When Facebook went public several years ago, CEO and founder Mark Zuckerberg instantly became one of the richest people on the planet. Like an increasing number of the hyper-rich, he’s promising to do something useful with all that wealth?
Be careful what you wish for is a comedy genre that might describe Facebook founder Mark Zuckerberg’s family’s efforts to do something great with its spare $45 billion.
Many of the people who makes lots of money know very little about what to do with it, other than making more of it. Excess money has become something of a screwball problem that, by the miracle of compounded interest, necessarily defeats all efforts to solve it. The more money you have, the exponentially greater the miracle is. Many fortunes are so large that the pile will always grow faster than anybody’s ability to spend it or even give it away.
Members of the Forbes 400 increased their wealth by more than $500 billion last year, meaning that they will inevitably make more than that next year. What’s more, nearly everybody on the list will be dead in 40 years, most well before that, meaning that the more than $4 trillion they collectively are worth, compounding every day, has to be dealt with.
This is the situation highlighted in last year’s best selling book, Capital in the Twenty-First Century, by Thomas Piketty. The world divides between people with assets, which compound, and people without assets, who fail to advance.
But one factor in this unstoppable march of modern wealth that Piketty did not consider is something that has become conventional wisdom, learned through many cautionary examples, among the super-rich: You can’t leave all your money to your children. Not if you don’t want weird and terrifying kids. Yes, they can have a salubrious, first-class life style, but the true superhero-size wealth has got to go. This is the situation that Zuckerberg and his wife, Priscilla Chan, forthrightly faced this week with the birth of their first child Max (a girl) when they announced — via a molasses-sweet video, and, of course, in an extended Facebook post — a plan to give away 99% of their net worth,.
Now, even keeping only 1% will leave Max and her potential siblings with $450 million, so the problem is really yet to be solved. And, given the rate at which the Zuckerberg fortune could expand, with capital growth quite likely to outpace efforts to give it away, it is highly possible that even 1% would be character and soul destroying for the Zuckerberg offspring, a worry perhaps keeping the couple up at night, along with Max’s feeding schedule.
Much has been bitterly made across the left-wing and angry-youth Internet about the sham nature of this bequest. That is, the Zuckerbergs aren’t making a bountiful and magnanimous contribution to humanity at all. Instead, they are maintaining control of the money, to do with as they like.
A philanthropic professional of my acquaintance points out that the goal of charitable giving used to be to help people, whereas now, with fortunes the size of government budgets, it is to change the world — and, of course, to change it in a benefactor’s image. Surely, no modern rich person, with good lawyers, wants to end up in the position of, for instance, the right-wing Henry Ford having his fortune given away by a left-leaning foundation.
The suggestion that the Zuckerbergs ought to gift it to someone else so that it can be gifted somehow more selflessly is also simply bad math. There’s just too much of it. No institution or foundation or charity would be able to take it without its own character being distorted. The unmonied might scoff. But $45 billion earning a conservative 5% means you’d have to disgorge more than $2 billion a year before you’d even touch the principle. Hardly any organization has the wherewithal to do that.
The only real model for getting rid of this kind of dough is the Bill and Melinda Gates Foundation. The Gates Foundation — which for practical-minded or lazy billionaires will give their fortunes away for them— employs more than a thousand people to do the job, and, indeed, pretty much all the best people in the field, leaving the Zuckerbergs, who with half a fortune half the size might need at least half the employees, with slim pickings. What’s more, Bill Gates has practically retired from Microsoft in order to devote the bulk of his time to the complexities of giving away his billions, leaving his company in a long-term funk.
Now we have Mark Zuckerberg, CEO of a still-young company, effectively saying he is going to take another fulltime job.
As a comedic element we certainly have a mighty dose of hubris here, with hardly a better set-up than the video Zuckerberg and his wife made shortly before their baby’s birth, which has them both sounding like slightly druggy saviors of the world as they introduce the Chan Zuckerberg Initiative. But the hubris here is not just about the desire to insure peace and love and, as Zuckerberg would have it, to “make it so people don’t get sick anymore,” but the assumption that the future of a 10-year-old company and a 31-year-old man can be projected out in any sort of confident way.
Certainly the presumption that Facebook will continue to reflect its current value is a bold one, perhaps more likely to make the Zuckerberg family a figure of merciless fun in the future than to allow “people in the next generation to learn and experience a 100 times more things then we can.” What’s more, to tie a $45 billion bequest to a very young marriage also seems to be testing fate. One billionaire I know of who is donating oodles with his wife goes around saying he would give half his fortune to anyone who would take her too.
Anyway, congratulations to the new parents and best of luck. You’ve gotten what you’ve wished for.
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