I was watching some dumb show or other on Hulu while I chopped onions for the dinner I was about to cook, and it showed me an ad for an Amazon Alexa-enabled oven. On the one hand, I watch a lot of cooking shows, and it stands to reason that The Algorithms will show me ads for various kitchen gewgaws. On the other, my partner and I have been planning to renovate our old and mucky kitchen, and I have to wonder if my Google Assistant has been eavesdropping on our conversations and gossiping about the more monetizable tidbits with its friendly competitors. Amazon has just unveiled a whole line of voice-command devices, from microwaves to wall plugs. Fortunately, I avidly read every word Phillip K. Dick ever wrote when I was a teenager, so I am well-prepared for the nightmare future in which we find ourselves.
There is a kind of irony in Amazon’s newfound focus on the high-end home, which comes as its founder and the current richest man in the world, Jeff Bezos, announces a $2 billion charitable pledge toward providing early childhood education and combatting homelessness. Two billion dollars sounds like a tremendous amount of money until you consider that Jeff Bezos is on track to make $100 billion or more this year alone. In that light, Bezos’ pledge is the equivalent of a household making $75,000 paying their temple dues and making a mug-worthy donation to their local public radio station. Meanwhile, I worked in the nonprofit sector for most of my career, and our rule-of-thumb for the merely very-well-to-do was that they should give 3 to 5 percent of their annual income to charity, which means that your dermatologist who gives to the symphony and the local food bank is a far more generous philanthropist than the Crassus of the modern world.
Two billion dollars sounds like a tremendous amount of money until you consider that Jeff Bezos is on track to make $100 billion or more this year alone.
Nor is charitable giving Bezos’ only recent interaction with homeless policy. He notoriously strong-armed the Seattle city council into repealing its own unanimously-passed “head tax,” a $275-per-employee tax on medium-to-large businesses that was intended to raise revenue to alleviate the city’s homelessness problem, which is among the worst in the nation. His charitable pledge was obviously at least partially an attempt to soften the image of the world’s wealthiest man and one of its most-valued corporations bludgeoning the municipal government in one of the nation’s most unaffordable housing markets to forgo a modest payroll tax designed to ameliorate the desperate conditions of the city’s more than 10,000 homeless.
On the surface, $2 billion might seem a far greater investment than a tax that was projected to generate a few tens of millions of dollars a year. A typical charitable foundation will draw about 5 percent annually from its endowment (there are arguments that this is too conservative, but it remains the prudential standard), and at that rate, Bezos’ billions would produce $100,000,000 a year to be disbursed—less administrative overhead, of course, but even if that overhead itself ran into the tens of millions, the amount left for grant-making would be huge.
That calculation, however, assumes the $2 billion was a gift made in full. Instead, it was a pledge,, a promise to contribute that total sum over a period of time. Without knowing the payment schedule, we really have no idea how much will actually go into the foundation’s invested endowment, and we have no idea how much will be distributed from the foundation toward its programmatic purposes every year.
It may be that Bezos will transfer a large lump sum, endowing the foundation effectively in perpetuity. But it could equally mean that he can hold the lump sum himself and make many smaller contributions over a period of many years, passing them through the foundation to whatever other individuals, nonprofits, schools, etc. that he personally wishes to support. In ten, or twenty, or fifty years’ time, he will have disbursed the total pledge, and that will be the end of that. I suppose we’ll find out. In the final analysis, the figure of $2 billion is just marketing. Its specificity is an artifact of public relations, and it was certainly chosen not because anyone added up the cost of a carefully designed set of interconnected programmatic goals over many years, but because it sounds very, very big.
Charitable giving cannot effectively fight homelessness in any case; it is a social problem that demands public investment in service and infrastructure. It requires public housing, subsidized rents, and freely available healthcare; it requires not just “early childhood education”—Bezos’ other announced area of support—but pre- and post-natal care, childcare, living wage laws (another thing Amazon and Bezos oppose), addiction treatment, public transportation, public recreation, pensions and retirement, disability services, etc. Private charities can do excellent work, but they can only every be stopgaps where socialized programs fail; they can never replace those programs. And none of these programs can flourish in a country where we permit one man to make more money in a day—$275,000,000—than one measly municipal tax could have made in nearly a decade.
And this is not just an issue of a single rich guy, a single charitable gift, or a single municipality. As more urban economies come to be dominated by a cadre of over-capitalized tech firms, the question of public revenue streams becomes critically important. Homelessness is not monocausal, but home prices and rising rents are a huge structural component, and these are the seemingly inevitable results of the over-compensated administrative and technical employees (as opposed to the poverty-wage, largely rural and exurban warehouse workers, for example) coming to town.
My own city of Pittsburgh threw open the gates to Uber a number of years ago after our mayor extracted a set of fabulous—but always unwritten—promises from the company to invest in urban and transportation infrastructure. The company almost entirely reneged. The mayor had harsh public words. But that did not stop him from offering up a double-secret deal to Amazon when it announced its “HQ2” plan to build a second corporate campus in some city in America, launching one of the fastest races to the bottom the world has ever seen. Our same mayor has now gone to court to keep the terms of the deal secret from the public and even from city council.
It is a trick as old as organized crime and restaurants. Buy into the business for nothing; run up the tab; and when the joint runs out of money, let it burn.