Wednesday, July 18, 2012

David Koch donates hundreds of millions to hospitals, public television, and universities: what a selfish prick!

Libertarian blogger Matt Zwolinski queries on Facebook: "watching "The Illusion of Time" on Nova, and see that David Koch is a sponsor. Quick, NY Times - what's his self-interested angle here? Does he want to go back in time so he can exploit the environment even more thoroughly?"

It's important to remember one thing when confronted with large charitable donations by the ultra-wealthy. The rich are different from you and me--money is worth far, far less to them.

Koch is worth $25 billion dollars. 100 million dollars is approximately .4% of his wealth. The average American's net worth is about 37 k.  .4% of that amount is $148. And even still, the latter figure still greatly exagerates how much 100 million dollars is worth to David Koch. Because of the declining marginal utility of money, 100 mil. is actually worth far, far less to Koch than $148 is to the average person. Indeed, donating even billions of dollars would diminish Koch's consumption by approximately zero dollars, and hence hurts him very, very little. An equivalent sum for the average individual is quite literally pocket change.

This indicates that Koch's motives for donating to prominent organizations are also far less generous than they appear to be. Or at the very least, they are no more generous than when the average person offers change to a hobo. Many of the objects of the Koch's largess are already wealthy icons of NY high society, and many other donations are related to research into cancer, which David Koch suffered from while many of those same donations were made. Would you spend a few bucks in order to have a huge gala dinner thrown in your honor, while earning the accolades of your fellow New Yorkers and gaining you a great deal of social capital and perhaps saving your own life? Of course you would!

Many of the institutions the Kochs give to are already quite wealthy and do not particularly need the massive donations that they offer them. If the Kochs really wanted to make a huge difference, and to do so anonymously, they could just send out checks randomly to people in poor areas of the world. Of course, such anonymous giving would not earn them the type of praise and access to high society that gifts to already wealthy organizations on the East Coast do, so it's no surprise that they don't engage in it and that they make sure that there are plenty of witnesses when they do so. The Kochs like to claim that we can dismantle the welfare state thanks to kind hearted mega billionaries like themselves. If the purpose of the welfare state were to allow rich guys to easily gain cheap accolades and to engage in narcissitic self-promotion, this would certainly be true.

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