January 4, 2016

Only some excerpts from two articles in this issue.

From What Money Can Buy

Because foundations tended to fund liberal causes, conservatives were still a little suspicious of them, but outright opposition had been rare since fears of Communism died down—perhaps because conservatives tended to believe that a person ought to be able to spend his money as he chose, and if he chose to spend it on charity rather than on yachts, well, who was to fault him for it? Because foundations tended to fund liberal causes, they were regarded benignly by most liberals, when they were regarded at all. But this liberal approval was odd, because, as Rob Reich, a political scientist at Stanford, pointed out in the Boston Review, foundations were undeniably plutocratic: they were vehicles for the rich to mold society into the shape they thought it ought to be. In this, foundations resembled super PACs: in both cases, money gave rich people the means to exercise an outsized and undemocratic influence on American life. Although foundations were not allowed to fund overtly political activity (which prevented them from addressing the root causes of the conditions they were permitted to alleviate), it was difficult to see why attempting to change American society by lobbying was political while doing the same by funding activists was not. “Why are we . . . hypersensitive to the dangers of big money in politics . . . but blind, it seems, to the dangers of big philanthropy in the public sphere?” Gara LaMarche, formerly of George Soros’s Open Society Institute, wondered in an article in Democracy.

But there was a significant difference between foundations and super PACs: the money that endowed foundations was exempt from taxation, so when foundations attempted to mold society they were doing so at the expense of the taxpayer.When a rich person endowed a foundation, he received, in effect, a substantial subsidy from the government, and in 2012 U.S. foundation assets amounted to more than seven hundred billion dollars. (Of course, the same could be said of any charitable donation given by a person who itemized his tax deductions: in 2013, tax revenue forgone owing to charitable giving amounted to nearly forty billion dollars.) Even the conservative legal theorist Judge Richard Posner could not understand why foundation assets should be tax-exempt. “A perpetual charitable foundation . . . is a completely irresponsible institution, answerable to nobody,” he wrote. “Unlike a hereditary monarch whom such a foundation otherwise resembles, it is subject to no political controls either. . . . The puzzle for economics is why these foundations are not total scandals.”

In fact, a hundred years ago, at the dawn of the foundation era, they were total scandals. When John D. Rockefeller tried to obtain a federal charter to establish his foundation, in 1910, Congress rejected him. In 1915, a Commission on Industrial Relations recommended that the Rockefeller Foundation be regulated by the government, or be shut down altogether by Congress, and its funds distributed to the unemployed, since presumably the reason it had all that surplus money was that the Rockefellers had been too cheap in paying their workers. “The domination by men in whose hands the final control of a large part of American industry rests is not limited to their employees, but is being rapidly extended to control the education and ‘social service’ of the nation,” the commission warned. The puzzle for history was why the scandal went away.

Conservative argument seems to make a lot more sense to me; for the least it is self-consistent.

From War of Words

Iranian penal code made the age of criminal responsibility nine for girls and fifteen for boys.