Bill and Melinda Gates annual letter 2019: is their fortune justifiable?

Bill and Melinda Gates are odd billionaires.

The Gateses, who released their foundation’s annual letter this week, are not cartoonishly out-of-touch like Stephen Schwarzman, the private equity billionaire who gave Yale $150 million for a performing arts center; they’re not magnates attempting to use their money to swing elections like Charles and David Koch or Tom Steyer.

They’re also not self-hating plutocrats like Nick Hanauer who openly decry their station in society and constantly demand just economic policies. And they’re certainly not among the dozens of barely known billionaires who fill out the Forbes 400 list of America’s richest people (quick, tell me all your thoughts about, uh, Thomas Peterffy?).

But I think in some ways, the Gateses (and to a certain extent, Cari Tuna and Dustin Moskovitz as well) raise the hardest questions about the role billionaires and philanthropy play in our society. Which is to say: The Gates Foundation has the kind of money and power that there are very, very good reasons to not want a foundation controlled by a private individual (or, in this case, three individuals — Bill, Melinda, and Warren Buffett) to have.

It is able to spend vast sums of money to influence the lives of people around the globe with minimal accountability, without the discipline that consumers and competitors force on businesses and voters force on governments.

When I look at figures like Steyer or Schwarzman or the Kochs or Howard Schultz exercising the power derived from their wealth, my reaction is easy: You’re doing this wrong. You’re not living up to the responsibility inherent in having that kind of money and power. The money you’re spending would probably be better used in public coffers.

I think the Gates Foundation, by contrast, has mostly used that money and power well. And I’m not entirely sure how to design a system that preserves the genuinely valuable work they do while dramatically lessening the role of billionaires in general, even as I think the latter shift is important and necessary.

I’m not going to defend everything that the Bill and Melinda Gates Foundation has ever done. I’m publicly on record as saying its choice to work in K-12 American education was a mistake — and that’s also among the areas where the Gateses’ work has the most troubling implications for democracy, given that their money has given them a somewhat shocking amount of power over the whole discourse around education reform.

But if you look at the bread and butter of Gates’s work on global health — fighting malaria, funding vaccine development and deployment, work on HIV/AIDS — it’s hard to avoid the conclusion that the group has saved a tremendous number of lives.

To give just one example, the Gateses provided $750 million in seed funding to establish Gavi, a nonprofit that specializes in providing vaccines in poor countries; in total, the Gateses have given the group some $4 billion.

A World Health Organization report estimated that between 2000 and 2013, Gavi provided 440 million immunizations and averted 6 million deaths.

That’s not solely the Gateses’ doing — but it’s pretty fair to say that they played a major role. And that’s just one example of how the foundation has saved lives.

A common response to this line of argument is to say that the work the Gates Foundation does should instead be done by governments, through taxes. And I profoundly agree with that as a normative principle.

How do you solve a problem like billionaires

But suppose for a minute that you confiscated the Gates family fortune and gave it to the US Treasury. What are the odds that Congress would allocate the funds to giving vaccines to poor people abroad? What are the odds they’d use the money to pay for more missiles, or just reduce the deficit slightly with no other real effect?

If the diminution of the Gateses’ fortune was matched one for one by an increase in US government spending on public health abroad, I would be 100 percent on board. Take their money, give it to poor countries to build universal health care systems. I’m just not certain that’s the relevant counterfactual.

Usefully, Bill Gates personally recently weighed in on the idea of him paying much more in taxes to fund more public goods through the government. He told my Verge colleague Nilay Patel, “We can be more progressive, the estate tax and the tax on capital, the way the FICA and Social Security taxes work. We can be more progressive without really threatening income generation.” He added on Stephen Colbert’s show that he wants higher capital gains rates.

Bill also told Forbes’s Randall Lane, “I think it’s fascinating that for the first time in my life people are saying, ‘Okay, should you have billionaires?’ ‘Should you have a wealth tax?’ I think it’s a fine discussion.” He can be overly defensive about some critiques in that discussion — he preposterously implied that writer Anand Giridharadas is a “communist” for supporting large systemic change in the economy and philanthropy — but he’s hardly Schwarzman, who once compared raising tax rates on capital to the Nazi invasion of Poland.

And none of the policy plans to target wealth inequality put out by left-leaning Democrats would really threaten Gates’s ability to give large amounts to effective causes.

Alexandria Ocasio-Cortez’s 70 percent top tax bracket is perfectly compatible with large charitable giving, especially if we retain a charitable deduction.

Elizabeth Warren’s wealth tax would take 3 percent of wealth over $1 billion every year, which is not a particularly large dent in Gates’s fortune, especially given that he can save money and earn higher interest than that.

Bernie Sanders’s 77 percent estate tax would probably spur more giving to charity in bequests as long as a deduction remains.

But it’s clear that some of the impulse among left activists critical of billionaires is not to cut wealth inequality while holding, say, Gates’s charitable work harmless; it’s to make a more basic moral argument that no one should have that kind of money to give away. That might argue for much higher taxes on the ultrarich, but it could also argue for a broader cultural understanding in which someone like Gates is not admired for what he’s doing but admonished.

That’s the cultural and policy shift I’m less sure about. It would probably lead to good outcomes in the cases of 90 percent-plus of billionaires. It could lead to good outcomes in the cases of the Gateses if it’s matched by a conviction to use the US government to remedy global inequality, not just intra-American inequality. But absent a shift like that, the wealth of the small number of seriously philanthropic billionaires might do more good in private rather than public hands.

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