Alec MacGillis wrote in The New Yorker (March 14th, 2016 issue) about David Rubenstein, a principal in the private equity management firm, Carlyle. Mr. Rubenstein earns a lot of money categorized as a carried interest on other people’s investments, on which he pays taxes at the preferential long term capital gains rate (of about 20%). He also donates a lot of money to what he calls “Patriotic Philanthropy,” including paying for some of the monuments and museums in Washington DC.
I have nothing against the Washington Monument. I was in Washington the other day, and it looks really cool high in the air with the White House in the background. When it was damaged in an earthquake in 2011, Congress (in all its wisdom) decided that it should be fixed, with half of the budget coming from the federal government, and half from a rich donor (who turned out to be Mr. Rubenstein). Maybe that’s what they mean by “public-private partnership”.
Alec MacGillis asked me about philanthropy mitigating the need for reform of our tax system and included my response in his article, but I want to elaborate a bit.
Some part of our national income is spent on collective purposes — the common good. Should decisions on how to spend that money be made by (a) individuals who earn the money deciding how to spend it or (b) representatives elected by the voters deciding?
Option (a) is the obvious right answer (I write with tongue in cheek). Of course the people who make the money should have control over how to spend it. Why should some politicians who are thousands of miles away and may not understand what a private equity manager actually does have the right to take away some of the managers money and spend it on stuff that he thinks is a total waste?
And why stop at the Washington Monument, the Library of Congress, and the big museums that David Rubenstein funds. I would like my tax dollars spent on redecorating the State Dining Room in the White House. I think having the president give toasts at State Dinners standing in front of a picture of immigrants arriving at Ellis Island in the 1920’s would be a better reflection of American values than the famous portrait of Abraham Lincoln that the tourists think is Daniel Day-Lewis. I’m rich; not as rich as David Rubenstein, but I can afford to send in a few hundred thousand dollars to promote my idea of what patriotism really means.
It will be easy to raise money for the Blue Angels or the Thunderbirds (the aerobatic teams that show off jet fighters at airshows). I could easily find a billionaire per month that would pay millions of dollars to have jet fighters showing off at big fancy private parties.
And imagine selling million dollar condominiums in New York or Miami Beach that could be the official apartment houses of Seal Team Six. We could have a rotating system of members from the unit that killed Osama Bin Laden standing guard in front of the building.
On the other hand, it might be a little tougher doing other things. I’m not sure anyone would want to fund the sewage treatment center on West 143rd Street in exchange for having private parties there. I’m not sure I would pay a lot of money to have the people in Flint Michigan drinking “Morris Pearl Water”.
Obviously there is some hyperbole there, but the question is: do we want to fund those things that the rich think are important, or do we want to fund things that the majority of the people (working through their elected representatives) think are important? The people who founded this nation called the original states commonwealths for a reason: they wanted to do things that required common wealth.