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Is a philanthropic monopoly a good thing?

Marketplace Staff Jun 30, 2006

TESS VIGELAND: Ever wanted to ask Warren Buffett for some business advice? One California investor will get to over lunch. He paid more than $600,000 for the privilege as part of an online charity auction. And he already has one question prepared: What do you do if you have too much money and don’t know where to invest it? Apparently you bid $600,000 for lunch. But I wonder if Buffett might advise him to donate to the Bill and Melinda Gates Foundation. Political philosopher and commentator Benjamin Barber hopes not.

BENJAMIN BARBER: OK, here’s an economics 101 summer quiz: A $30 billion company merges with a $30 billion company to create a company bigger by far than the next seven largest competitors put together.

What’s the result? An unconscionable and dangerous mega-monopoly ripe for an antitrust lawsuit? Or our new civic hero, the Bill and Melinda Gates Foundation?

Before people start calling Marketplace in a tizzy, let me say clearly that Bill and Melinda Gates, and now Warren Buffett, are doing God’s work. Private philanthropy is a great American civil society tradition and we should all applaud it.

But there’s a catch here.

Philanthropy is private wealth deployed for public purposes. All wealth is ultimately derived from the commonwealth. Using it privately is justified only when the private market enhances freedom, entrepreneurship and pluralism in a way that the public sector cannot.

The public sector — the state — is necessarily a monopoly. Markets are supposed to be anything but. They are supposed to maximize the chances for innovation, experimentation and genuine choice.

So private wealth scaled up to the size of big government is a big problem.

Bundling software and hardware, a kind of monopoly, was a bad thing for Gates’ Microsoft. That’s why the government sued.

Bundling enormous philanthropies might not be that good for Gates’ Foundation either. Big bucks may increase efficiency but will narrow philanthropy’s overall diversity, at least for experimentation, for entrepreneurship and for choice.

Before we join Warren Buffet and start willing our money to the Gates Foundation, let’s remember that diversity is the private market’s real virtue. More foundations should be the goal, not bigger foundations.

VIGELAND: Benjamin Barber runs the non-profit Democracy Collaborative.

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