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Why Philanthropy Matters

Why Philanthropy Matters: How the Wealthy Give, and What It Means for Our Economic Well-Being

Copyright Date: 2013
Pages: 272
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  • Book Info
    Why Philanthropy Matters
    Book Description:

    Philanthropy has long been a distinctive feature of American culture, but its crucial role in the economic well-being of the nation--and the world--has remained largely unexplored.Why Philanthropy Matterstakes an in-depth look at philanthropy as an underappreciated force in capitalism, measures its critical influence on the free-market system, and demonstrates how American philanthropy could serve as a model for the productive reinvestment of wealth in other countries. Factoring in philanthropic cycles that help balance the economy, Zoltan Acs offers a richer picture of capitalism, and a more accurate backdrop for considering policies that would promote the capitalist system for the good of all.

    Examining the dynamics of American-style capitalism since the eighteenth century, Acs argues that philanthropy achieves three critical outcomes. It deals with the question of what to do with wealth--keep it, tax it, or give it away. It complements government in creating public goods. And, by focusing on education, science, and medicine, philanthropy has a positive effect on economic growth and productivity. Acs describes how individuals such as Benjamin Franklin, Andrew Carnegie, Bill Gates, and Oprah Winfrey have used their wealth to establish institutions and promote knowledge, and Acs shows how philanthropy has given an edge to capitalism by promoting vital forces--like university research--necessary for technological innovation, economic equality, and economic security. Philanthropy also serves as a guide for countries with less flexible capitalist institutions, and Acs makes the case for a larger, global philanthropic culture.

    Providing a new perspective on the development of capitalism,Why Philanthropy Mattershighlights philanthropy's critical links to the economic progress, health, and future of the United States--and beyond.

    eISBN: 978-1-4008-4681-8
    Subjects: Political Science, Education, Business, Sociology, Economics

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
    (pp. ix-xviii)
    (pp. 1-18)

    On August 3, 2010, theWall Street Journalran an article titled “U.S. Super Rich to Share Wealth.”¹ The piece was about the Giving Pledge—an effort by Bill Gates and Warren Buffett to get the world’s richest individuals and families to give away half of their wealth during their lifetimes. The pledge’s initial outreach effort, which stemmed from Gates and Buffett’s conversations with wealthy individuals over the previous year, ended with forty American billionaires signing on. The article, published a day after the signing, was buried inside the paper and initially didn’t seem to create much excitement.

    I expected...

    (pp. 19-45)

    For most of recorded history, civilization was pretty easily divided into two classes of people—let’s call them lords and peasants. The standard of living of each class did not change very much, and what change did occur was typically not noticeable within one lifetime. The lords generally preserved their wealth by coercion or rent seeking. Lords could choose war and plunder, or they could tax peasants for the use of their property, such as farmland or pastures. Tensions existed between lords and peasants, but if you wanted to move up, you had to stage a revolution.

    Some lords were,...

    (pp. 46-85)

    While I was traveling around the world during the boom years of the 1990s and lecturing on innovation and entrepreneurship (the second current of our story), one question was on everyone’s mind: Why did the information revolution—which is sometimes overshadowed by the related dot-com bubble—happen in America?¹ What is unique about this country that made it happen here? My hosts often gave me the short answer: “cowboy capitalism.” But when I would ask, “What exactly is ‘cowboy capitalism?’ ”—a phrase associated with Ronald Reagan—my audiences were mostly silent. They could explain Scandinavian egalitarianism: everyone is equal....

    (pp. 86-120)

    Since the beginning of the twentieth century, the American research university has increasingly moved to the forefront of innovation, playing a more critical role in developing new technologies used by large companies and entrepreneurs. In recent decades, one university and one region in particular have become almost synonymous with knowledge creation and the high-tech industry: Stanford University and Silicon Valley. The university plays an integral part in the success of its region, in part because many of its alumni work in nearby technology companies but also because many of the inventions created at Stanford, particularly by faculty and graduate students,...

    (pp. 121-148)

    Let’s take a few minutes to ask a very simple question: Why are billionaires giving their money away? In order to understand philanthropy as a viable system for recycling wealth and creating opportunity, it’s worth probing the dynamics that have sustained philanthropic giving and the conditions under which it has prospered and wavered.

    In general, there is a considerable amount of generosity in the United States. Over the past few decades, the roughly three hundred fifty billion dollars given away each year amounts to roughly 2 to 3 percent of GDP. To put this in perspective, this amount is about...

    (pp. 149-175)

    In chapter 1 I closed with a question, “Is American-style capitalism working?” Of course to answer that question we need to be clear about what exactly American-style capitalism is. And the answer to that depends on who one asks. In chapters 2–5 I tried to paint a broad-brush picture of what I think are the currents of American capitalism: opportunity, entrepreneurship, wealth creation, and philanthropy. Using this metaphor of the currents, let’s now use a finer brush and paint a more nuanced picture of American prosperity today.

    How could philanthropy be a part of capitalism? Capitalism is a relatively...

    (pp. 176-199)

    In this book, I have described American-style capitalism as interplay between innovators and entrepreneurs, on the one hand, and the vast system of universities, foundations, and research institutes they created, on the other hand. This back-and-forth has helped America navigate its dual obligation to create both wealth and opportunity—the critical balancing act that determines the true strength of a capitalist system. By opportunity, I mean the extent to which individuals can participate in the economic system, which is perhaps how the term is most commonly used, as well as the ability of new firms and new ideas to enter...

    (pp. 200-204)

    A few years ago, my family and I were on vacation in southern France. One evening after dinner in Saint-Tropez, a small crowd had gathered at the harbor. The crowd was swarming around a brand-new yellow Ferrari. Why all the fuss? In this playground of the rich and famous, another luxury car was nothing to get excited about. But it was not the car that created the excitement—it was the message. Written on the windshield in brilliant red lipstick was the message, “Bobby, on your 18th birthday, Love, Mother.”

    This book has made the argument that the indiscriminate use...

    (pp. 205-226)
  13. NOTES
    (pp. 227-240)
  14. INDEX
    (pp. 241-250)