Billionaire philanthropy is a double-edged sword

The thing about billionaire philanthropy is that it’s the worst possible system for getting things done that governments don’t care about – except everyone else.

This is a recurring theme here at Future Perfect. We’ve written about how access to abortion and contraception worldwide is almost exclusively funded by billionaires – indeed, great and crucial advances in safe abortion and contraception have been developed through billionaire-funded research, not government-funded research.

We’ve written about how in the early months of Covid-19, billionaire-funded Fast Grants quickly gained funding for promising research into treatments and vaccines, even as the accelerated NIH funding approval process still left behind many talented researchers with no way to get the money they needed for crucial Covid research.

In a piece grappling with the billionaire philanthropy dilemma, my colleague Dylan Matthews pointed to other past cases, such as Julius Rosenwald, the Sears mogul who funded schools for black children in the Jim Crow South a century ago.

The Connecting Theme: Sometimes the ultra-wealthy can get the crucial work done for the people who need it most, especially when the government — and the voters who brought it to power — aren’t willing to do it .

So that’s the good side. Then there’s the bad side.

Billionaires have a high variance

To start a ridiculously successful business in the US these days and not sell it to Google or anyone else and quietly retire with a significant fortune, you have to be an unusual kind of person.

Elon Musk’s biggest fans and biggest critics would probably agree on this: he is a particularly vivid example of this. He is clearly good at some of the basics of running a business – most people couldn’t use the investment capital he received in multiple successful companies in difficult industries. He also makes expensive, terrible decisions always.

It’s quite possible that these tendencies go hand in hand — the very traits that made him decide he could do spaceflight better than anyone else are also the ones that made him decide he could. tweet a thoughtless solution until the Russian invasion of Ukraine.

And while we’ve been through a lot of Elon Musk drama around his Twitter takeover recently, I’d say Musk is unusually visible rather than unusually unique. Many billionaires are weird people, and their pranks often affect the rest of us.

It wasn’t that long ago that many technology company valuations were crooked wild for the eccentric bet of SoftBank billionaire Masayoshi Son, whose Vision Fund lost $27.4 billion last year. Some of the biggest obstacles to the re-election of Kathy Hochul’s Democratic New York government last night were contributions from Ronald Lauder, a billionaire who may be motivated in part because he wants to kill a wind farm near his home.

I think Musk’s Twitter activities will end up being a lot of noise and anger that mean nothing. Twitter will probably be fine. (Or at least as nice as Twitter can ever be.) The people who are addicted to it will still be there.

But some of his other decisions made much more sense. He co-founded OpenAI on the premise that AI was a terrifyingly powerful technology, but the company continued to develop unprecedentedly powerful AI systems and release them to the public. (Musk resigned as President of OpenAI in 2018; in the meantime, the company has done a lot to develop unprecedented systems, and the “release” is somewhat slowing down due to a combination of security and profit considerations.)

That’s a big bet on something that could go very, very wrong, and the damage it could cause would be far worse than Musk’s efforts to make people pay for verification on Twitter.

Where high variance is good – and where it is really bad

There are some billionaires that I think are doing incredibly well, like Bill Gates or Dustin Moskovitz, who have both literally saved millions of lives through their global health donations. There are those, like Musk, who manage to do both world-changing good — like basically inventing the electric vehicle industry with Tesla — and world-changing bad at the same time. There are some billionaires—many in fact, though they often fly under the radar—who usually try to get politicians elected who represent their interests and cut their taxes.

The thing is, there’s an extremely high variance here. The difference between the best and the worst billionaires is very big.

In some areas the variance is good. With science grants, for example, I think the fact that billionaires are often eccentric and working out their own theory about what’s important in terms of what to fund is a definite plus. If they are right, critical progress can take place that would never have happened otherwise. And if they’re wrong, in the worst case scenario, they’ll just lose their money. If the downside is limited, the variance is good.

In some areas, however, variance is extremely damaging. With dangerous technologies, for example, I’m not that excited about a world where every billionaire can do whatever they want. I don’t think Musk’s creation of OpenAI was a good idea, and I definitely don’t want a billionaire to be able to build super-powerful AI systems just because they can.

Likewise, it is far from ideal for a small number of people to be able to take down or rescue banks and stock markets as the cryptocurrency industry seems to realize lately, if too late. (Disclaimer: Future Perfect has received funding from Building a Stronger Future, a family foundation run by cryptophilanthropist Sam Bankman-Fried and his brother Gabe.)

This seems like a good rule of thumb for where I’m quite in favor of billionaire philanthropy or activism, and what I’m against. Is the downside risk really just that they waste their money? I’m all for it.

Isn’t the downside risk of them costing tons of other people that we have as a society a way to make them pay? I’m much less excited.

Is the downside risk that they literally kill us all? I am gone.

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