Recently, and somewhat quietly, 93-year-old Ruth Gottesman gave a $1 billion gift to the Einstein Medical School in New York City. The purpose of this gift was to make the medical school free of charge to its medical students – forever. Strikingly, this gift came with very few strings attached, apart from the mission. No request was made to exchange the gift with a renaming of the school (a not uncommon practice with such gifts).
It is not a good time for billionaires. Amassing fortunes of money does not seem to lead to happiness.
Alleged billionaire Donald Trump may soon embody the adage, “a fool and his money are soon parted.” For others, escalating adventures lead to tragic death, as was the case of billionaires Hamish Harding and Shahzada Dawood in a submersible, or a car race crash like James Crown. Briefly, we were exposed to the possibility of some sort of fist fight between billionaires Elon Musk and Mark Zuckerberg. The cage match was ultimately called off by Zuckerberg after he accused Elon Musk of “wasting his time.”
As might be expected, billionaires have dangerous hobbies — and struggles with narcissism, for many — but underpinning these activities are perhaps a search for meaning. Billionaires are people too, and it would be wrong not to recognize that the ideas and longings of billionaires can be the same as the average person.
To get some deeper perspective, it is instructive to understand the prototypical billionaire, John D. Rockefeller.
Rockefeller was not a nice man. He turned a $100 idea, the fractional distillation of kerosene, into the biggest fortune any single individual had ever amassed. Along the way, his rapacious and cut-throat business practices invented the modern monopoly. His company, Standard Oil, was finally broken up by the U.S. Supreme Court through the Sherman Antitrust Act in Standard Oil Co. of New Jersey v. United States (1911). The result was the creation of 34 separate companies, several of these are still enormously powerful and wealthy.
Rockefeller did something seemingly more unusual, though. For unclear reasons, he began to give away his money.
By the time of his death, he had given away $540 million (unadjusted for inflation) before his death in 1937 at the age of 97. During his time, his net worth was estimated at $1.4 billion ($30 billion when adjusted for current inflation); this give-away corresponds to about 33 percent of his total wealth. In so doing, he created modern philanthropy, which resulted in the creation of two of the world’s greatest research universities, helped pull the American South out of chronic poverty, greatly enhanced the educational opportunities of countless African Americans, stimulated and professionalized medical research, and dramatically improved health around the globe.
We are meant to be impressed by this. No doubt, this capital redistribution was helpful. But the real question is not why he gave away 33 percent of his wealth — why did he not give away 99 percent?
Assuming for a moment Rockefeller did give away 99 percent of his wealth, he would have been left with $14,000,000. Translating that to today’s dollars, that would be approximately $300,000,000. To make sense of Rockefeller’s world, consider that in 1935, the average American salary was $471 per year.
It would take the average American worker at that time 30,000 years to earn $14,000,000. The average nice home in the 1930s might cost $6,000. With $14,000,000, Rockefeller could have bought 2,333 homes. In 1935, the Deluxe Ford Touring Sedan cost $655. Rockefeller could have picked 21,347 such cars.
Recall now that Rockefeller did not give away 99 percent of his money but only 33 percent. If we redo the math of what his money could have done, that average worker would need 2 million years of work, the number of houses bought is now 154,000 and the number of purchased Deluxe Ford Touring Sedans is 1.5 million.
Math is tricky, even for billionaires. When the human brain counts, it goes: one, two, three, four, many. The study of behavioral economics struggles with trying to sort out our psychological relationships to gain and loss.
Psychologists Daniel Kahneman and Amos Tversky won the Nobel prize for a seemingly simple idea they called Prospect Theory. It states, “losses hurt more than gains feel good.” Kahneman and Tversky advanced the concept of “loss aversion.” In this idea, losing money — be it $100 or $500 million — is far more painful than the joy gained by finding the same amount.
Additionally, a loss of 10 percent feels the same if it is 10 percent of $100 dollars or 10 percent of $1 billion. This may explain why most billionaires are startling stingy with giving money away, even though a multi-billionaire can give away billions of dollars with no impact on their standard of living, and still have plenty left over to launch rockets or die in little submarines.
If billionaires are just people with the usual vanities, fears, and misgivings about money, though, how can we explain the extraordinary actions of multi-billionaire Mackenzie Scott?
According to reports, Scott’s philanthropy is occurring at a rate faster than any other person in human history. She has given away more than $16 billion of her original $40 billion, representing 41 percent of her total wealth. This puts her ahead of Rockefeller in total percentage, and certainly speed.
In 2019, Scott divorced Amazon owner Jeff Bezos and the cash settlement left her as the third wealthiest woman in the world. In that same year, Scott signed the non-binding “Giving pledge,” a charity campaign with the mission to have her give away most of her wealth while alive, or in her will. Hundreds of groups are no doubt the happy recipients of Scott’s giving. Not all billionaires are impressed with Scott’s plan.
Elon Musk upbraided Scott with an ad hominem and stated, “Super rich ex-wives who hate their former spouse” should “be listed among ‘Reasons that Western Civilization died.” Musk has a point, but perhaps not the one he thought. Why do we allow so much wealth to be accumulated in the hands of so few people in the first place?
Today, there are more billionaires, and therefore more philanthropists, than ever before. Each year, billions of dollars are given away, yet inequity continues to rise. Barely one-fifth of all donations by the big givers ends up in the hands of the poor. It is commonly assumed that philanthropy results in a redistribution of money. This is wrong. Lots of philanthropy ends up in the pockets of the powerful.
Philanthropy is a statement about power and control and bestowing of large amounts of money to others that may or may not align with what would be in the best interest of society. At worst, large-quantity philanthropy provides a sanitizing cover to a system that permits the unbridled accumulation of wealth into the hands of so few people. One should not confuse philanthropy with the actions of the person with very modest means when they donate their time to the local soup kitchen. Such actions rarely result in a naming right on the soup kitchen building.
Time will tell what the future holds for Einstein med school graduates because of Gottesman’s gift. Will a cohort of future doctors now freed from the debt burden of expensive medical school turn around and give more generously to needy comminutes, or will it just be a faster track to wealth accumulation?
Joel Zivot, MD, MA, JM, is associate professor of Anesthesiology and Surgery, Emory School of Medicine; former adjunct professor at the Emory School of Law; and senior fellow in the Emory Center for Ethics.