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OPINIONS

Get rich first: Stanford’s theory of social change

If students are truly interested in making a positive social impact post-Stanford, it is quintessential that we have a rigorous theory for how social change is created and how we contribute to the process that creates this social change. At Stanford, a prevalent approach towards creating social change is the “donor mentality” wherein students plan to enter into a lucrative profession, get rich and then donate that money to noble causes. To many, this strategy to create positive change is valid. It allows students at Stanford to get the best of both worlds: to generate large amounts of money, live a lavish lifestyle and earn social status points while also contributing to social change. However, the “donor mentality,” in fact, may preclude truly sustainable and effective social change.

When considering a theory for social change, it is important to first conceptualize a theoretical goal for what a “just” society would look like. One prevailing view in ethical theory is that a just society is one where there exist only voluntary rather than involuntary inequalities. By this, theorists mean that financial inequalities do not originate from the arbitrary and uncontrollable circumstances of one’s birth, including both social circumstances like race and income and biological circumstances like natural talent or disabilities. Rather, in a just society, inequalities only stem from one’s choice to put in varying amounts of effort towards their careers.

If we take a just world to be one where there is an equality of opportunity and each individual’s level of success can be attributed solely to their choice of effort, then charity has no place. In this world, if someone transfers their wealth to another who is less wealthy, they are, in effect, providing more wealth than is due to that individual given the amount of effort the less wealthy individual put in. The same is true in reverse when a less wealthy individual transfers money to a wealthier individual. Thus, in a just society, it appears that charity only distorts incentives for individuals to work.

However, moving away from the realm of the ideal, we can also consider whether charity has a role to play in reaching this just, equal-opportunity society. In particular, we will prove that private charity alone cannot deliver us to a just society. Charity provides only band-aid solutions to problems that require institutional reform. In the status quo, there exist unjust institutions (i.e., access to quality education, healthcare, employment opportunities) that allow individuals with class, gender and racial privilege to utilize such institutions to succeed. Private charity, such as alms used for food, health and education, provides temporary and often insufficient aid to victims who have already been wronged by broken institutions that do not provide equality of opportunity. A more effective approach to private charity would be to reform the broken institutions themselves.

In addition to not addressing the root cause, private charity tends to be unreliable and uneven in responding to involuntary inequalities. Individuals with wealth to spare are more likely to help those who are close at hand or those who subscribe to their particular ethnic or religious belief system, while ignoring others. Moreover, the donors themselves have complete freedom and reign to decide how to allocate their money. However, donor preferences might not match the actual needs of those less wealthy, resulting in an inefficient use of resources to reduce involuntary inequality.

Finally, the very concept of charity can sustain unjust institutions because it implies that people who have unfairly accumulated their wealth are entitled to that wealth. In particular, during a charitable transaction, people who are giving away money are believed to have a rightful claim over that money. The idea that the distributor of charitable donations is not obligated to transfer her wealth, but rather is “generous enough” to donate money she accumulated through unjust institutions perpetuates the belief that status quo institutions are fair and that the donor earned her money fairly. In essence, then, charity becomes a benevolent act for a world that is perceived to be as just as possible.

As students plan their careers to make a social impact, they should consider whether or not getting rich and making charitable donations is the most effective way to make social change. If we believe that a just society is one where there is equality of opportunity and success does not depend on one’s circumstances, then we should pursue a career where we can work to reform unjust institutions rather than attempt to change the world through private donations, which, at best, provides an ineffective solution to involuntary inequality and, at worst, serves to preserve such inequality.

 

Contact Neil Chaudhary at neilaman ‘at’ stanford.edu

 

  • havensda

    I graduated 3 years ago in Human Biology and have worked at an education nonprofit since graduation. I ran into many philanthropists who earned vast sums of money and donated to our nonprofit. With <1% of their wealth, they sustain an organization of 30 that works every day to provide innovative support to the education system. They get to also fund other nonprofits, while even the CEO of my company is at their beck and call. I found myself asking: do they not have more "impact" by funding these initiatives than I would have even if I succeed and end up running one?

    I was happy to read your article. This paragraph was the best argument I've heard to help me commit to public service: "the very concept of charity can sustain unjust institutions because it implies that people who have unfairly accumulated their wealth are entitled to that wealth. In particular, during a charitable transaction, people who are giving away money are believed to have a rightful claim over that money. The idea that the distributor of charitable donations is not obligated to transfer her wealth, but rather is “generous enough” to donate money she accumulated through unjust institutions perpetuates the belief that status quo institutions are fair and that the donor earned her money fairly. In essence, then, charity becomes a benevolent act for a world that is perceived to be as just as possible."

    This seems to say that we should not endorse systems in the USA that would permit one person to even accumulate wealth. Are there any fair ways of making that much money? Probably, and perhaps in entrepreneurship, but not very many. Even successful startups rarely compensate more than the first several members with wild stock options that bring crazy wealth. It's mostly reserved for the investor class, who, while sometimes incredibly valuable, mostly benefit from rising tides or convoluted financial instruments.

    The difficulty lies in two values Stanford places a high premium on: do good, and scale. Often if I think strategically about scaling my good, it is much easier if I take a break from doing good to make money. Anyways, I have no answers in this comment – but good article.

  • aannoonn

    Well said. The reason this doesn’t hold up, however, is that when we judge an action (such as getting really rich and donating a lot of it) we cannot choose to judge it while pretending it takes place in an ideal society. Charity, or praising charity, would have no place in a society where inequality does not exist. In our world, charity is very useful AND should be lauded, because it incentivizes other rich people to do the same (making the system overall more equal) and brings attention to something that is not done enough. I’m a CS major who hopes to make a ton of money, and use everything I don’t need for social good. (This will be pretty easy, I don’t actually want a lot from life.) I can think of no better utilitarian way to improve the world as it is now. You’re totally right in saying that donor preferences may not match actual need – the best I can do is be very, very careful about organizations I give money to, making my own decisions about what injustices really need more money to be combated. You are also completely right in saying “perpetuates the belief that status quo institutions are fair and that the donor earned her money fairly”, but the problem is that there are so many other factors that also perpetuate this belief other than what I choose to do with my money, and I as an individual have no power over all the other factors. It’s a terrible magnified prisoner’s dilemma. I have to act as if society is more or less going to function as it always has, and make my decisions on how to help based on those predictions.

    There is also no reason people can’t reform broken institutions while people like me are pasting bandaids everywhere. I hope to god it happens. But while it’s important to bring attention to the fact that it might be useless and stupid and we should really be working for reform instead, I’ll just continue predicting that society will be pretty much what it is now for the rest of my lifetime (I would be VERY GLAD to be proven wrong about this), and use my time and money to do things that produce quantifiable, tangible benefits.

    I hope this doesn’t come off as argumentative or anything – I actually agree with almost everything you’re saying here, I just wanted to offer my perpective on why you can still believe everything you’ve just said and go down the other patha anyway.

  • Jonathan Poto

    Neil is definitely a boss. I hope Prof. Bruce Sievers gets to see this.

  • maddogsfavsnpiks

    Good article and good comment. Thanks for your work.

  • havensda

    Great points. In a society that’s bleeding, bandaids are important, and it is pretty hard to argue that it’s bad for you to get the power to patch them by donating to good charities.

    That said, you are one of the highest potential college graduates in the nation (with CS degree from Stanford). If everyone like you was convinced to pursue money for use in philanthropy, you would be leaving a dearth of highly trained talent to fix the system and reform the government. That creates a downward spiral that would reinforce the fractured philanthropy mindset as the government becomes less and less deserving of our money. At that point, I suppose the right thing for the wealthy to do would be to get everyone to sign giving pledges (basically a tax by another name) to a new philanthropic system that would hopefully be more efficient than the social nets we have now.

    I think Neil is saying while you could go try your luck and becoming rich and donating in a higher leverage way than government, society is better served if we try to make the government/social system better for all instead.

    We agree we want to do good and help. The discussion is really about HOW. And I really have no idea.

  • Well said Neil. It looks like you also eschew the concept of welfare state. Indeed, people have to be incentivized based on hard work.