Billionaire benevolence is booming, but it comes with strings

Plutocrats often think they know better than elected officials when it comes to addressing social ills. Under the current US administration, they are getting the opportunity to prove it.

Take Michael Dell, who has donated more than $6bn to the president’s scheme to give every American child a “Trump Account”. Elon Musk, meanwhile, has broached the idea of giving a share in rocket-maker SpaceX to Trump Account holders, a donation worth about $11bn at the current market price.

And don’t forget Dario Amodei, co-founder of Anthropic: his AI lab is creating a “public benefit fund” endowed with 5 per cent of the company’s shares, potentially worth $100bn at the company’s mooted IPO valuation. Amodei has extra reason to look benevolent: Anthropic has admitted its products could threaten humanity’s survival.

It’s not unusual for self-made business owners to fancy themselves better capital allocators than the folks in Washington. At Davos in 2019, Dell argued against higher taxes for the ultra-rich by suggesting he is better at deploying funds for public good than the government. Citadel boss Ken Griffin has given $3bn to fund a new university in Miami, suggesting a similar view.

They also have the means: private wealth has exploded, while the public purse looks threadbare. Musk himself is worth almost $1tn; Dell has seen his fortune balloon from $30bn to about $250bn since his Davos comments. And the current government shows little appetite for raising the taxes on such fortunes.

The givers gain, too. Donations come with tax deductions, but the resulting goodwill is helpful in building data centres and developing bots with minimum governmental intervention. Making every child a shareholder in SpaceX, for example, is a pretty good way to get Americans to feel favourably towards Musk, which the majority do not, according to a recent YouGov survey.

They are racing against time. Californians will next month vote on a one-off 5 per cent tax on fortunes greater than $1bn. Billionaires are generally opposed. Meta Platforms founder Mark Zuckerberg is one who has threatened to move elsewhere, and even forced the company to change its structure in a way that helps him pay his dues without losing control of his company.

Democracy is rarely the order of the day in Silicon Valley. Dell and Musk recently moved the corporate domiciles of their respective companies to Texas, a jurisdiction known for crimping shareholders’ power to hold managers to account. Anthropic is proposing a corporate structure, common in the tech world, with supervoting shares for insiders.

Investors in companies such as SpaceX and Dell can always sell if they don’t like the way founders think. Those unlucky enough to have social needs that don’t align with tech barons’ priorities have less choice. That is far from ideal. Philanthropy is better than nothing, but nothing is better than fairness.

sujeet.indap@ft.com