The billionaires’ donations will turn Notre Dame into a monument to hypocrisy

Handouts from France’s super-rich make them look pious, and lend credibility to gross inequality writes Aditya Chakrabortty in The Guardian

 

Antoine Arnault, CEO of Berluti, and his wife Natalia Vodianova visit Notre-Dame de Paris after the fire. Photograph: POOL/Reuters


In 2017, a welter of stories appeared in the international press pointing out the brokenness of Paris’s Notre Dame. Cathedral officials showed journalists how patches of limestone would crumble at a finger’s touch. Gargoyles that had lost their heads were patched up with plastic pipes, while fallen balustrades were replaced with wooden planks. All this decay was caused by pollution, acid rain and eight centuries of use – but also official neglect was to blame. Keepers of the building had begged for more money, but neither the belt-tightening French government nor the wealthy grumbling about higher taxes gave enough.

Then came Holy Week 2019 and the inferno by the Seine and all of a sudden, nobody can give too much. After years of preaching the shrinking of the public sector, the French president, Emmanuel Macron, now wants to mobilise the full resources of the state to get the roofless cathedral rebuilt within just five years. And money from France’s billionaire class keeps raining down. In three days, the cathedral has been pledged €100m (£86m) from Francois-Henri Pinault, the ultimate owner of Gucci and Yves Saint Laurent; €200m (£172m) from the Arnault family of Louis Vuitton fame; another €200m from L’Oreal owners the Bettencourt Meyers family, and €100 from French oil giant Total.

From these two episodes just two years apart, we can draw two conclusions. The first is that what is happening this week is a remarkable display of public-sector coordination and private generosity, in the service of a great thing: the restoration of one of the world’s treasures. And the second is that the rebuilt cathedral will be a monument to the gigantic hypocrisy of austerity politics.

Francois-Henri Pinault, pictured with his wife, Salma Hayek, has pledged €100m to Notre Dame. Photograph: Nina Prommer/EPA

A heritage site that roused barely a shrug two years ago means the world this week. A billionaire class that shrieked at the wealth taxes of the former president François Hollande is happy to stump up whatever it takes now. A politician, Emmanuel Macron, who has repeatedly told the poor they must live on less and the workers that they must give more to bosses, now plays at being a national leader – like Charles de Gaulle with more hair wax. And a capital city that over the past few months has been under siege from the working poor of the gilets jaunes is reminded once again of the enormous wealth held by a very few of its citizens. Everything that was impossible as late as 2017 is now deemed essential in 2019.

Of course, we would prefer private millions to be pulled out from under goose-feather pillows and spent on public works. But we should also be asking why it takes an almighty conflagration to force this to happen; and why those generous donors are so averse to giving their money to democratically chosen priorities, which is what taxes represent. If the ultra-rich can chuck in so many millions of euros for a building, then what stops them ending hunger and poverty?

Few want to ask that question, nor the obvious follow-up about how much the mullti-billion-owning Catholic church will stump up. The press prefer instead to boggle at the nine-figure sums that have been magicked up, while Macron and others congratulate the donors without asking where that money came from. Some go further still. The editor of Moneyweek went so far as to remark on social media: “Billionaires can sometimes come in really handy.” Well, yes. And democracy can be such a downer and greater equality a massive drag.

But for those who care to look, there is plenty here that is ugly. No sooner had Pinault pledged his €100 million, then his consigliere, Jean-Jacques Aillagon, sprang forth to suggest that all such donations should receive a 90% tax deduction. In other words, the French public should pay for most of its beloved billionaires’ generosity. The suggestion was swiftly withdrawn, but its proposer is no naïf. A former culture minister, Aillagon knows that charitable giving in France attracts a 60% tax rebate: so for every €100m some industrialist papa gâteau wants to chip in, the public will pay €60m. At least Reuters reports that the Pinault family is sitting out this particular  round and not claiming tax relief.

Then there’s the source of that €200m pledge from France’s richest man, Bernaud Arnault, who just a few years ago was reported to be applying for Belgian nationality. This was not to enjoy any tax advantages, said his spokesman, but purely to better order his affairs. Nothing to do with the fact that inheritance tax in Belgium is only 3%, while France charges 11%, non monsieur.

Such ghastliness is not France’s alone. It is international and it is orthodoxy. Just look at Thursday’s Guardian lead story on how 1% of people in England own 50% of its land. Or remind yourself of the Oxfam finding that last year, the world’s 2,200 billionaires got 12% wealthier, while the bottom 3.5 billion people grew 11% poorer. Those at the top extract their wealth from those below – and then are applauded when they chuck us their spare change. From here it is just a short selfie-stick shuffle to a rebuilt Notre Dame boasting an Arnault gallery and a L’Oreal visitor centre. I’m joking, you snort. In which case, let me take you to the Sackler gallery at London’s Serpentine, generously donated by the family that extracted millions from opioid addiction.

Not least among this litany of ironies is that it takes a Catholic cathedral to remind us that we have barely advanced an inch from the medieval buying of indulgences, when the rich could amass their fortunes in as filthy a fashion as they liked – and then donate to the Church to launder their reputations and ensure their salvation. What was it that old Friar Tetzel used to say? “As soon as gold in the coffer rings, the rescued soul to heaven springs.”

The art of profitable giving - PhilanthroCapitalism

G Sampath in The Hindu




Not too long ago, public opinion was against philanthropy. A new book explains how attitudes have changed, and why we must scrutinise them.




Once upon a time there was charity. The haves gave some to the have-nots, and that was that. Sometimes the giving impulse was religious, sometimes guilt-induced. But charity was more about the soul of the giver than the welfare or rights or dignity of the receiver. This is why there can be no charity between equals. Or between friends. For all these reasons, charity had for long remained an activity rooted in the personal-private, quasi-religious sphere.

Then came philanthropy. Jeremy Beer, in his The Philanthropic Revolution: An Alternative History of American Charity, argues that the displacement of charity by philanthropy was “the result of a reconceptualisation of voluntary giving as primarily a tool for social change.” It also marks, according to Beer, a shift from a theological to a secular framework for giving, bringing with it all the baggage that secularisation entails – blind faith in the technological mastery of the social world, centralisation, and the bureaucratization of personal relations.”

And today we have ‘philanthrocapitalism’. The term gained currency after The Economist carried a report in 2006 on ‘The birth of philanthrocapitalism’. Noting that “the need for philanthropy to become more like the for-profit capital markets is a common theme among the new philanthropists,” the article explains why philanthropists “need to behave more like investors.”

Two years later came the book that today’s biggest philanthropists swear by: Philanthrocapitalism: How the Rich can Save the World by Matthew Bishop (a senior business editor from The Economist) and Michael Green. The title is not intended to be ironic. It is an earnest argument: in a world of rich men and poor states, who better to save the poor than the rich themselves?

The advent of philanthrocapitalism may have finally brought to the fore what is tacitly understood but rarely made explicit -- the symbiotic relationship between capitalist excess and philanthropic redress.



When philanthropy was shunned



It is no accident that the first great philanthropists were also the greatest capitalists of their age. Nor is it a coincidence that many of these men, remembered today by their philanthropic legacies – John D Rockefeller, Andrew Carnegie, Andrew Mellon, Leland Stanford, James Buchanan Duke – also figure in Wikipedia’s list of “businessmen who were labelled robber barons”.

If one is to make sense of the recent surge in the quantum of philanthropic funds sloshing around looking for worthy causes – the Bain & Co. Indian Philanthropy Report 2015 notes that foreign philanthropic funding in India more than doubled from 2004 to 2009, jumping from $0.8 billion in FY‘04 to $1.9 billion in FY’09 – then one needs to go beyond the numbers and look at the economic underpinnings of corporate philanthropic initiatives. This is precisely what sociologist Linsey McGoey sets out to do in No Such Thing as a Free Gift: The Gates Foundation and the Price of Philanthropy, which released last month.

No Such Thing… kicks off with a quick reminder of the shady origins of philanthropy. How many of us know, for instance, that not too long ago public opinion (and government opinion) was against philanthropy in general, and corporate philanthropy in particular?

In the early 20th century, philanthropic foundations were “viewed as mere outposts of profit-seeking empires, only cosmetically different from the corporations that had spawned them, a convenient way for business magnates to extend their reach over domestic and foreign populaces.” McGoey quotes US Attorney General George Wickersham, who had observed that they were “a scheme for perpetuating vast wealth” and “entirely inconsistent with the public interest.”

Yet what was common sense in 1910 would sound blasphemous in 2015. While no self-respecting economist today can deny the obscene economic inequality that characterises our age, not many would willingly acknowledge the connection between concentration of wealth and philanthropy. That is to say, an equitable society would suffer neither a club of the super-rich that seeks self-expression through philanthropy, nor a class of the super-poor that is dependant on philanthropic charity for survival. McGoey makes this point simply with a quote from the economic historian RH Tawney: “What thoughtful rich people call the problem of poverty, thoughtful poor people call with equal justice the problem of riches.”

If philanthropy is thriving in this age of extreme inequality, it is because it serves a dual purpose: one, to make inequality more acceptable ideologically and morally; and two, to define poverty as a problem of scarcity rather than of inequality. Hence the ultimate argument in favour of philanthropy, deployed when all else fails, is the one based on scarcity: ‘something (from a foundation) is better than nothing (from the government)’.

Philanthropy is the palliative that makes the pain of capitalism bearable for those fated to endure it. Philanthrocapitalism, on the other hand, is about transcending this palliative function to represent capitalism itself as a philanthropic enterprise.

In Bishop and Green’s formulation, such a philanthropic capitalism – also known as ‘venture philanthropy’, ‘social entrepreneurship’, ‘impact investing’ – would drive innovation in a way that “tends to benefit everyone, sooner or later, through new products, higher quality and lower prices.”

As McGoey reveals in her book (and Bishop and Green attest in theirs), no one does philanthrocapitalism better, or bigger, than Bill Gates, who helms the world’s largest philanthropic foundation, the Bill and Melinda Gates Foundation (henceforth Gates Foundation), with an endowment of $42.3 billion. For this very reason, the Gates Foundation is an ideal case study for understanding the social impact of philanthropic foundations.



Problems with philanthrocapitalism



McGoey enumerates three obvious problems with philanthrocapitalism, illustrating each with reference to the Gates Foundation.

First is the lack of accountability and transparency. McGoey points out that the Gates Foundation is the single largest donor to the World Health Organisation (WHO), donating more than even the US government. While the WHO is accountable to the member governments, the Gates Foundation is accountable only to its three trustees – Bill, Melinda, and Warren Buffet. It is not unreasonable to wonder if the WHO’s independence would not be compromised when 10% of its funding comes from a single private entity “with the power to stipulate exactly where and how the UN institution spends its money.”

Secondly, “philanthropy, by channelling private funds towards public services, erodes support for governmental spending on health and education.” With governments everywhere slashing their budgets for public goods such as education and healthcare, the resultant funding gap is sought to be filled by philanthropic money channelled through NGOs. But with one crucial difference: while the citizen has a rights-based claim on government-funded social security, she can do nothing if a philanthropic donor decides to stop funding a given welfare project – as has happened time and again in many parts of the world.

At the same time, even as it facilitates government withdrawal from provision of social goods, philanthropy paves the way for entry of private players into the same space. McGoey details how the Gates Foundation orchestrated this brilliantly in the American education sector, where it helped create a whole new market for private investment: secondary and primary schools run on a for-profit basis.

Third, the same businessmen who made their money through unhealthy practices that worsened economic inequalities are now, in their philanthropic avatar, purporting to remedy the very inequalities they helped create. In the case of the Gates Foundation, Microsoft’s illegal business practices are well documented in the US Department of Justice anti-trust case against the company. As McGoey puts it, the fortune now being administered through the Gates Foundation “was accumulated in some measure through ill-gotten means.”

Of course, none of this should detract from the undeniably good work that philanthropic bodies have done. The Gates Foundation has saved countless lives, especially in Africa, through its funding of immunisation programmes and outreach projects. Its several achievements, therefore, have been deservedly celebrated. Nonetheless, critical scrutiny lags far behind the lavish accolades.

Even the three issues discussed above barely scratch the surface. McGoey goes on to raise several more.

She asks, for instance, asks how the Gates Foundation’s interventions in global health tally with Bill Gates’ violent opposition to any dilution of the patent regime. The Gates Foundation was the largest private donor to the Global Fund to Fight AIDS, Tuberculosis and Malaria. At the same time, it “has continually lobbied against price reductions of HIV drugs and other medicines”, infuriating activists who “want a more equitable global patent regime” and “do not want charity handouts.”

She examines the Gates Foundation’s partnerships with Coca-Cola, not exactly popular among those who value public health. In the context of the Foundation’s work to help combat global hunger, she reveals how its financial ties with Monsanto and investments in Goldman Sachs “may be compounding food insecurity rather than mitigating it”.

She interrogates its skewed research portfolio. Of the 659 grants made by the Gates Foundation in the field of global health, 560 went to organisations in high-income countries, even though the problems being targeted were in low-income countries. How does excluding local scientists and programme managers who are best placed to understand the problems help the cause, asks McGoey.

While it is generally taken for granted that a philanthropic foundation would make grants only to non-profits, McGoey draws attention to the Gates Foundation’s non-repayable grant of $4.8 million to Vodacom, a subsidiary of Vodafone. In 2014, the Gates Foundation also announced a grant of $11 million to Mastercard for a “financial inclusion” project in Nairobi. Interesting how philanthropy has evolved to such an extent that in a world wracked by hunger, disease, war, and malnutrition, two entities found to be most in need include a multinational credit card network and a multinational mobile service provider.
Finally, not to be forgotten are the tax breaks that philanthropic foundations enjoy. Critics have pointed out that nearly half of the billions of dollars in funds that philanthropic foundations hold actually belong to the public, as it is money foregone by the state through tax exemptions. History has shown that progressive taxation is the most efficacious route to redistribution. But a strong case for philanthropy is another way of making a strong case for lower taxation of the rich – after all, it’ll leave them with more money to spend on uplifting the poor. Small wonder then that philanthropy’s biggest enthusiasts are political conservatives.

The Economist report on philanthrocapitalism cited above also quotes a young Indian philanthropist, Uday Khemka, who predicts that “philanthropy will increasingly come to resemble the capitalist economy.” That was in 2006. Nine years later, the publication of McGoey’s No Such Thing As a Free Gift marks the first systematic attempt to document this phenomenon.







sampath.g@thehindu.co.in

How we fell out of love with Keynes

The same intellectual retreat can be seen all over the western world and it shows that noble intentions and half-decent ideas don't get you very far

• 
• • Aditya Chakrabortty
  • guardian.co.uk, Monday 26 March 2012 20.00 BST

The Greek crisis acted as a parable of what happens when countries borrow too much. Photograph: Anne-Christine Poujoulat/AFP/Getty Images

 

Remember all that talk about never letting a crisis go to waste? All those frontbenchers – from across the political spectrum – who swore that the banking crash would change economic policy for good? Vince Cable and Alistair Darling traded their favourite bits of Keynes and state intervention was firmly back in fashion. Well, you can rip up those fine, fevered promises and stick them in the bin. That at least is the big message out of last week's budget.

Oh, we all know what the papers reported: the granny tax, the kid gloves for the super-rich, and George Osborne's tin ear. But just as notable was what they didn't pick up: any meaningful dispute over the big picture. Labour's two Eds concentrated their attack on the chancellor for the fairness of his individual measures and kept schtum about the overall cuts strategy, of which they are only a small part.

The business lobby applauded the drop in corporation tax and the bungs for Grand Theft Auto and Richard Curtis (or, as they're officially known, relief for the British video games and film industries), but let the coalition off the hook on its promises to rebalance the economy.

How very different from Osborne's previous budgets. Over its first couple of years, Lib Dem wobbles and the European meltdown forced the coalition's austerity programme front and centre in political debate.

As for reform of Britain's listing economy, the strapline for last year's budget was that it would start "the march of the makers". Yet with the euro crisis temporarily on simmer, and the chancellor still clinging to his Plan A, the argument of ideas has gone all-but-silent.

Going by last week's squalls, what has replaced it is a giant scrap about who should lose most: OAPs or the young, the super-rich or welfare claimants.

As the cuts go deeper and further, and living standards remain depressed, this visceral battle of sectional interests will surely only escalate. Meanwhile, the political classes are busy getting back to business as usual. Last week's announcement of infrastructure privatisation suggests the new orthodoxy for Cameron and Osborne: when in doubt, Thatcherise it. As for the banks, where all this began, they are firmly back in charge. You know all about the bonuses, but even more telling is this underreported Treasury announcement from last week: the banks' miserliness with credit has forced Osborne to take £20bn of taxpayers' cash and use it for loans to small businesses. But wait for it: this money – your money – will be given to the same big banks to lend, with the minimum of public oversight. Take it from me: those last two sentences do not improve on rereading.

Blame Tory ideology, if you like, or Labour's failure to offer an alternative, but this is what those fervent avowals from MPs between 2008 and 2010 have given way to. As Old Whiskers might have said: all that is solid melts into hot air.

The same intellectual retreat can be seen throughout the Western world. John Quiggin, author of Zombie Economics, and political scientist Henry Farrell, have just published a fascinating paper charting how governments, central bankers and economists changed in the four years after Lehman's collapse from being "Keynesians in the fox hole" (as one Chicago academic put it) to merchants of austerity.

The tale Farrell and Quiggin tell is a simple, but compelling one. In autumn 2008, the policy-making establishment was in deep panic. The world they had constructed was collapsing around their ears, and ministers and economists had no idea how to respond. Amid this confusion, the long-marginalised followers of Keynes were able to win panicked international support for their economic-stimulus packages and reform of the financial sector. But no sooner had the global economy stabilised than governments and central bankers (led by Jean-Claude Trichet in the eurozone) returned to their old ways. They were urged on by the now-rescued and boisterous finance sector. And of course there was then the Greek crisis, offering a seemingly irresistible parable of what happened to countries that borrowed too much.

Never mind that the Greece story doesn't tell you much about any other country apart from Greece. Never mind that the principal argument of the Keynesians that you don't cut public spending amid a slump is as true now as in 2008. The conclusion one takes away from the past four years is that it wasn't the free-marketeers who were on the wrong side of history – it was all those good-hearted people punching the air and proclaiming the arrival of some progressive moment. The conclusion one takes away from Farrell and Quiggin's paper is that noble intentions and half-decent ideas don't take you very far. You need an adequate political vehicle, which Labour has plainly failed to provide, and some hard-headed analysis too.

Still, there's always the next crisis. And the failure to reform the economy pretty much guarantees that another one will come along.

My Weltanschhaung - 10/2/2012

I am pleased at the new Cameron proposal, - 'Elderly people should be encouraged to go back to work and move into smaller homes'. Thats one more supply side policy. The principle behind it: the purpose of every human being is to contribute to society until death and the Cameron policy exemplifies it. So retirement will only be for the rich, this policy is a third world policy indeed. But who will hire them, I ask? Also, had Britain become a third world country?

I am also pleased that tax breaks are planned for those who employ cooks and cleaners. This is a good way to boost GDP, after all the cooking and cleaning services provided by stay at home parents are free and are not included in the GDP figures.

Its funny the interesting stories seem to appear only in the Daily Telegraph.