Acton Commentary

Social Institutions, Scrutiny, and the 1 Percent

Mark Zuckerberg and Priscilla Chan’s letter to their daughter may indeed be substantively vacuous, but the move to place $45 billion into an explicitly socially-conscious LLC is illuminating on a number of levels. At least some of the critical reaction to the announcement hinges on a deep skepticism and even suspicion of for-profit corporations, however, and has less to do with the specifics or lack thereof of the Chan Zuckerberg Initiative than to do with broader fears about institutions more generally. To adapt a phrase of Reinhold Niebuhr, we see here a model assuming the morality of man but the immorality of social institutions. Here are three things to keep in mind when considering the prudence of incorporating the Chan Zuckerberg Initiative.

First, humans are natural institution makers. Human individuals and social institutions go together. The first and most basic human institution is the family. It’s in this context that we are born, grow, mature, and eventually go out to develop new institutions. The sociologist James Davison Hunter identifies institutions as “patterns of thought, behavior, and relationship.” The modern world has seen a growth in the diversity and complexity of institutions, but they are not a novel innovation. The Chan Zuckerberg Initiative can thus be seen as an intentional outgrowth of the concern that arises within the context of one social institution (the family), sustained by the material wealth generated in the context of another social institution (Facebook, the business), and taking the form of another social institution (a limited-liability corporation). Different social institutions have different purposes and forms appropriate to those diverse purposes. Just as charities and non-profits are best suited to address some kinds of challenges or particular aspects of social problems, other forms of incorporation can address other phenomena or work in different ways. What we need today are more diverse sets of institutions aimed at the complex challenges of the modern world. Skepticism about the social good achievable by an LLC rather than a 501(c)3 is illustrative of an untenable bias against markets and fails to see profit itself as a social good.

Second, even $45 billion can be squandered or spent down. In making the Chan Zuckerberg Initiative an LLC, the couple is leaving open the possibility that their investment can be aimed toward sustainability over a longer time horizon. Some of the work they support may be profitable, whether in the short or long term. $45 billion, the current value of the Facebook stock pledged to fund the initiative, is a huge amount of money. But if the goal is sustainable and sustained social change, the work necessary will take decades and even generations rather than days, months, or years. As the letter indicates, the real focus is strategic and purposive “investment” rather than occasional or ad hoc “charity.” And to provide a sense of how far $45 billion can go, consider that the federal government of the United States spends more than that every 5 days.

Finally, skepticism about institutions should be applied consistently and proportionately. Human beings naturally make institutions, and some of these institutions are more focused on profitability in the marketplace than others. And in today’s world we have a sometimes dizzying variety of institutional forms a corporation could take. But there’s no inherent reason to be more skeptical of the corporate agendas of someone like Mark Zuckerberg than there is to be of other rich people. It’s not prudent to subject those who pursue agendas with whom you happen to disagree to enormous scrutiny but to exempt those whose views are sympathetic. So, yes, indeed, let’s train a critical eye on the motives, means, and goals of the likes of the Koch brothers and Rupert Murdoch, but only if we are similarly skeptical of the Clinton family, Bill and Melinda Gates, and George Soros. Rich people have an important and unalienable social responsibility, and this comes to expression in a diversity of institutional forms and agendas.

But if we are skeptical or even suspicious of Mark Zuckerberg, Mark Cuban, or Mitt Romney, we should extend and even sharpen that critical posture toward civil government. Generous estimates of the share of wealth owned by the top 1 percent of wealthiest people in the United States places their holdings at around 40 percent. Total wealth in the US recently hit a new high of just over $80 trillion. That means that the top 1 percent is worth about $32 trillion, or just about what the federal government spent over the last decade. So even if we forcibly confiscated all the wealth of the 1 percent, it would only keep the doors of the federal government open for ten years, and less than that with current spending trends upwards.

What should really concern us is where these two interests align and are increasingly conflated. So whatever Mark Zuckerberg and Priscilla Chan do with their billions, we should become most concerned if and when they attempt to use that money to curry political favors, direct government resources towards to their own benefit, or otherwise seek private benefit at the cost of the public good. As citizens, we have a much more direct claim and responsibility for how the government is spending its money than we do for how the wealthy are disposing of theirs.

The theologian John Calvin once described the human heart as a “factory for idols,” constantly creating false gods and things to worship. These idols often take institutional form, and so we should be suspect of great concentrations of power, whether economic or political. But in our public discourse let’s be sure to apply that skepticism in a principled fashion, consistently and proportionally. In our world today, that will mean increasingly more concern about the ways that politicians and bureaucrats are spending taxpayer money rather than hand-wringing over the investment and charitable choices of private citizens.