Saturday, January 26, 2008

Andy Carnegie and Bill Gates

My recent post about the two faces of Bill Gates brought some comparison with Carnegie. There is an interesting difference between the two. Gates is a recent convert to philanthropy. Carnegie, however, began at an early age. He decided that he would make a fortune and use it to contribute to a better world.

Carnegie came from a family of radical Chartists. Philanthropy was his way of being radical. So, he felt justified in screwing anybody -- even sanctioning the bloody battle of Homestead to promote his philanthropy.

209: "... there are higher uses for surplus wealth than adding petty sums to the earnings of the masses. Trifling sums given to each every week or month -- and the sums would be trifling indeed -- would be frittered away, nine times out of 10, in things which pertain to the body and not to the spirit; upon richer food and drink, better clothing, more extravagant living, which are beneficial neither too rich or poor."

Carnegie, Andrew. 1895. "The Best Use of Wealth." in Miscellaneous Writings of Andrew Carnegie, 2 vols. Burton J. Hendrick, ed. (Garden City, NY: Doubleday, Doran & Company, 1933): pp. 203-18.


Robert D Feinman said...

I don't know if there is any point in arguing over history, but I think your take on Carnegie is a bit off.

I don't see any evidence of his fundamental belief in philanthropy, I regard his self serving writings as early PR. I understand the religious overlay to his thoughts, but self justification is a powerful force that leads to self deception.

As for Bill Gates, the story that has been heard most commonly is that he got into philanthropy after he was shamed into it by Ted Turner. As the story goes Turner said to Gates "what are you going to do with all your money, take it with you?"

This after Turner had pledged $1 billion to the UN.

Peer pressure may be one of the few ways to alter the behavior of the super wealthy. They certainly don't care what we think...

Michael Perelman said...

Actually, it was not just PR. He even had it written into his prenups.

He lived quite well but never squandered like some of his contemporaries.

You are right that he often used his gifts to further his business interests, but it was not JUST public relations.

He was a pretty weird person.

Robert D Feinman said...

I'm in the midst of reading a book about Canegie and the rest of steel industry by a fellow blogger and labor history professor:

"Managing the Mills - Labor Policy in the American Steel Industry During the Nonunion Era" - Jonathan Rees

So far weird is also the world I would use from what I've read to date.

I have to thank Carnegie since my retirement plan is a result of his founding of TIAA...

Anonymous said...

robert d. feinman:

Why all the Carnegie and Gates bashing?

Every single thing in the universe has something bad about it. The question is, what do you choose to focus on? On a clear sunny day do you focus on a single cloud in the blue sky and say "it's cloudy"? Sounds like it.

Anyone who is a Carnegie or Gates hater is either broke, has never given anything to anyone, or both.

Do you feel the same way about Julius Rosenwald?

Myrtle Blackwood said...

The following purported quote of the 25th President of the United States is disputed. However William McKinley was known the hold such sentiments:

"The truth is I didn't want the Philippines, and when they came to us as a gift from the gods, I did not know what to do with them.... I sought counsel from all sides - Democrats as well as Republicans - but got little help. I thought first we would take only Manila; then Luzon; then other islands, perhaps, also. I walked the floor of the White House night after night until midnight; and I am not ashamed to tell you, gentlemen, that I went down on my knees and prayed Almighty God for light and guidance more than one night." "And one night late it came to me this way - I don't know how it was, but it came: (1) That we could not give them back to Spain - that would be cowardly and dishonorable; (2) that we could not turn them over to France or Germany - our commercial rivals in the Orient - that would be bad business and discreditable; (3) that we could not leave them to themselves - they were unfit for self-government - and they would soon have anarchy and misrule over there worse than Spain's was; and (4) that there was nothing left for us to do but to take them all, and to educate the Filipinos, and uplift and civilize and Christianize them, and by God's grace do the very best we could by them, as our fellow men for whom Christ also died. And then I went to bed and went to sleep and slept soundly."

Today's version:
Because of the current great doubt experienced by the two major political parties about the virtues of the fiduciary habits of ordinary workers, they feel compelled to take their savings away. The money is placed in pension funds for their old age. Workers are not allowed to withdraw this money and especially they are not permitted any control over the way in which these dollars are invested. (Meanwhile we'll continue to tout the virtues of a 'free market' system).

..Superannuation fund trustees have traditionally not invested in hedge funds both because of the infancy of the hedge fund market in Australia and because of the legal obligations described above. Rather,superannuation trustees have tended to prefer to invest in fixed interest investments, cash, government bonds and property investment trusts.

Hedge funds have not been favoured areas of investment principally because of perceptions concerning:
• the volatility of returns;
• level of regulation;
• the perceived lack of transparency of hedge funds ;
• levels of management fees; and
• additional risks associated with the use of derivatives by hedge fund managers.

In order to make such investments, superannuation trustees need to give careful consideration to the
legal restrictions imposed in the form of general trustee duties and the investment parameters imposed
by their trust deed, investment plan and the SIS Act.
However, despite this traditional reluctance to invest in hedge funds, superannuation trustees in
Australia are now starting to use hedge funds to diversify their investments. Hedge fund investment is providing superannuation trustees with a way of counter-balancing the decline in returns on investments in traditional products. Those trustees are also attracted by the relative low correlation between the performance of some hedge funds and that of the equity markets more generally. There is also a
considerable degree of liquidity with hedge funds, something that real estate or other structured assets may not offer. Finally, the introduction of hedge funds for retail investors has made the product apparently more mainstream and therefore, for trustees, possibly less likely to result in fund member concern...

Australia: Some Legal Issues relating to Superannuation Trustees as Hedge Fund Investors
By Tessa Hoser and Katherine Henzell, Blake Dawson Waldron1
December 2002.

Anonymous said...

gates is funding an 'african green revolution'. so far, he is not pushing GM technology---mostly because of resistance, but it appears he is promoting the standard 'green revolution' which has had mixed results (eg in India there has been an increase in food production, which kept up with population, but due to its 'agribusiness' model this has meant that something like 10,000 small farmers have committed suicide in recent years. (perhaps this would be an example of a stolper-samuelson style 'compensate the loosers' pareto optimal/general/nash equilibrium , colloquially known as the 'you can't take it with you' optimum).

the standard green revolution is pesticide, fertilizer and fossil fuel intensive, though i guess if 'abiotic oil' is correct (or maybe Fred Hoyle's ET continuous creation model) this is not a problem since more oil is made everyday under russia and in the d-branes. (all one needs is to solve the transportation problem).

gates also has on his foundation leading this , noble Borlaug, big player in the original green revolution who was at Monsanto doing GM, and an african woman PhD who got alot of press for supposedly developing GM sweet potatoes in Kenya to deal with a blight there. This was written up in Science, Nature, etc. and later the results thrown in the trash. (Also, he has Nkrumah's son on his AIDS board, for a dose of pan-africanism.)

The Gates foundation is also heavily invested in the companies destroying the Nigerian delta through oil. So i guess this is 'steal from and kill peter to heal paul'. i guess you can't please everyone, so 'don't worry, be happy'.