Being preposterously rich means never having to say you’re sorry. You can, for example, say the most outlandish things and get away with it. Steve Schwarzman is a mogul in the shady private-equity world, the 53rd richest man in the United States. He’s worth a cool $7.8-billion and has friends in very high places. Yet Steve Schwarzman is not happy, as President Barack Obama would like to raise taxes on his industry. If I were in Mr. Schwarzman’s shoes, I’d be unhappy too. If the President gets away with it, Mr. Schwarzman and company might have to pay the same level of taxes as their secretaries. This, he says, means war: “It’s like when Hitler invaded Poland in 1939.”
It’s true some billionaires have recently agreed to donate half their fortunes to good works, and good on them. But it brings to mind a thought-provoking question raised by that homespun philosopher, Uncle Albert: Is a man with $8-million really richer than one with $7-million? Or what about $7.8-billion? Truthfully, fellas, would this Schwarzman dude really miss the other $3.9-billion (although I’m pretty sure he’s not among the giving billionaires)?.
Being a billionaire means there are no limits on chutzpah. Canada’s own Frank Stronach, for example, received a payout of about $1-billion to give up control of his company, Magna, which he wanted to do anyway. This is on top of the compensation Mr. Stronach routinely granted himself when he ran the shop – $58.1-million in 2002, for example, $70.6-million for 2007. Even without these top-ups, Mr. Stronach was worth an estimated $1.19-billion, more than some countries. We can conclude that he does not agree with Uncle Albert.
Needless to say, being a billionaire buys you power and influence big time. Many accept this as a fact of life. Others find it disconcerting and even write books about it, like The Trouble With Billionaires by Linda McQuaig and Neil Brooks. Among their worries, as one chapter heading says, is that “Billionaires are bad for democracy.” Among their examples are the influence that Toronto magnate Peter Munk, head of Barrick Gold, has at the University of Toronto.
I’ve run into Mr. Munk’s controversial mines more than once in my Africa work, and I’ve frequently visited the University’s Munk Centre for International Studies, which his foundation partially funded (with generous tax reductions). Last year the Munk Foundation agreed with U of T to establish a new School of Global Affairs to replace the Munk Centre. Ms. McQuaig and Mr. Brooks fear Mr. Munk might be buying influence over the nature of what goes on within the new school – say the choice of faculty and courses –which the university pooh-poohs as unthinkable.
As it happens, two weeks after their book was completed, Ms. McQuaig received the actual Memorandum of Agreement between the Munk Foundation and the governing council of U of T, dated Nov. 23, 2009 and duly signed by both. (It’s now been made accessible by the university here.) The memorandum, which I hope will be reproduced in the paperback version of The Trouble With Billionaires, makes the book’s concerns quite plausible.
It’s a fascinating document in a number of ways – see the many references to “branding” and a “branding strategy” – but two sections are particularly notable.
The funds from the Munk Foundation (with generous tax reductions) are to be donated over time. Only a portion will be donated up front. After that, “the university shall provide to the Donor in each year a detailed report indicating … a description of the program initiatives and activities of the School.” Then the school’s director “shall meet annually with the Donor’s Board of Directors” to discuss these matters “in greater detail.” Beyond all this, an additional tax-deductible gift of $15-million will be handed over if the Munk Foundation determines the university has achieved certain assigned objectives. “The determination of whether the University has achieved the Objective shall be solely that of the Donor and ... shall be conclusive and binding on the University.”
The university insists these words really mean nothing. But look at them again. These are carefully sculpted clauses. Why include them at all if they’re inconsequential? Why isn’t it a reasonable interpretation that further Munk Foundation donations will depend on whether it approves the programs the new school – sorry, Munk School, as the memorandum rigorously stipulates – is running? Is this institution likely to initiate a major project on the operations of Canadian mines in poor countries? What’re the chances it might consider adding to its faculty a certain Linda McQuaig, one of Canada’s indispensable public intellectuals who’s published far more than the great majority of tenured academics?
Let me also draw attention to another quirky paragraph, quietly tucked away in Schedule A, called the Space Plan. The new Munk School will be housed in a splendid building called the Heritage Mansion. This fine old pile faces Bloor Street, one of Toronto’s main thoroughfares, with side entrances on Devonshire Place. Paragraph 3 of Schedule A reads as follows: “The main entrance of the Heritage Mansion will be a formal entrance reserved only for senior staff and visitors to the School and the [Canadian International Council].” Everyone else must come and go through the Devonshire Place doors.
Now what’s going on here? This is pretty outrageous stuff. Is it really just that the front door to the Heritage Mansion is too narrow to accommodate us all? Maybe Peter Munk could spend a few bucks to renovate it so even the rabble would fit. But let’s ask the obvious question again. If this paragraph doesn’t mean what it says, why is it there? Easy peasy. It’s what billionaires can demand and what universities, it appears, will allow them to get away with.
Call it elite or class segregation. It’s the return of Upstairs, Downstairs. The maids and butlers and tradesmen have their own entrance while the lords and ladies of the manor enter through the front. It’s what grossly increasing inequality inexorably leads to. It’s not about how the other half live, though. It’s about how the tiny but dangerously powerful plutocracy lives. The Munk School is simply the prototype for a new gilded age in which the few enter through the front, the middle largely disappears, and the vast majority squeezes in if there’s room. Welcome to the future.Report Typo/Error
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