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Philanthro-Capitalists Can’t Buy a Clue

Monopoly Man costume

“Humility” is not a term usually associated with former New York mayor Michael Bloomberg, especially when it comes to his demonstrated views on the importance of wealthy people in American society. His mayoral tenure focused on luring the world’s richest to live and invest in New York City, a priority underscored by his statements that private wealth-holders are the support base for public good.

After his tenure as mayor, one might expect Bloomberg to be taking his place among his billionaire cohort as a “philanthro-capitalist” who wants to solve social problems through private charity rather than public policy. According to Chrystia Freeland in her 2012 book Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else, “the ambition of the philanthro-capitalists doesn’t stop at transforming how charity works. They want to change how the state operates, too.”

Previous coverage of Bloomberg’s evolution into a one-man public-private partnership suggested that he not only belonged in that camp but epitomized it: The Chronicle of Philanthropy wrote in October 2013, “Mr. Bloomberg is one of several American billionaires who are using their wealth to attempt to change the world through ‘policy and politics’ in a way that harkens back to the era of men like Andrew Carnegie, Andrew W. Mellon, and John D. Rockefeller.”

But Bloomberg many have surprised some people with his first major interview after leaving office, published in the New York Times last month. Rather than trumpet the power of private philanthropy, Bloomberg was refreshingly deferential to public institutions that operate on a scale far grander than almost any individual philanthropists could dream.

As the Times’s Paul Sullivan described, Bloomberg “urged realism about tackling large problems around the world” with singular, albeit substantial, fortunes. “All the billionaires added together are, as they’d say, bupkis compared to the amount of money that government spends,” Bloomberg said. This is an interesting pivot, given his record of using his personal philanthropy to ease the way for his administration’s initiatives. (As the Yiddish joke goes, “look who thinks he’s bupkis!”)

In fact, Bloomberg had an entertainingly deadpan smack-down for one hedge-funder’s big dreams of eradicating big social problems through private generosity. From the Times:

[Bloomberg] recalled being at a conference early in his mayoralty, when a hedge fund manager pulled him behind a cactus to talk about an urgent proposal . . . . “He says he’s going to raise $1 billion from the hedge fund community over the next five years to fix public education . . . I explained to him that New York City’s annual school budget was $22 billion a year.”

One imagines Bloomberg in that moment as Justin Timberlake’s version of Sean Parker in The Social Network: “A billion dollars isn’t cool. You know what’s cool? Twenty-two billion dollars. A year.”

In contrast with Bloomberg’s pragmatic pose in the Times, the more common attitude towards government among today’s mega-philanthropists was recently and succinctly stated by Louis C. Boorstein. As the former Gates Foundation executive put it in the Stanford Social Innovation Review, “Most of us would much rather play the part of the savvy impact investor than work to . . . enhance public goods.”

Perhaps Bloomberg was chastened by Bill de Blasio’s victory, and the new mayor’s stated goals of reviving the public good through modest sacrifice of New York’s wealthiest citizens—like a .04 % tax increase for families earning above $500,000 per year to fund universal pre-K. The de Blasio administration’s ethos so far has been equal parts ideological and pragmatic: the method of financing the public good (higher taxes, usually) is as important as the actual policies that the mayor wants passed.

Or, maybe serving in government actually gave Bloomberg much-needed perspective about the scale of private wealth to public good. Bloomberg’s established pattern of making private gifts to underwrite public programs seems to indicate an attitude that flexible philanthropic dollars should support government, rather than undermine it, as the vehicle for improving society. (Of course, the de Blasio response is to make such generosity mandatory through taxes, rather than at the discretion of the donor.)

But assuming we will have an extraordinarily wealthy one percent for the near future, and that those one-percenters have ambitions to change public education, health, and other major fields, the question of who sets the terms on socially-oriented funds is a key one. Bloomberg seems prepared to offer money and expertise to help government, but on terms set by public officials.

One would hope that would be the guiding principle for his foundation’s grant-making in the area of “government innovation,” which involves testing new policies for local or state governments. The term “innovation” can be a dog-whistle for importing private sector management strategies into public institutions, as vividly illustrated by Dale Russakoff’s recent New Yorker article on the disastrous attempt to reform Newark public schools with huge gifts from Mark Zuckerberg and others—and with no input from community stakeholders.

So can Bloomberg, given his recent modesty, demonstrate a way for philanthropists to support government without undermining democratic institutions? Maybe Bloomberg should fund a national service campaign for the Forbes 400 to run, say, sanitation departments in Appalachia. There is some precedent: in 2011, Bloomberg’s foundation gave a $6 million grant to fund new staff inside Mayor Rahm Emanuel’s office in Chicago to revise business licensing procedures.

It wasn’t a particularly sexy project, but that’s exactly the point—philanthropic dollars can support priorities determined by democratically-elected officials, rather than vanity projects, and they don’t need to reinvent the wheel simply for the donor’s ego. (On the other hand, Emanuel may be particularly amenable among big city mayors to outsourcing public institutions to private actors, so perhaps their partnership was not as deferential as it appears).

That naïve education reformer who trapped Bloomberg behind a cactus could have used some exposure to the scale and importance of government services. Cocksure elites chomping to address social problems as ones requiring market-driven solutions would see the light on exactly how much sacrifice and public commitment we need in order to “fix” problems like poverty.

We would be right to cringe at further reinforcement of old “wise men” dynasties, when prominent families like the Kennedys and Rockefellers cycled through government, business and philanthropy. But unlike the old guard, this era’s plutocracy has serious tunnel vision when it comes to the power of the market. As clothing mogul and aspiring social entrepreneur Marc Ecko put it at a philanthropy conference, “government involves a lot of unnecessary compliance and non-market-like conditions,” while Ethos Water founder Peter Thum has echoed, “if all corporations behaved responsibly, we wouldn’t need political will.”

It remains to be seen whether Bloomberg’s newfound humility will stick. But either way, his latest stance should serve to remind his peers that, yes, we do need political will, and the “compliance and non-market-like conditions” that so annoyed Ecko and stymied Bloomberg’s oblivious hedge-funder are non-negotiable.