Posted by Eileen Ellsworth
This is the first post reviewing the book “Why Philanthropy Matters: How the Wealthy Give, and What It Means for Our Economic Well-Being” by Zoltan J. Acs (Princeton University Press 2013)
Zolton J. Acs makes a persuasive and scholarly case that American philanthropy is essential to American-style capitalism because it continuously revitalizes our economy and invests in the middle class.
Acs has spent a considerable portion of his professional career studying entrepreneurship in the US and Europe and has the ammunition to back up this theory with good evidence. He starts with a discussion of the Giving Pledge, reprinting word for word several pledge letters written by such philanthropists as David Rubenstein, Peter Peterson, Bill and Melinda Gates, Warren Buffett, George Kaiser, and David Rockefeller. One of the primary repeating themes you find in those letters is at the core of Acs’ book – the idea that philanthropy is intended by those who engage in it to create new opportunities for the next generation of entrepreneurs, and in doing so, becomes essential fuel for American capitalism.
Acs discusses a well understood distinction between “charity,” which is the relief of immediate suffering on the one hand, and “philanthropy,” which is an investment in something on the other. He argues that American philanthropists consciously invest in the middle class by promoting enterprise and creating opportunity. As is the case with any investment, American philanthropists expect a “return” for their generosity, namely, that the intended beneficiaries recognize the opportunity offered, work hard, and improve their lot.
Compare this with what the author calls “rent-seeking behavior” of the Old World in which the nobility, for example, worked to skew the reward system of society in its favor. Rent-seeking behavior does not benefit society, but rather concentrates wealth in the hands of the few. Philanthropy, on the other hand, is a means to help maintain the societal balance between altruism and self-interest, a balance that continuously revitalizes our economy, middle class, and workforce to everyone’s benefit.
In a recent ranking of 79 countries on dimensions such as availability of venture capitalism, innovation, and share of high-growth firms, the US finished first, beating the EU, Brazil, India, China, Denmark, Singapore, Israel and many others. We excel at entrepreneurship, innovation and economic dynamism, not only because of the sheer number of available jobs here, but also because of education and high-tech research, both of which are related to and fed by philanthropy.
There are several fascinating discussion threads in the book on innovation and creative destruction, the economic history of our nation, and the current “entrepreneurial” economy. So much more to come!