Last week, author Malcolm Gladwell stirred up the 1% hornet’s nest by sarcastically calling out a hedge fund manager, John Paulson, for his $400 million donation to Harvard University. The billionaire’s donation to the richest university in the world will benefit the School of Engineering and Applied Sciences.
Upon hearing the news, Gladwell, the New Yorker writer and “Tipping Point” author, took to the Twittersphere to unload a deluge of missives aimed at poking fun at the hornet’s nest.
It came down to helping the poor or giving the world’s richest university $400 mil it doesn’t need. Wise choice John! http://t.co/2bFmuTy397
— Gladwell (@Gladwell) June 3, 2015
If billionaires don’t step up, Harvard will soon be down to its last $30 billion.
— Gladwell (@Gladwell) June 3, 2015
Business Insider interviewed several hedge fund managers to get their take, and the pushback was swift and indignant. Most were appalled that someone would dare criticize such benevolent charity. All were shockingly out of touch with an America struggling to make ends meet.
It went from the defensive:
“Would they criticize him if he just sat on his wealth and ‘compounded it’ like certain others?” asked Daniel Loeb of Third Point LLC.
To the sanctimonious:
“Malcolm Gladwell must have sustained some sort of head injury that has lowered his high IQ. That could be the only thing that could explain his tweets,” said Anthony Scaramucci of SkyBridge Capital. “We are very lucky to have people like John Paulson in our society. I would be long a John Paulson and short a basket of Gladwells.”
Then, this gem from T. Boone Pickens of BP Capital:
“I was amused by the criticism. My first thought was, hey, wait a minute, get the critic up there and ask, ‘Wait a minute, pal, how much have you given?’ You may find out he has given, but I have a hard time imagining anyone being critical of a charitable gift.”
Mr. Pickens, you’re asking completely the wrong question.
It is quite the spectacle to watch the 1% squirm when someone has the gumption to call them out. But what is truly lost in this debate is why hedge fund managers have so much money to begin with, and why should the very wealthy be the arbiters of how to spend these resources to make our society better?
A hedge fund is an investment vehicle that pools money and invests in risky speculations. They deal a lot in derivatives, the trading of which, if you’ll remember, is what started the Great Recession, leading to massive bailouts of banks while leaving the people hung out to dry.
Hedge fund managers have since recovered quite nicely since the purported “end” of the Great Recession, which actually continues for most of us.
President Obama recently has been citing a fascinating statistic: The top 25 hedge fund managers earn more than all kindergarten teachers in the country COMBINED. And that number checks out, with the hedge fund managers pulling in, collectively, $11.6 billion in 2014, in what was seen as an off year. The country’s 158,000 kindergarten teachers, meanwhile, collectively earned $8.5 billion in 2012.
This statistic is troubling because it is an indicator of what we value as a society. As it stands, it would seem that we believe that the pursuit of vast and obscene wealth exceeds our value of teachers and the education of our children.
I’m a dad with a 6-year-old finishing up kindergarten in a couple weeks. How many children do you know say, “I want to be a hedge fund manager when I grow up”?
It is sickening to think how little we collectively value the teachers we entrust with our children. But that’s the thing: I don’t think that’s actually the case. We all know our children’s teachers. We see the value they add into our lives, into society. What we don’t see is just what is it that hedge fund managers add to society. And, even worse, how are they extracting value from society.
Even from a sympathetic perspective, it’s fair to say that whatever value they may add is extremely disproportionate to the massive wealth they accumulate. But I would take it further and argue that they actually have a deleterious effect on the well-being of the rest of us.
People who have gamed the system are preying on those without access to the same resources that they have.
And when we are having debates over funding cuts to women and children’s nutrition and the solvency of our retirement system, for instance, we are falling far short of being able to fund vital public services, in a time with skyrocketing inequality when there are a few individuals who hoard all of society’s resources. And, looking specifically at this Harvard donation, there are huge shortages of higher education funding across the country. Couldn’t that money be better used elsewhere?
There is a difference between charity and change. A system of relying on our most wealthy to have the altruism and philanthropic kindness in their hearts to give “their” money away to help everyone else is a model of oppression for regular, hard-working people. Wouldn’t we be better off in a system where the wealth is shared and workers can earn their own money to spend on their families how best they see fit? Should we be perpetuating a reliance by regular folk on the emotional whims of wealthy people?
The 1% seems to be a bit flummoxed over the vitriol coming from Malcolm Gladwell. What’s driving it is simple. That $400 million, Mr. Paulson, should never have belonged to you in the first place. You procured that money off the backs of hard-working people across the country who are giving everything they have just to scrape by.
Your donation does not make you a humanitarian, sir. We live in a broken system with an uneven playing field, and you are the $400 million weight keeping us down.