Capitalism Needs More Capitalists Like Mark Zuckerberg

Yesterday Mark Zuckerberg announced his intention to give 99% of his Facebook stock to charity. I found the responses to this announcement largely unfair. The Guardian referred to it as a form of “imperialism”. Thomas Piketty called it a “big joke”. Others referred to it as “tax avoidance”. The other common criticism was that 1% of $45B left Zuckerberg with $450MM which is, well, a lot of money (too much being the implication).

First, we should applaud Zuckerberg’s move. This is a 31 year old person who has created more real value and technological advancement than many countries have in the last 10 years. He built a company from nothing and the public markets value that company at $300B. Granted, it’s hard to put a value on social media and the other Facebook companies, but I think it’s safe to say that Mark Zuckerberg’s contribution to society has been a tremendous net positive.

Second, Zuckerberg is gifting stock. In exchange for a service that has added tremendously to many people’s lives, he has largely unrealized gains. The market perceives this value to be $45B today, but Facebook could be gone in a few years and Zuckerberg will have actually given away very little relative to today’s reports. We shouldn’t forget that the market value of stock is not realized wealth.

Third, the other common criticism is that this is a form of aristocratic control and tax avoidance. Peter Kramer, a German billionaire has criticized this sort of giving arguing:

“You can write donations off in your taxes to a large degree in the USA. So the rich make a choice: Would I rather donate or pay taxes? The donors are taking the place of the state. That’s unacceptable.

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It is all just a bad transfer of power from the state to billionaires. So it’s not the state that determines what is good for the people, but rather the rich want to decide. That’s a development that I find really bad. What legitimacy do these people have to decide where massive sums of money will flow?

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In this case, 40 superwealthy people want to decide what their money will be used for. That runs counter to the democratically legitimate state. In the end the billionaires are indulging in hobbies that might be in the common good, but are very personal.”