Benevolent Capitalists
Occasionally Fortune’s Path will take a long view on current issues to put them in a better perspective. This article is an example.
“The man who dies rich, dies in disgrace. ”
— Andrew Carnegie
The elevator pitch for the effective altruism (EA) movement goes down pretty smoothly. The big idea is that effective altruists use reason and evidence to determine how to use resources to do the most good for the most people the farthest into the future. Resources are not limited to money but include the careers we choose, with the goal being to earn to give. In EA philosophy, making a lot of money is good because you can give it away.
The movement has several prominent philosophers on board and has recently become the cause célèbre of technocrats, including some crypto executives who openly express a desire to “earn to give.”
At odds with the basic premise of EA, there has been much recent criticism of its elevation of the “benevolent capitalist” in society. MIT Technology Review recently published a lengthy criticism of EA that debates whether or not the world needs a special class of benefactors who get to decide what everyone else needs.
EA advocates removing personal passions from giving decisions and relying on pure logic. We thought it would be interesting to look at the benevolent capitalists of the past and present to see how their excess capital shapes the world.
Carnegie: Rich People Know What Poor People Need
At one moment in time, Andrew Carnegie was the the world’s richest man. He gave all his money away to reshape the way knowledge was shared. $60 million of Carnegie money was used to fund a system of 1,689 public libraries across the U.S. Previously, subscription libraries were available to the wealthy elite, but Carnegie’s money democratized the library, creating the “the intellectual breadline,” a place where people with no money could go to feed their brains.
The idea for public and free libraries was born from Carnegie’s desire to improve his lot when he was working as a bobbin boy in a textile mill. His local library required a $2 subscription fee, but only for apprentices. Young Andrew wrote a plea to the library administrator that was turned down. But when he got the letter published in the local paper, the decision was reversed and all working men were allowed access.
Carnegie, while generous, was also a complicated and brutal man. Even as he recognized himself as the mere shepherd of his wealth, he dealt horribly with the workers who helped him procure it. The Homestead Steel Strike of 1892 was the worst labor conflict in American history. Carnegie believed he knew better than the workers what the workers needed. “If I had raised your wages, you would have spent that money by buying a better cut of meat or more drink for your dinner. But what you needed, though you didn't know it, was my libraries and concert halls. And that’s what I’m giving to you.” (Susan Stamberg)
Walton Brothers: Reshaping a Region Based on Personal Passions
Steuart and Tom Walton are the grandsons and heirs of Walmart founder Sam Walton. They grew up in a surprisingly outdoor-oriented family (didn’t even have a TV in their childhood home) and fell in love hard with mountain biking. As of 2018 they had pumped $74 million into cycling infrastructure in the Bentonville, Arkansas, region. (Bentonville is the Ozarks home to Walmart headquarters.)
The payoff has been a huge uptick in cycling-centric tourism that generates $50 million plus annually for local businesses. Tourism is also being leveraged as a mechanism to attract future residents who might want an active lifestyle and a career at Walmart. Or perhaps, more currently, a remote career they can do in proximity to their favorite single-track for shredding.
Tom Walton has also opened several upscale restaurants in Bentonville to help keep the town attractive to higher income tastes. And the brothers donated around $300,000 each to Keep Dollars in Benton County, a political organization that campaigned to remove the county’s “dry” laws relating to alcohol sales. Being a cycling town also means being the host to cycling businesses: Allied Cycle Works relocated to Bentonville after investment from the Walton brothers’ firm. The goals are also bigger than Bentonville. Tom and Steuart want to provide a model for other rural towns who have easy access to green spaces ripe for development. (Andrew Tilin)
MacKenzie Scott: The Most Consequential Philanthropist in the World Today
MacKenzie Scott’s 25-year marriage to Jeff Bezos ended in divorce. Their settlement gave 25% of Bezos’ stake in Amazon to Scott—4% of the company, worth about $36 billion at the time. Shortly after the divorce, Scott wrote a public letter stating that she had “a disproportionate amount of money to share” and that she would give it away thoughtfully but rather quickly until “the safe is empty.”
As of April 2022, Scott had given away in excess of $12 billion to 1,257 groups. She is giving widely and deeply with little to no transparency into which organizations she chooses and why. Just this week, she made the highest single donation ever to the Girl Scouts of America: $84.5 million.
In counterpoint to Carnegie’s beliefs, Scott wrote in 2020, “There’s no question in my mind that anyone’s personal wealth is the product of a collective effort, and of social structures which present opportunities to some people, and obstacles to countless others… What fills me with hope is the thought of what will come if each of us reflects on what we can offer. Opportunities that flowed from the mere chance of skin color, sexual orientation, gender, or zip code may have yielded resources that can be powerful levers for change. People troubled by recent events can make new connections between privileges they’ve enjoyed and benefits they’ve taken for granted. From there, many will choose to share some of what they have with people whose equal participation is essential to the construction of a better world.”
Five Books recommends the following additional reading on philanthropy and saving the world. For a more contrarian viewpoint, check out Anand Giridharadas’ Winners Take All: The Elite Charade of Changing the World.