Enemies of the State? How Billionaire Philanthropists Think About Government

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Are wealthy philanthropists hostile toward government? It’s easy to think so if you read critiques of the billionaire donor class—most recently Anand Giridharadas’s book, Winners Take All. Today’s leading benefactors, we’re told, vastly prefer privatized solutions to social problems—especially ones that they themselves devise by tapping their business chops and channeling the free market’s magical powers.

This argument is most familiar in regard to public education, where philanthropists are said to be leading the charge to privatize America’s most cherished public institution—our schools.

In my own book, The Givers, I looked at how a cabal of wealthy donors and conservative foundations have bankrolled a 40-year assault on government—with the goal of cutting taxes, downsizing the regulatory state and eviscerating civil rights protections.

My book also examined how private donors are increasingly stepping into the void left by weak government. You can see this most vividly in higher education, where mega-givers are riding to the rescue of public universities battered by declining state investments in these systems. Wealthy philanthropists, who’ve benefited hugely from historically low tax rates since the early 1980s, now receive accolades for solving problems that their class helped create. The fall of government and the rise of big philanthropy, I wrote in The Givers, can seem like entwined subplots in a larger story about a plutocratic power grab.

In fact, though, the story is not so simple.

The crusade to shrink government down to the size “that it can be drowned in a bathtub”—to paraphrase Grover Norquist’s memorable phrase—has never been a shared project of the upper class, but of a powerful libertarian faction within that class. Even the ceaseless drive for tax cuts over a generation has mainly animated wealthy people on the right. Many less ideological rich people aren’t so worked up over taxes; after all, when you’re loaded, you can easily afford them. And while polls show that the wealthy are more fiscally conservative than the public writ large, it’s also true they tend to favor many government functions: a globalist foreign policy, infrastructure, education, scientific research, space exploration, environmental protection, and so on. They understand that these things cost money.

In Winners Take All, Anand Giridharadas doesn’t much explore this larger context, but rather argues a tighter brief: that today’s wealthy elite has contempt for government and a reflexive affinity for privatized solutions. Like the many progressive critics of charter schools, Giridharadas depicts philanthropists as trying to shove government aside so they can call the shots, guided by market ideology and their own brilliance. Diane Ravitch has been most trenchant on this point, arguing that a clueless “billionaire boy’s club” of education reformers has done an end-run around democracy—only to make a mess of things in places like Newark, with kids of color paying the price.

These and similar criticisms offer a devastating picture of an overclass that’s become a powerful adversary of government by and for the people. But this is neither a full nor accurate accounting of how wealthy philanthropists think about the public sector. In fact, it’s misleading in key respects.

If you put aside the libertarian ideologues like the Koch brothers and the DeVos family, what you’ll find is that most of today’s wealthy philanthropists think about government in much the same way that big donors and foundations have always thought about government: as a sector with enormous power to solve problems, but also with major limitations—such as a reluctance to take risks and experiment with new ideas, an inability to move quickly or pivot easily, and a tendency to neglect causes or concerns that don’t animate ordinary voters or which antagonize powerful interests.

Since the earliest days of modern philanthropy in the early 20th century, the goal of many grantmakers has never been to replace public solutions with private ones; it’s been to do things that government can’t or won’t do, and to catalyze government to take new kinds of action. In other words, the state hasn’t been the enemy; the state has been the prize.

You win that prize if you can get government to scale up the pilot project you’ve funded. You win if you get government to implement the idea you’ve researched for changing how healthcare works or how coal fired power plants are regulated. You win if you get government to protect a long-persecuted minority, like transgender people.

Smart philanthropists know that they don’t have the real money or power in society; government does. And so influencing the state is the name of the game for many top donors.

This deployment of private wealth to shape public institutions is deeply problematic in its own way, as I argue in The Givers, as the rich use philanthropy as yet another tool to control the state. But that’s a very different critique than the idea that most donors are hostile to government on principle and favor a privatized world. This is not the case.

Take the example of Bill and Melinda Gates, America’s biggest philanthropists. Both have frequently noted how limited their resources are in comparison to government. And both have made no secret of their desire to influence what government does—and, in many cases, push it to do more.

The couple is well known for their huge investments in global health and development—and their foundation has been rightly criticized for having way too much power in these domains. But what gets less attention is that the Gates Foundation also bankrolls advocacy to spur more U.S. foreign aid and protect existing overseas programs. Or that it partners with public agencies and pilots projects that it hopes will attract much bigger government money. In his interactions with Donald Trump, Bill Gates’ main message has been that foreign aid is a bargain for America. He’s often said the same thing about government investment in scientific research, another area where he wants the state to do more, not less.

On education, the Gates Foundation has sometimes been cast as a key player in a philanthropic cabal to privatize public schools. This is a caricature. Rather, the foundation’s goal has been to influence how public education works in order to improve student outcomes. The huge Gates role in education is problematic; it gives a private couple way too much power over a key democratic institution. And that power has been abused, too, as a high-handed foundation has pushed through ill-conceived reform ideas.

Still, let’s be clear what’s going on here. Bill and Melinda Gates are not libertarians. Quite the contrary. Like many technocratic donors, they often want to expand the reach and authority of government.

The huge Gates push to enact the Common Core standards is a case in point. This has been viewed—rightly, I think—as a backdoor effort to enact national education standards in an area where federal power has always been limited. It’s not surprising that the right mobilized against the standards early on, pushing back against what they saw as an elite bid to elevate the power of a know-it-all state over the wisdom of local leadership—familiar battle lines that date back to the clash between Jefferson and Hamilton.

To be sure, there are some K-12 philanthropists who really do dream of substantially privatizing public education. But most of these donors, including top charter school funders, don’t believe in true privatization, and that’s not what they’re after.

What these donors want is for public schools to operate with more day-to-day autonomy, so that their leaders have the kind of power that effective leaders need, starting with the ability to hire and fire their own staff and control their own budget and infrastructure. These donors are not hostile to government per se; they are hostile toward government that is overly centralized, with a command-and-control model they view as archaic and ineffective. They see charter schools as a means to get around these institutional obstacles and reinvent how government works when it comes to education.

Charter schools have not succeeded or scaled to the degree that many philanthropists have hoped. And to be sure, there’s been a lot of hubris on the part of donors who’ve overestimated the applicability of business management models to education. There are other fair criticisms of charter backers, too. But broadly casting this crowd as favoring privatization isn’t one of those criticisms.

Many progressives and teachers union leaders define public schools as institutions directly run by government. Charter advocates have a broader definition: they’re institutions funded by taxpayers and accountable to government, but which can be run by a range of operators. This debate has come to have almost theological dimensions, and I can’t imagine adding to it—except with the observation that government at all levels engages in outsourcing for social services. In 2012, some 56,000 nonprofits received $137 billion from government for services. Critics don’t accuse state agencies of privatizing, say, Medicaid by giving contracts to nonprofit nursing homes. So what’s with the holy war against outfits like KIPP?

As for the familiar charge that billionaire education donors are broadly hostile to democratic institutions, there are two sides to this argument. These donors argue that K-12 education has long been dominated by a powerful interest group—teachers unions—which are among the top campaign donors in states like California. Wealthy education reformers like Eli Broad have seen their money as counter-balancing that special interest group’s power and allowing policy alternatives to get a hearing—creating more democracy, not less. A similar argument is made by wealthy philanthropists pushing reforms in other areas, such as to regulate greenhouse gas emissions or rein in prescription drug costs. I’ve pointed out the flaws in the pluralism defense of big philanthropy—namely, that only certain alternatives tend to get a hearing—but arguing that democracy is being hijacked by backers of ideas like charter schools is an overstatement.

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There’s no question that the far upper class is deeply implicated in the fall of government and has benefited financially from it, through lower taxes and deregulation. And it’s true that many wealthy philanthropists, like many Americans overall, have lost faith in government’s ability to solve problems. Meanwhile, the flood of money into public life—with philanthropy a growing part of that river of cash—has fueled the rise of political inequality, which serves to further entrench economic inequality.

But in closing, it’s important to look beyond plutocrats and remember where we’re living. America is by far the most anti-statist of all advanced countries, and always has been. Some of the fiercest attacks on government in recent decades have come from grassroots movements like the Christian Right and the Tea Party. Trump’s non-college-educated base has stuck with him even as he’s taken a sledgehammer to the administrative state.

At the same time, the long-term decline of the public sector as a dynamic agent of change has a number of causes. Books like Government’s End and The Rule of Nobody have documented the calcification of public institutions that have become dysfunctional and ineffective. The fiscal woes of state and local governments have much to do with the way that public officials kicked pension obligations down the line. Surveys show that many workers in the public sector are frustrated and unfulfilled. The public’s trust in government is near a historic low, following a steep decline that began in the 1960s. It’s no wonder that lots of people looking to make change—whether they’re young idealists or wealthy donors—would look to other vehicles, such as nonprofits and social enterprises.

Revitalizing effective government is among the most important challenges of our time. But my guess is that on this issue, like so many others, some wealthy philanthropists will stand as key allies; others will be adversaries.