Few books have shaken the philanthropy world more than ‘Winners Take All’, Anand Giridharadas’s blistering critique of wealthy do-gooders. Global elites who ostentatiously give away hundreds of millions of dollars, he argues, are actually just preserving the status quo that grants them power in the first place. This week, Anand joins Nick and Goldy to explain how do-gooding perpetuates inequality.
Anand Giridharadas is a writer. His most recent book, ‘Winners Take All: The Elite Charade of Changing the World,’ is a national bestseller. He is an editor-at-large for TIME, an on-air political analyst for MSNBC, and a visiting scholar at the Arthur L. Carter Journalism Institute at New York University.
Winners Take All: https://www.penguinrandomhouse.com/books/539747/winners-take-all-by-anand-giridharadas/9780451493248
Beware Rich People Who Say They Want to Change the World: https://www.nytimes.com/2018/08/24/opinion/sunday/wealth-philanthropy-fake-change.html
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Speaker 2: On [inaudible 00:00:36]-
Speaker 3: Editor at large for TIME Magazine and author of the book Winner Takes All: The Elite Charade of Changing the World.
Speaker 2: A new book argues that when today’s Corporate Titans and political leaders tried to change the world, they actually preserve the societal problems they say they want to solve.
Speaker 4: If you decide as a Goldman Sachs that you’re going to get into the conversation, you’re immediately on day one, one of the biggest players in that field, and you are going to distort that conversation. When the rich and powerful get involved in social change, they change change
Speaker 5: From the offices of Civic Ventures in downtown Seattle. This is Pitchfork Economics with Nick Hanauer. Confessions of an American capitalist caught on tape.
Nick Hanauer: I’m Nick Hanauer, Founder of Civic Ventures.
David G: I’m David Goldstein, Senior Fellow at Civic Ventures.
David G.: Nick. You’re a really rich guy, right?
Nick Hanauer: Apparently.
David G.: Yeah. And you give away a lot of money.
Nick Hanauer: I do.
David G.: And you do it in two different ways. Some of it is, charitable contributions-
Nick Hanauer: Correct.
David G.: … that you get a tax deduction for?
Nick Hanauer: Right.
David G.: And some of it is, well, it’s also charitable, but it’s political-
Nick Hanauer: Right.
David G.: … It’s like what we do in this office-
Nick Hanauer: Most of what we do is non-tax-deductible.
David G.: It’s non-tax-deductible. And, which of those two do you think is more effective?
Nick Hanauer: Yeah, there’s no question. That’s the non-tax-deductible stuff that is, is more effective because if you want to make big change you have to make it at the intersection of policy and politics. And that work as you know, is non-tax-deductible.
David G.: So it’s weird. Then the most socially important giving that you do is the stuff you don’t get the tax deduction-
Nick Hanauer: Correct. If you write a big cheque to your own children’s private school tax deductible, if you write the same cheque to a minimum wage campaign helping thousands or hundreds of thousands or millions of people, you are not related to, not tax-deductible.
David G.: Right. And all of your wealthy friends, they’re with you. They understand that the most important way to give away their money is through the non-tax-deductible stuff?
Nick Hanauer: Yeah, sadly no. This is not a new phenomenon. This is something that rich people have done for generations, maybe thousands of years, is we wash away some of our sins by giving a little bit of money to charity, and we ignore the fundamental dynamics that are creating the need for the charity-
David G.: Which is the vast inequality that has [crosstalk 00:03:19]-
Nick Hanauer: Usually.
David G.: … you and your friends so outrageously rick.
Nick Hanauer: Correct. And today you get to talk to a super interesting and brilliant guy on, and geared at us who has written this amazing book called, Winners Take All: The Elite Charade of Changing the World. And in that book, he makes this very precise argument that, we live in a world we refer to often as neoliberalism is this world where the only thing that matters is money and competition. And the richer the rich gap, the better off everyone else will be. And if you try to make rich people less rich, then you’re actually harming poor people and all that stuff.
And he calls that, market world. And he has this very precise, and I think important critique of that and believes that we need to be more honest, that we need to start to say that, a few people are winning, and most people are losing. And that one, it’s not just that, that’s happening, but worse. A lot of the charity that wealthy people engage in either obscures that reality or actively promotes it.
David G.: And the way we solve this problem is not by rich people like you giving more. But that is, sorry, you’re going to have to take a little less.
Nick Hanauer: That’s right. To have a society where the needs go down dramatically because you have more just structure, right? You don’t need a giant poverty industrial complex. If every business in America paid their workers enough to get by without the need for these services. Right? Which you could do. Yeah. So I’m really excited to talk to Anand, I became acquainted with him several years ago for the first time when I saw his, I think it was his first TED Talk.
It was based on I think a book he wrote called, The True American: Murder and Mercy in Texas. And it’s the story of this terrible murder that took place of an immigrant in Texas. And he gave this just astounding TED Talk. And we were like, “Whoa, that dude is really smart and talented.” Then more recently, he wrote this really important book, Winners Take All, which quickly it became required reading here at Civic Ventures.
David G.: Right. The idea that, this is a Winners Take All economy, that’s not new. The way he talked back at people like you, that wasn’t new.
Nick Hanauer: And very persuasive and I can tell you definitively that the book had a huge impact, at least at this point in terms of the kinds of conversations that people are having in big philanthropy around the country because the critiques are… they’re persuasive, and it’s hard to get out from under them. In addition to writing these books, he’s an editor at large for time and on air political analyst for MS and DC, and visiting scholar at the Arthur L. Carter Journalism Institute at NYU.
David G.: And I should add a hell of a Twitter follow. Yeah, he is. So anyway, she’d be fun to talk to him.
Anand G: I’m Anand Giridharadas, I’m a writer, and I’m the author of Winners Take All: The Elite Charade of Changing the World.
David G.: We’re huge fans of your book and are in pretty violent agreement with the thesis. But for our listeners, just lay it out. Give us your perspective.
Anand G: I think it’s sometimes helpful to tell people in a way what’s not in the book, which is why you did a book, and how you get to the place of even beginning. And I think for me it was observing two things that I think anybody listening to this, whether you agree or disagree with where I went with it, I think anybody listening to this would agree with the two observations. And observation number one is that, we’re living in this time in which you cannot walk down the street in certain zip codes of this country without bumping into a plutocrat trying to change the world.
They are doing philanthropy maybe. Their kid is in Africa right now starting a social enterprise that turns poop into recycled coffee. They come back from those Africa trips with these like plutocrat bracelets that they all wear when they go to Africa. They are involved in making finance more humane by doing impact investing, whatever else. And so all of these initiatives are really ubiquitous, and we all know they’re going on. When you go to college campuses, every young person is engaged in some kind of change the world effort.
And so on the one hand, we’re living in this time in which the very, very rich and powerful seem to be all in on the idea of making the world a better place, in aware of inequality and interested in fighting it. On the other hand, we’re living in this time in which the same class of people, the same plutocratic class that is doing so much to give and help essentially has secured for itself and continues to benefit from a near monopoly on the fruits of the future and has essentially rigged the society to function as a casino in which the house, IE them, always wins.
And so the inquiry behind, Winners Take All, started with the question, what is the relationship between these two facts? Which themselves are not particularly in dispute. I think where the dispute comes in, is what you think the relationship is. And the conventional wisdom out there is, or was that, the relationship was one of a drop in the bucket. That yes, we do live in this time in which there is the savage inequality. However, rich people are on the case stepping up and there’s just not enough of them, or they’re not giving enough away, or they’re not stretching their dollars, far enough by not being effective enough.
And if only there were more of them, and they gave it away better and they did this and that, then we could solve these problems. And I started to become intrigued by an opposite possibility, that all this elite magnanimity and do-gooding activity was actually part of how we sustain the elite monopoly on the fruit to the future. That in other words, the extraordinary helping of our time was how we maintain the extraordinary hoarding. And I did what I do as a reporter, which is I began to report it out.
David G.: Tease out more how all this do-gooding sustains the inequality and propels it
Anand G: To start with us, I get that, that’s counterintuitive to people. I think what a lot of people who are… I mean, I think if you’re like a Koch brother, first of all, my condolences on being a Koch brother or being a deceased Koch brother. But if you are…sorry, was that not spoken [crosstalk 00:10:22]. Yeah, sorry, I forgot to drink Koch compassion coffee this morning.
David G.: Yeah, exactly.
Anand G: So I think there’s some people who would say, “Forget this guy. Who cares about inequality?” Right? So, I’m not going to have much luck with those people. But if you are persuaded that, yeah, there’s inequality thing is a big problem. I think many people, probably most people that people in a way I was writing to force the question, I think many people would say, “Okay,” but at least these people are doing some small thing to help, isn’t it better than doing nothing? Right? That’s the basic question that my book is up against because my book is a portrait of a series of people and of gestures, which I think at the margin, each of them is an improvement in the condition of the world.
If you look at it in isolation and to the question then becomes, what is this guy saying about the fact that not just the system that produces this wealth in which these people are trying to do a little bit. It’s not just that it’s not enough. It actively may be upholding the harm. Right? And so here’s how I make that case. First of all, the simple way to think about it is, if an individual act of do-gooding is a betting a harmful system on a larger scale, then it may actually be counterproductive deed.
Now that is obvious in cases like the Sacklers behind the Opioid Crisis where a relatively small amount of money is enabling a system or a reputational cleansing that literally is allowing harm to be done in a much greater scale than the gift. But the point I was making was broader. And here are some of the ways in which individual acts of do-gooding that are marginally helpful to people that really do make some difference in some people’s lives, may in fact be contributing to a bad system, A, reputation washing, right?
So you got a whole class of people who have cause to be resented in this time, who are as we know in many cases manipulating their company books so they don’t pay taxes, who are underpaying workers, who are claiming as Jeff Bezos did that they’re going to give benefits and then pulling the benefits from whole foods workers, et cetera, et cetera. And so you got a bunch of people who are doing a bunch of things to make money that would really cause them a lot of problems.
And might create bad stories of the kind that would drive people into the streets and would force reform but for changing their reputation, but for softening their image. But for acquiring a kind of moral glow as philanthropists, they would be in real trouble. I mean sometimes criminal trouble personally, but certainly just kind of reform trouble.
David G.: And if I may interject and, and it definitely takes one to know, one, they are converting circumstances in which they would have low status into circumstances in which they would have high status, which is all wealth and power really is.
Anand G: Correct.
David G.: The people who work the hardest to be richest are the most status conscious people in our society. That’s why they work so hard. And the thing that is most important to most people is their status. And certainly to status conscious people. And I think that this point you make is really important and profound, is that if your goal in life is to have as much status as possible, these bad stories are… they’re more than just inconvenient.
Anand G: They’re a real problem. I’m a parent, I have kids, who you may have even heard in the background screaming, I really care about what… I care less what all book critics think of me than I do about my kids. These people all have kids. Right?
David G.: Yes.
Anand G: These people, can’t afford to have themselves known as predatory loan sharks-
David G.: Social pariahs.
Anand G: … Right. And I think here, the point is that it’s a relatively cheap bargain basement way of changing your name.
David G.: 100%.
Anand G: The rule of thumb that I would use is you can do bad things in the billions and wipe it out with gifts in the millions-
David G.: Millions. Yeah for sure.
Nick Hanauer: Goodwill is something that corporations actually put on their balance sheet.
David G.: Yeah.
Anand G: And some of these programs, when they’re done by companies are literally run out of the marketing department, which reveals everything. So that’s kind of thing A. Another thing is that, a lot of these acts of do-gooding even when thing A is not involved, even when you’re not an economic sinner or someone who’s made money in a dishonorable way, the act of giving and then following up on the gift by sitting on boards of things and shaping how it’s given and funding research, it confers power.
And if you are persuaded by me, that the central problem here is actually not maldistribution of resources, although that’s a big problem, but actually a maldistribution of power that has led to a maldistribution of resources.
David G.: Correct.
Anand G: And then a good deed that gives further leadership positions, and further intellectual sway to the views of that class of people is problematic. So for example, if you decide as a Goldman Sachs, that you’re going to get into the conversation about empowering women, which they did 10,000 women program, right? You’re immediately on day one, one of the biggest players in that field because you’re Goldman Sachs and you are going to distort that conversation, right?
When the rich and powerful get involved in social change, they change change. And so to the extent that there are ways of empowering women that involve a wealth tax… because by the way, a lot of the things that wealth tax would fund to be, look at Elizabeth Warren’s plans or others would be beneficial to all people and women in particular in many cases. That’s not going to be part of your report. That’s not going to be the stuff that you’re talking about on your panels at the Aspen Institute.
But if there’s other ideas to empower women like Lean In, feminism, which is I think just trying to convince women that thousands of years of patriarchy is a posture problem. They were just leaning at the wrong level of an incline. And Goldman Sachs may go all in for that because that’s a way of promoting change. And my point is, that distorts that intervention, distorts the change markets. The conversation that we have about change. So that’s the second thing.
And third, there is I think a level of outrage, general outrage, not about specific things, specific people did, but about who this society is working for or not. That gets in a way obscured and obfuscated by the generalized feeling that rich people are giving back. And it distracts people in many cases from the sheer extent of the rigging and the taking.
Nick Hanauer: Yeah. So interesting so there is so much to unpack here. I want to first say that how extraordinarily useful your book and argument has been to our work because it has forced a conversation that needed to be had for a super long time.
David G: Right. Particularly our next work in trying to persuade his fellow plutocrats to use their money more effectively because we’ve long argued, and it’s what we do in this office, that, it’s much more efficient to spend money on politics to enact legislation like a $15 minimum wage that will have a huge impact than it is to address the symptoms of poverty with, given to food banks or homeless shelters.
Nick Hanauer: Yeah. And the thing that drives us crazy to use a local example are, the local big companies who will give a million dollars to a homeless shelter and get all these accolades and their CEO’s get status. And everybody’s like, “Yay, yay, yay, yay, yay, yay, yay.” But when an opportunity comes along to actually enact a tax to address the underlying problem at the scale of the problem, they-
David G: They’ll spend another $1 million in electing-
Nick Hanauer: … 10 million to prevent it.
David G: … to elect a friendly city council.
Nick Hanauer: Yeah. And it’s just this ass backwards, just the most insidious process that unfolds.
Anand G: I’m curious, I mean you said that… because it’s funny for a writer, you sit and you write this thing and then you drop it and then it goes and lives its life. I’m always curious how these conversations happen. How specifically have you been able to use the book to change an individual person’s mind or a group’s mind? I’m curious. How does that actually happen?
David G.: Can you go into those details?
Nick Hanauer: Well, I can’t name names, but I can tell you that, your book, which sent shockwaves through the community of people who give a shit ton of money away, it lets somebody like me say, we should be thinking differently about this and that $25 million you just gave to that very nice nonprofit to help people who are poor could very well be better spent on five minimum wage campaigns that would actually solve the problem.
And that has been super useful. I think of the 50 largest foundations in the country, 75% of them have education as one of their top priorities. Zero of them are working on wages. But wages is the problem.
Anand G: Yeah. That’s really interesting.
Nick Hanauer: If I give $1 million to my kids’ fancy private school, I get to deduct that from my taxes. If I give $1 million to a minimum wage campaign, I can’t. Therein lies the problem, right? The whole thing is upside down and for super obvious reasons, right? It’s super cheap to write $1 million cheque to the local homeless shelter. It’s more expensive to be taxed, right? 10 or 20 or 30 million bucks a year to address the problem.
Anand G: I’ll tell you a story about it. I went to go speak to a group of… it was a coalition of folks that fight homelessness and it was people who fight it from every angle. So it was like shelter providers, rehab clinics and treatment centers, but also funders, philanthropists, individual philanthropists, foundations. Non-Pro is the whole anybody who works on that issue in one space. And it was a massive room with these people and many of them would read by book and we were having this conversation about essentially what you’re talking about that a lot of the people working on these issues are actually unwittingly fighting on both sides of the war.
They’re doing a good thing for the homeless, but in a way they don’t realize they’re also helping to cause homelessness. And you know what’s interesting for me is I’m a general purpose writer and I write about this as it relates to many different worlds, but I don’t know the deep dive on each person’s little world. And so I learned a lot by what people tell me about their little world. And in this little world of the nonprofits that are fighting homelessness, people started to raise their hand and basically talk about, a lot of the people who donate to us, we know in terms of their tax practices or how they pay people, that they are-
Nick Hanauer: They are causing homelessness.
Anand G: … a big part of how there is homelessness in our community. A lot of these are younger people who work in these development jobs. A lot of them are women raising money from powerful men. There’s an enormous sexual harassment problem, by the way, in that donor, young female development officer relationship that doesn’t get talked about enough. And those donors get to keep doing it. And no one’s going to tell them the truth. The people are doing the work on the ground with homeless, can’t tell them the truth because they’re going to need another, another 3 million next year.
Nick Hanauer: Exactly. And homelessness is actually a very interesting example because homelessness by your Winner’s Take All crowd is treated as a symptom of poverty. And that’s a lie. Homelessness is a consequence of inequality. And it’s the very people who are writing the cheques for the homeless shelters, whose enterprises are driving the inequality that produces the homelessness. Economic growth is in many ways a good thing, but it’s not an unalloyed good.
And when the rent in a place goes from $500 a month for an apartment to $2,000 a month for an apartment because of that economic growth, which benefits a small minority of people, obviously the consequence of that is a ton of homelessness and a bunch of other social pathologies. And to not be able to connect those two things. The benefits that accrued to some people of growth and the harm that befell other people as a consequence of that growth is, I think the central narrative problem we face is that people will either can’t or won’t connect these two things.
I would just tell you that in my social world, that is the stickiest and most awkward part of the conversations I have to have with people because everyone I know is complaining about homelessness and none of them will admit that it’s their fucking fault. Homelessness is a byproduct of the economic system which has benefited them so much.
Anand G: Right?
David G: And in a city like Seattle, it is the problems that Seattle has and homelessness is the biggie. Affordable housing and homelessness. This is a symptom of affluence. It is a problem of affluence and inequality. Well, the affluence that has come in because of Amazon and companies like that, that have driven up rents and driven up real estate prices. But the irony is of course that because we’re so affluent, we can actually afford to address this problem-
Nick Hanauer: We want it-
David G: … if Companies like Amazon didn’t fight the taxes.
Anand G: I want to push on some of your saying because I think this is at the very intellectual heart of the matter, and in some ways the basic, there’s a kind of litmus test question about where you stand on this and how you see this issue of inequality. Because frankly, President Trump talked about inequality. Joe Biden talks about inequality. Elizabeth Warren talks about inequality. So at some point if everybody’s talking about it, we need to sharpen a little bit, what are the different theories out here?
And there is a basic dividing line that I propose in the book, which is whether you have a win-win paradigm or win lose paradigm. What you are describing there with homelessness is that some people are homeless because the people on top have made certain choices. I fully agree with you on that. I think that maps onto many issues as a true thing, but that is the fundamental thing that most people in power deny. A relationship between those on the bottom and those on top.
No one denies, from Joe Biden to Donald Trump to Elizabeth Warren. No one denies that there are some people on the bottom and some people on top. No one denies. I think that there’s too many people on the bottom and that it’s, life is too hard on the bottom right now in America. No one denies that. The question is, are the people down below there in spite of the success of the people in the top or because of the success of the people in the top.
And Winners Take All in some ways is an emphatic argument that the people down below are down there because someone’s standing on their back. Someone is standing in fact on their neck and the reason this is important, then when you start to say, “How I look at these different initiatives that are happening? “How do I look at 10,000 women from Goldman Sachs? How do I look at impact investing?” How do I evaluate presidential candidates?”
You should ask yourself, is the theory of change being proposed here? One in which we can empower those below by in no way threatening the wealth and power of those on top, win-win or is the theory of change at work by this person or this organization that the only way to do right by those in the bottom is to, crimp the power and wealth of those on top. That is a fundamental dividing line in how you see America today. I am strongly emphatically because of evidence in the wind lose camp. I think you are too. And I think by the way, when you look at the 2020 candidates, I think this becomes a very helpful way to evaluate who’s who.
David G: When we talk about win lose that people understand it. Nick, you often say how a market capitalism is the greatest problem solving and prosperity producing social technology ever invented. And we agree with that. But our theory of how the market works is that, it’s an evolutionary system and evolutionary systems by their nature compound advantages and disadvantages over time. And by that, inequality is the natural and inevitable consequence of an unregulated market.
Nick Hanauer: Correct.
David G: And so this is why this prosperity in this affluence creates all this inequality and creates all this poverty because that’s what evolutionary systems do. There are winners and losers. And if you believe, “Well, it’s the market. So it must know what it’s doing. The market is wiser than government,” then you’re going to end up with the system we have in which, well, maybe some benevolent plutocrats like you will help us fix the symptom-
Nick Hanauer: At the margin.
David G: … Right?
Nick Hanauer: Yeah.
David G: But if you believe that the way you address this, you want the market because it produces all these great things, but it undermines itself through all this inequality, then we have to start using government to help regulate and control-
Nick Hanauer: For sure-
David G: … and redistribute.
Nick Hanauer: Yes, for sure. That’s true. And I want to just parse a little bit of what Anand just said. I want to go deeper on the winners and losers dynamic, because I think it’s true, but nuanced. So I know Jeff Bezos extremely well, and I can attest to the fact that he is the most galactically talented person I’ve ever met. And I’ve met a lot of people, right? And there is almost no scenario in which Jeff Bezos would not have come out on top.
Maybe not as a professional football player, but certainly-
Anand G: He may not have become the richest person in the world. But-
Nick Hanauer: No, no, no.
Anand G: … but you think he was going to become the richest person in the world no matter what?
Nick Hanauer: Absolutely. But the question is how rich and how much wealth should the system provide for the most capable and hardworking person in the society relative to others? So Jeff Bezos is net worth, and I used that word worth cautiously because I think the word miss explains what’s actually happening.
Anand G: It implies that he deserves.
Nick Hanauer: Exactly, but obviously if Jeff was required to pay every worker connected to Amazon, whether they were his direct employer or a contractor, enough to live in dignity, his net worth might not be in the hundreds of billions. It might be in the tens of billions. Now, does that mean that Jeff Bezos lost? Anand, I would submit? No.
Anand G: I think when I hear people trying to frame an argument like that, I hear the immense power in our culture, the pressure in our culture to tell the powerful that they too will benefit from social change. Now you may be right as a descriptive fact. I actually think it’s true to a certain extent that when you don’t have so many people desperate, it’s a more fun society for rich people too. There’s a truth to that certainly. But I think we have to overcome the cultural pressure we feel.
And we all feel, if you’ve been part of the culture of the United States in the last 40 years, to reassure rich people that there’s not genuine loss involved the same way, you can make some sonorous Obama has claim about, what is happening now demographically in the United States is good for white people to, and in a certain sense it is. But I think we actually get real social problems when we’re not honest with people about the fact that we are asking them to lose something.
And I think it’d be a better society he’s living in. But to be honest, I think in a fairer America, Jeff Bezos may have a couple of billion dollars if that, and we might’ve invested, through a wealth tax. And other taxes and through frankly higher minimum wages that would have crimped it has thing on the pre redistribution side. We might have invested $100 billion that is currently his net worth into the society and reap all kinds of benefits out of that. And I don’t want to sit here and lie and say that would entirely be a gain from him.
If he had $1 billion instead of what he has now, he would not be running his own space program. His room for error to fail at Amazon would be drastically smaller if he didn’t have the kind of money here. So we got to be real with people. I am willing-
Nick Hanauer: Well that’s fair.
Anand G: … to actually have that guy have less power, less of a say-
Nick Hanauer: Same as money
Anand G: … less of a seat at the table for sure. In order to make $100 billion worth of investments in the common good in this country over the last 10 years.
Nick Hanauer: The thing about you Anand, is you have a way with words. And I think this frame you have that generosity is not justice, is an extremely important part of this thread that we need to build a world which is more just, and if you’re going to bend the arc of history towards justice, you are mostly going to antagonize rich and powerful people. Right? That is it.
Anand G: Yeah.
Nick Hanauer: Increasing amounts of justice means that the most powerful will have less power unless say and almost certainly less money and that is just an arithmetic fact.
David G: You’re arguing against the Econ one On one textbook here, you are going for a non Paredo optimal world.
Nick Hanauer: Exactly.
Anand G: I specifically think about Econ one On One because I want to tell you the following thing, which is, I went to university of Michigan. I enrolled in the fall of 1999 I took Econ one On One. I guess either that fall or I don’t know, maybe it was my second year, first year or something. And I remember exactly as you say, I remember learning, all parties benefit from trade. They may be some transitional thing, but both sides benefit, both countries become richer of it.
We were in fucking Michigan, we were in Michigan. It was 1999 in Michigan. When I started going to grocery stores outside Ann Arbor, I realized that there were Bosnia like economic conditions, 20 minutes in every direction.
Nick Hanauer: Yeah, right.
Anand G: How could they still have been teaching in 1999 the trade benefits to all people? A lot of this, if any other discipline, we’re allowed to operate on the bullshit assumptions of economics and then completely guide how we organize the modern world. It would be a scandal. It’d be a scandal. You just assume everything away and so that’s a big part of it and it is economic logic. You’re exactly right that has pushed this win-win thing. Whereas anybody who studies politics and power as their lens or sociology completely understands that a lot of the time someone’s down because someone’s on their neck.
And this becomes a lot easier to see when you go to historical episodes. We’re all biased about our own time, but we’re all more clear eyed about other people’s times. Right? So if you say in Downton Abbey or the world of feudal England or the feudal world a while ago, are the people on the edge of the property who don’t own the land but farm it and pay rent or are the servants and drivers living in the basement, are they there just because they haven’t quite gotten into the castle yet?
Or are they there because of what the people in the castle do, because of the system that they benefit from and fight to defend? And it’s super obvious that they are down there because you are up there. And if you go to slavery in the South and you say are the slave slaves simply because they haven’t become white masters yet or are they there because white masters are perpetuating system that keeps them below? You say, it is obvious that they are down there because you are up here.
And you go to the caste system in India and you say, are people untouchables just because they haven’t read enough books to become a Brahman yet or are the Brahmans actually maintaining a system that invents them as untouchables and keeps them down there and you say, yes, it’s obvious that the people are down there because someone is standing on their neck.
And so then the question becomes, why is it that when we look at our own society? We suddenly unlearn what we have learned through history, which is that when you have an injustice, there’s usually someone benefiting from it and that person usually needs to be moved out of the way and have their power reduced in order for justice to be done.
Nick Hanauer: It’s the cult of the market. In our popular culture, we celebrate both wealth and philanthropy. And part of that assumption is that better to let rich people like Nick give away his money then have the government do it because the government is always inefficient and this market of philanthropy will be wiser. After role, he’s really smart. He made all this money. He must know how to spend it.
Anand G: We got to talk about that though. So Michael Dell recently, that was in January made a version of this argument when he was asked about Alexandria Ocasio Cortez, the congresswoman’s tax proposal to tax, high incomes, 70% marginal income tax rate. And he basically used his foundation to say, we give money away in this really effective way and therefore it’s much better to have us do that in the government. A couple things. First of all, this idea that government is inefficient, it just passes through rich people chatter as like an undisturbed hypothesis.
Actually, it’s just not true. There’s a lot of different ways to look at it. Our healthcare system is way more private than all the other rich countries and it is way less efficient than all the other rich countries. So that’s complicated for that thesis. It’s also true that programs like social security are some of the most efficient things in the history of the world. And you’d have old people bleeding out on the streets without them and they’re not only efficient but tremendously effective.
Pick any area of life old people, which rich person or corporation has done more for old people than social security has, which rich person or corporation has done more for black people than the civil rights act and the voting rights act. Which organization including Cheryl Sandberg, she can compete, has done more for women than suffrage. The reality is, this idea, that solving things through policy’s inefficient, is straight up corporate propaganda. Are there government programs that are inefficient? Sure.
Is their money spent in government that doesn’t add social value? Sure. Do you want to start listing companies that spend money that don’t add social value? Does Exxon add social value? Does Pepsi add social value? I mean how many companies in the fortune 500 add social value? So a lot of things are not perfect. I don’t think government is specially imperfect. And I think the reality is the biggest civilizational achievements like the fact that something you don’t think about very often in America that I think about, is someone whose family came from India who travels all around the world.
You go out to eat in India, you’re rolling the dice on getting sick. I can’t remember the last time I ever got sick in a restaurant in America. That is a gigantic civilizational achievement that was achieved through government, through policy and law.
Nick Hanauer: Yeah, for sure. We would be remiss if we did not zero in on whether somebody like me can indeed play a constructive role in all of this.
David G.: It’s he just spinning his wheels here.
Anand G: We’ve reached the therapy portion. So I’m going to just mark the time now and I will only bill you for this part of the hour.
David G.: Okay.
Anand G: Yeah, I just laid down. So, look, it’s a very important question and I am often misunderstood on this score, which, I guess you can only blame yourself. Clearly I haven’t communicated it well. But I said in my first interview that I think the opening day of the book and the Chronicle philanthropy, look in a better world, in a better America, rich people will have less money in general. They will make less money while they’re on the making end. More of it will be taken through wealth taxes and other devices that they will have net worths way lower than Jeff Bezos’.
And we will actually have fewer social problems for them to solve through philanthropy because a lot of that money that we’ve taken from them would be invested. Right?
Nick Hanauer: Yeah.
Anand G: So that’s the world I want to get to. By the way, someone stood up recently in June at a book event I was doing in London. He was like, “Yeah, you guys are talking about all these social problems. I just want to say, I’m from Sweden. We do not have a lot of philanthropy there. But we also don’t have any of the social problems you all were talking about today on stage-
Nick Hanauer: He’s right.
Anand G: … and [crosstalk 00:40:25] down.” So I want to live in a world like that. However, I’m a realist. In addition to being an idealist and I understand that we don’t live in that world now and we may not live in that world ever and we’re not going to live in it for 10 years at a minimum. And so the question is, if you are a rich person as you are persuaded of that eventuality of wanting to get there, but you want to know what to do today, I do absolutely believe there are better ways to give that would help hasten the advent of this fairer society and fairest system.
And there’s other ways to give whose primary, while it may assist some people, primary effect would be to shore up the bad system, right? There is system busting philanthropy and there is system enhancing philanthropy. There is de-rigging philanthropy and there is rigging philanthropy. So let’s talk about what exists within the de-rigging group within the system bursting group. I’m actually working a project to try to guide rich people into some of these areas.
So let’s pick a few of these areas. If you say, “I want to fund $1 billion effort, raise a fund to $1 billion effort to lay the groundwork to get money out of politics.” Now that could by the way be part philanthropic, it could be political action committee. We could talk about how you do that, right? That’s like a Koch brothers type of initiative where you’re working all sides of the IRS tax code with the philanthropic and this and that. But more importantly, $1 billion to try to get money out of politics, would on the one hand be a big exertion of philanthropic power, rich people power.
Someone like you could absolutely lead and get involved in. However, if it succeeded, it would drastically reduce the power of your class. Right? And that is the paradigmatic example that I’m trying to get out of here. What is trader to your class giving, right?
Nick Hanauer: Yeah.
Anand G: So that’s a good example. Here’s another trader to your class giving. If we were to say, there’s a bunch of lawyers right now in America fighting for educational equity, basically trying to win cases saying that unequal funding by property tax is unconstitutional. Right now it is very constitutional. And so as you go to Marin or Greenwich or Evanston and they got some very nice public schools ring-fenced for their district. The money stays in that district. Mommy or daddy has a nice house so you get a nice public school and then everybody else has schools that are strapped.
It’s immoral. It should be unconstitutional. Now, you can get things like that rendered unconstitutional, but it takes like 20 years and you’ve got to farm cases and you got to alter public opinion and you got to, start some stealth initiative at the Federalist society, convincing right-wing judges that this actually violates Christian values. It takes like a concerted project of work as they did in the gay rights cases. The people doing that do not get the kind of funding that the people doing charter schools get.
Nick Hanauer: For sure.
Anand G: It’s $1 billion initiative to help those lawyers. There are areas, and we could go on, but there are multiple areas of system busting philanthropy, a philanthropy that would actually tend to push us in a direction of solving these problems in ways that have the following four criteria, public, democratic, institutional and universal. Rich people can give in ways that increase the odds of us solving more and more of our problems that way.
Nick Hanauer: And I’ve often thought that we need a new language of philanthropy. We actually need four or five words, new words to describe the different kinds of giving from the most self interested, which is to give a big donation to some college that you want to get your kid into, which-
David G: Nobody would ever do that.
Nick Hanauer: … yeah. Or whatever. Right?
Anand G: Nick, that’s a totally made up. That’s totally made up [crosstalk 00:44:28].
Nick Hanauer: Yeah, yeah, yeah. That’s-
David G.: Fake news?
Nick Hanauer: Yeah. Fake news. To the polar opposite where you are working in a way to increase justice directly, which contravenes your power.
David G: When you give political money to raise your own taxes, you are contravening your own personal interests.
Nick Hanauer: Exactly. And that, that should be called something different than donating to your own kids private school.
Anand G: There is this conversation that’s happening now around what is the ethics of, of that credit. But I think there’s a more basic question here which would really get these people’s attention, which is not just do you give people credit? Do you actually give a tax deduction for these donations?
Nick Hanauer: Yes.
Anand G: And here’s what I propose. There’s some people who want to abolish the tax deduction altogether. There’s some people-
Nick Hanauer: That’s me.
Anand G: … who I think we want to have it limited, so that regular people giving $100 to United way could get it. But Pluto grads giving away $1 billion, don’t get it. That’s another smart proposal out there. There’s some people who don’t want it touch it because they feel America is so dependent on that large ass. Here’s an another idea that I have and I don’t even know that I would vote for my own idea relative to maybe yours. But a thought, which is that what if we made the tax deduction for philanthropy conditional on how public spirited the gift actually is?
Nick Hanauer: It should be on a sliding scale.
Anand G: Correct. And so here’s a few things on that scale. If you get your name on it, right? If you’re putting your name on a building, the whole world’s going to know you did it, then I think you don’t get the tax deduction because what you’re purchasing is a reputation shoe Polish and [crosstalk 00:46:11]-
Nick Hanauer: Exactly you’re purchasing standards.
Anand G: … that’s Fine. That’s a service. That’s not a gift, right? You’re buying a service.
Nick Hanauer: You don’t get a tax deduction for buying the naming rights on a stadium.
Anand G: It’s in that sense, a lot of these things are identical. And number two, if you are a meddler after you give, you sit on the board, your kids are on the board, your nephew is an intern. You are asking for quarterly or weekly PowerPoints from the staff which they have to spend the entire week preparing instead of actually doing the programmatic work. If you’re a medler and you insist on using the gift to exert more and more power over society, knock yourself out, no tax deduction. You are buying the right and a lot of older people don’t have necessarily a lot to do after they’ve made all their money.
They’re in their sixties and seventies they love these board meetings. They love having these young women call them and give them updates. Like you don’t get a tax deduction if you’re using that kind of giving, you’re like have a friend phone you. We could then talk about, if you have set up some mechanism for the public to have some say in what you’re doing. If you’ve allowed a certain amount of community involvement. If you’ve allowed people receiving the grants to shape the thing, then maybe you get the tax deduction.
If you you haven’t. You don’t. Basically what I’m suggesting is the deduction we give which costs tens of billions of dollars a year to the taxpayer, we are giving because we are essentially saying, I think you are doing a public service that is saving us money as a society, so we’ll reimburse you for some of that. You’re doing some of the stuff that we would do if you didn’t do it. But that’s actually often not the case and we need more of a cheque to make sure that these gifts that the public is helping subsidize are actually public spirited.
David G.: I actually think it’s easier just to eliminate all tax deduction. I’m only 25% of filers actually itemize any way. So if it was up to me, you just remove all deductions entirely. And yeah, that’s how you simplify the tax code. So I have to say great conversation. You did disappoint me in one way in that, you haven’t told Nick he’s full of shit. But we have a closing question for you. We ask all our guests, why do you do what you do?
Anand G: I think I write and write nonfiction and try to think about books as biopsies of a society or a moment in time. And I do that because I think in a large and complex and affluent society such as ours, there are so many people who are so invested in stories about reality. That sometimes reality is a casualty. And I think about writers as the people who are paid to tell the clear-eyed truth. They’re not paid to rep a particular company and make it look good or paid to represent a particular ideology or party.
And while it’s important that a lot of people out there are doing those kinds of jobs, building things, repping things, advocating for things, I think it’s important to keep around a certain number of village gossips who talk to people, who find out what people really think and try to tell the truth. I got especially lucky with this book that the truths in this book were not my private truths. They weren’t things that only I thought they were in the way of the village gossip, the thing that a lot of people secretly thought but couldn’t say because they got a job.
Their healthcare depends on going back to that foundation tomorrow. And I think it’s important to have some people in this society to whom people whisper about the truth. They can’t say because those people, those writers can say it in their stead.
David G.: I love it. That’s a good answer. We want to thank you for your time and for your work. And I think you and I are going to be on a panel in New York for the new Yorker maybe.
Anand G: Oh yeah, yeah, yeah, yeah.
David G.: So that’ll be super fun. And I’ll shoot you a note and maybe we can have a coffee cup of coffee too or something like that.
Anand G: Yeah, I would love that.
David G.: Okay, man. Thank you so much.
Anand G: All right. Thanks so much.
David G.: Take care.
Nick Hanauer: Great talking to you.
Anand G: Bye.
Nick Hanauer: Bye.
Anand G: Alright.
David G.: I got to tell you, Nick, I was a little disappointed
Nick Hanauer: I knew you would be.
David G.: He didn’t hand you your head on a platter-
Nick Hanauer: He was surprisingly unmean to me, wasn’t he?
David G.: Yeah.
David G: Yeah.
David G.: Or maybe that’s just you.
Nick Hanauer: I was ready for more, but still it was a super interesting conversation and I think he’s such a remarkably articulate thinker and speaker. It’s really cool to get to talk to him directly.
David G.: Yeah. And it’s hard to overstate, I think the influence he’s had with his book and his public appearances over the past few years because we’ve really have been living in an era in which we have celebrated extreme wealth and celebrity and celebrated the philanthropy from you and your wealthy friends. And he’s starting to open the eyes to what the real costs of all this have been.
Nick Hanauer: And again, I think it’s worth just for a second more deliberately and more precisely tying this conversation back to economics. Right?
David G.: Right.
Nick Hanauer: Because this is an economics podcast and his book was not strictly speaking about economics, but the thing about economics is that, it is and to science, it’s mostly a narrative. It’s how human societies rationalize who gets what and why. It’s how we instantiate our social and moral preferences about status, privileges and power. And I think that he has spoken very directly to those things. He has spoken very directly to the kind of ideas that have shaped our culture, which in turn have shaped how we think about economic policy and all the things that touch that.
David G.: And pointing out that philanthropy as it’s used today by folks like the Sacklers and the Opioid crisis that they created. So form of reputational money laundering that actually distracts from the true cause of the problem. I mean what we argue in our office and what you have argued to your wealthy friends is that, you need to spend your money better in the sense that you are addressing the symptoms but not the disease. You give them money to fund a homeless shelter rather than addressing the structural inequalities in the economy that lead-
Nick Hanauer: That produce-
David G.: … homelessness. He goes a little further where it’s not just you need to spend your money more wisely. Maybe you shouldn’t have so much money.
Nick Hanauer: Right. The world would be a better place. Indisputably if the wealthiest citizens had less than everybody else had more you would just have… and you would have less need for-
David G.: Less need for philanthropy.
Nick Hanauer: … Exactly. Obviously. Anyway, very interesting conversation. Fun to have him on. I’m glad he wasn’t mean to me.
David G.: And if you’re wondering how we got into this market world, stay tuned for the next episode where we’re going to be talking to George Mambo and Binya Applebom about how neo-liberalism happening.
Speaker 1: Pitchfork Economics is produced by Civic Ventures. The magic happens in Seattle in partnership with the Young Turks Network. If you liked the show, make sure to subscribe, rate and review us wherever you get your podcasts. Find us on Twitter and Facebook at Civic Action and Nick Hanauer, follow our writing on medium at Civic Skunk Works and peek behind the podcast scenes on Instagram at Pitchfork Economics as always, from our team at Civic Ventures. Thanks for listening. See you next week.