The problem with Mark Zuckerberg's big gift

It reveals something very telling about power in our democracy

Mark Zuckerberg and wife Priscilla Chan Zuckerberg announce the birth of their daughter along with news that they will be donating the bulk of their wealth.
(Image credit: Ryan Etter/Ikon Images/Corbis)

Facebook head-honcho Mark Zuckerberg and his wife, Dr. Priscilla Chan, are giving $45 billion away to philanthropy. Sort of, anyway.

Specifically, they're setting up the Chan Zuckerberg Initiative, which, they say, will get 99 percent of their shares in Facebook given "during our lives."

"Our initial areas of focus will be personalized learning, curing disease, connecting people, and building strong communities," the couple wrote in a letter introducing the project.

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There's enough angst about inequality and suspicion of the elite running around these days that — along with cheers for the couple's magnanimity — there was also a fair amount of grumbling. For one thing, it's not clear the initiative should really be called a "charity," as many reports have done. It's technically a limited liability corporation, which means it can make for-profit investments, while an actual charity is legally structured to be strictly non-profit. The initiative intends to reinvest profits in new projects under the umbrella of its mission, which makes Zuckerberg more of a venture capitalist with a think tank and a social conscience than a charitable philanthropist.

A few accusations also floated around that this was a way for Zuckerberg to avoid paying capital gains taxes or estate taxes on the money. But that's complicated by the fact that his Facebook stock doesn't pay dividends or any form of capital gain, so he's not paying any taxes on it as it is.

But frankly, I don't think the specifics of how the Chan Zuckerberg Initiative would operate, or what personal sacrifices the pair genuinely are or aren't taking on, are terribly interesting questions. The really interesting question is broader: What does the very existence of such an organization say about our society?

One of the most annoying quirks in American politics is the absolute refusal in many quarters to view economics as a question of power. Most all Americans are deeply concerned with the problem of power — how to distribute it equitably, how to keep a wary eye on it, and how to check it effectively. This is really the foundational issue that a constitutional democracy is meant to address. But "power" in our debates is framed almost exclusively as a matter of government action — the decisions of politicians and the various uses of government's ostensible monopoly on the legitimate use of force. To the extent these questions bleed into economic matters at all, it's usually as complaints about government "interfering" with the "natural" functioning of markets.

First off, this sort of distinction is just nonsensical. Markets wouldn't exist without institutions like ownership and property law, which are themselves defined by government, and thus merely constitute an extension of government force. But more importantly, it introduces an enormous blind spot into how we discuss our lives together. Economic decision-making — where we invest resources, where we don't, how businesses are operated, how people's jobs are run and directed, how incomes are distributed, etc — arguably shapes all our lives and the social fabric more than any other single factor. Yet the idea that who gets to make those decisions — i.e. who owns the wealth — itself constitutes a problem of power that should be monitored, investigated, checked, or even more equitably distributed never really gets an airing.

What makes it even more striking is how insanely skewed wealth ownership in America is. The 20 richest people in the country control more wealth than the bottom half of the population. In fact, the remaining 1 percent of their Facebook shares that Zuckerberg and Chan will hold onto would still leave them twice as rich as Mitt Romney. Not that it matters, since Zuckerberg will even retain all the voting power to direct Facebook's operations represented by the shares he's giving to his initiative.

At the very least, it's a bit weird that the economic realm — with its enormous reach into every aspect of human life — isn't one where we worry about how to live out democratic values in some form. (Which does not at all necessarily mean bringing it under direct governmental control.) It's even more remarkable that, if we were to try grappling with that question, we would find the economic realm to be a place that is, in practice, about as undemocratic as it can possibly get.

Put differently, $45 billion in stock represents enormous power to decide what sorts of projects society invests its resources in and which projects it ignores. Certainly, it's worth asking whether Zuckerberg's previous philanthropic efforts "worked." But what sort of worldview is implied by those efforts? If Zuckerberg is now a venture capitalist with a think tank and a social conscience, what informs that social conscience? Because its choices will shape the lives and horizons of possibility for millions of other people whether they like it or not.

It's certainly hard to take issue with the idea that we could always use more research and breakthroughs in the area of medicine. But while Zuckerberg's mission statement says a lot about reducing poverty, promoting equality and making sure everyone has the opportunity to realize their potential, it clearly conceives of those problems through a purely meritocratic frame: There's poverty and a lack of equality because our education system fails to capture all the people with potential talent, and because technology isn't sophisticated enough to give them all adequate opportunities.

This is pretty consistent with what we know about the general attitudes of the super elite. Compared to the general public, they tend to be more concerned with cutting government spending and deficits, and much more friendly to cutting Social Security, food stamps, and other forms of aid. They like spending on education, but in the forms of merit pay and charter schools and vocational training, as opposed to things like universally free college. And compared to general public, they're rabidly opposed to the idea of government ensuring everyone a decent standard of living or serving as an employer of last resort.

Meritocracy and markets work, in other words, and should be left alone. But certain specific policy failures — mainly in the realm of education — are just gumming up the works. The notions that meritocracy is itself an unsalvageably contradictory notion; or that improving educational outcomes may be a giant non sequitur; or that markets institutions are simply incapable, all by themselves, of ensuring everyone gets a decent living, never really enter into it. And interestingly, since the Chan Zuckerberg Initiative isn't a non-profit, it will still be legally allowed to lobby the government. So it won't just act on these assumptions itself; it will be able to bring enormous resources to bear in convincing the rest of our society's governing institutions to adopt the same assumptions.

Certainly, it's an open question to what degree and intensity Zuckerberg himself holds to those various assumptions. And maybe his individual causes and investments will be good on their merits, maybe not. That'll be a complicated case-by-case question, and an inevitably subjective one.

But no matter what, it's a reminder that the world basically belongs to him and his socioeconomic ilk. The rest of us are just living in it.

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Jeff Spross

Jeff Spross was the economics and business correspondent at He was previously a reporter at ThinkProgress.