
Injustice is not just only wry, but it undermines the stability in our societies.
Therefore, economist and Nobel prize winner Joseph Stiglitz argued for an equality goal in the row of sustainable development goals. Each country should be obliged to make sure by 2030 that the top 10% does not own more than the bottom 40%.
The French economist Thomas Piketty argues for a tax on capital. This should exponentially grow from a half percent on capital surpassing 200 thousand euros. So far both economists are facing harsh resistance against their proposals.
The Giving Pledge
Together with co-billionaire Warren Buffett, Bill gates started ‘The Giving Pledge’ in 2010. This initiative calls upon billionaires around the world to donate a large part of their gathered wealth to charity. So far 184 1.000.000.000.-plussers have signed the pledge. The total wealth of these 184 amounts to about 635 billion euro. Charities around the world can expect billions of dollars in the next 20 years (billionaires aren’t the youngest). Even Amazon founder Jeff Bezos, who so far seemed immune to the call of Gates and Buffett, seems to ascribe to the idea of big philanthropy now. Bezos made it known in September that he was going to invest 2 billion in the One Day Fund, meant to help homeless families.
Rich by comparison!
Rich or poor; that (too) is a relative concept. Compared to Scrooge McDuck were all poor. But how do we do compare to the rest of the world? Nowadays there are sites which show you how your wealth compares to that of others. Want to feel rich? Then go to e.g. globalrichlist.com To belong to the top 0.1% you need to earn about six hundred thousand net per year (or have 12 million in the bank).
How rich are you? Where are you on the global ladder of the richest people? Take the test here!
A billion euros? Give it away!
You hear more and more about multibillionaires and billionaires deciding to spend a part of their wealth on charity. Bill Gates, Mark Zuckerberg, and Warren Buffett are doing that. And in the Netherlands, we know, among others, the funds of the Brenninkmeijer family and Fentener can Vlissingen. Applause. But how transparent are these funds? And how influential are these Scrooge McDucks? Should their good Samaritan money actually be in the state’s coffers?
This past summer, at the annual Aspen Ideas Festival, Stanford professor Rob Reich shook things up when he said that “Big philanthropy erodes the foundations of the democratic state.” A shock went through the room. The annual Aspen Ideas Festival doesn’t just draw scientists and employees of NGO’s, but also staff members of the Bill and Melinda Gates foundation and other private charity organizations. The attendees were used to listening to speeches such as ‘the transformative power of Philanthropy’ and ‘It takes guts to give’. And now a Stanford professor was talking about a dangerous liaison between philanthropy and democracy? Reich argued as follows.
How influential are the Scrooge McDucks?
The large philanthropic foundations, so says Reich, have garnered power across the globe in the policy areas in which they operate. “Bill Gates is received around the world like a head of state.” This power is separate from any democratic checks and therefore hollows out democracy. Reich doesn’t beat around the bush: “the modern philanthropic institutions might be the least accountable and least transparent institutions we have in our democratic society.” Protest rose from the crowd in Aspen. Instead of being grateful and saying yes and thank you to the millions of Gates and consorts, Reich continued, we should “… see philanthropy as a form of power and plutocratic activity.” Distrust instead of gratitude is warranted.
Castle in France
The donations are also money out of our own pockets, says Reich. He told the audience in Aspen about the start of the Open Society Foundation of billionaire George Soros, 25 years ago. During one of the first meetings of the new organization staff members were discussing with Soros about the theme’s the organization would be focusing on. At a certain point Soros got sick of the discussions, slammed his fist on the table, and said: “in the end it’s my money and I decide what happens with it.” To which an employee stood up and calmly responded: “excuse me mister Soros, but about half the money is this foundation would be in the hands of the government if you hadn’t spent in on the foundation, so it might not be such a bad idea to let others have a say.” What Reich illustrates here is that billionaires pay virtually no taxes. They hide their money in tax havens or put it into foundations to evade taxation. The contribution to public services by the super-rich is practically nothing. The question is what is better for society: a billionaire who buys a yacht or castle in France or a billionaire who places his money in a charitable foundation? Reich: “you can be sure that the castle is paid for with funds which have been taxed.”
The golden goose
The question is how bad it is that rich individuals give money to causes they find important. Quite a bit, say, among others, Jens Martens and Karlin Seitz of the Global Policy Forum. The researchers find in their report Philanthropic Power and Development – Who shapes the agenda a golden goose dynamic, where whole sectors adapt themselves to the preferences of generous billionaires. In the healthcare industry for example, it is tempting to focus on vaccination and HIV/Aids, both of which are important themes for Bill and Melinda Gates. And it isn’t just the smaller organizations, but larger organizations are adapting to the will of large foundations. Martens and Seitz mention the World Health Organization (WHO) which received billions from the Gates foundation. The influence of gates is, as say the authors, responsible for the lessened attention to ‘global health emergencies’, which can account for the weak response by the WHO during the 2014 Ebola outbreak.
The agriculture sector is similarly affected, say Martens and Seitz. Both the Rockefeller foundation and Bill and Melinda Gates believe in ‘quick fixes’ to the food problem. They’re a driving force behind the push to ‘modernize’ African agriculture, including the use of GMO crops. The fear is that these efforts will harm policies that support small scale family agriculture in Africa.
Besides the excessive influence of billionaires on policies and the political agenda, Martens and Seitz note 3 main risks. Firstly, most philanthropists and their foundations use a business model of quick results instead of systematic change and long-term perspective. Lack of transparency and accountability’ of the foundations is the second risk. Because while the funds have a major influence on policy in the areas where they operate, they don’t or barely have to account for their actions. Often there is only a ‘board of directors’ or a ‘board of trusties which have some control. In the case of the Bill and Melinda foundation this exists of Bill and Melinda, strengthened by the present of co-billionaire, Warren Buffett. A third risk is that the large funds cause fragmentation and erosion of ‘global governance’. Large philanthropic funds are the driving force behind global, ‘multi-stakeholder’ alliances (e.g. the Children’s Vaccine Alliance, the TB Alliance and ‘Scaling Up Nutrition’). The rapid growth of the scope and size of these alliances weakens the power of the major multinational (UN) organizations and furthermore forms a threat to the development strategies of individual countries.
Are there ways in which the wealthy philanthropists can donate their wealth ethically? Dif skyped with Reich. “definitely” he said. “they can focus their aid on projects which are experimental and innovative and above all long-term. I call that social discovery’. That is where their niche is. Both politicians and commercial parties are way too focused on the short term and on sure investments. Politicians do this because they’re dealing with the limited time they’re in office. They want to accomplish something in that time. And the commercial sector must deal with investor interests who want to see a fast return on investment. Philanthropists can make themselves useful by supporting social innovations which won’t show their effects within ten or twenty years. If they’re successful, then they can, humbly, lay this before the public domain for a follow up.
A recommendation by Dif: Rob Reich’s book “Just Giving – Why Philanthropy is Failing Democracy and How It Can Do Better (Princeton University Press, 2018).