Two articles in the Dutch newspaper Trouw caught my eye this week. The first was titled “Bill Gates and the British tackle malaria with mega-fund”, about the fact that governments do not have enough budget for international development and are increasingly looking for private money. I have noticed that too in my own work; more and more of our projects are funded by the Bill & Melinda Gates Foundation. This phenomenon is called philantrocapitalism.
The second article was about tax evasion in the European Union. “If you buy an Ikea wardrobe, you contribute to tax evasion”, says MEP Paul Tang. Large companies such as Apple and Google divert their profits to tax havens. The Netherlands is attractive for large companies due to low business taxes, according to this guide.
Why is it a problem if companies do not pay their taxes? The Oxfam report An Economy for the 1% cites tax evasion as a major reason for the large global inequality. Companies like Apple increasingly manufacture their products in developing countries. In this way, they benefit from the education and health care in these countries. But they do not contribute to it through taxes. Instead they pay their workers slave wages and divert the money to tax havens.
Almost a third (30%) of rich Africans’ wealth – a total of $500bn – is held offshore in tax havens. It is estimated that this costs African countries $14bn a year in lost tax revenues. This is enough money to pay for healthcare that could save the lives of 4 million children and employ enough teachers to get every African child into school. (Oxfam, 2016)
Hearing the first story about Bill Gates, the reader might be inclined to think: What a generous man; he may be rich but at least he uses his money for a good cause. Firstly, this generosity may be less impressive than it looks. Gates contributes 1 billion dollars to this fund, from his net worth of 79 billion. That is comparable to me giving away 60 euro’s from the 5000 on my bank account.
But what is more important is the way in which this all money ended up with these powerful companies. The current economic system is geared toward making the rich even richer. The richest 62 individuals in the world have now as much money as the poorest half of the population and this inequality is growing rapidly. This is what Thomas Piketty wrote in his book Capital in the Twenty-First Century (I haven’t read it yet). The fact that there are poor people is no coincidence; it is a direct result of the neoliberalism that allowed Gates and his associates to become rich. And philantrocapitalism will not change this system. Like Jaap Tielbeke notes in De Groene Amsterdammer:
The wealth of the philanthropists and the injustices they fight are both excesses of the same economic system. Gates and Zuckerberg will not bite the hand that feeds them: they want to relieve the poverty of others with the same mentality that has made them rich.
The impact of the Bill & Melinda Gates Foundation on projects in agriculture is very noticable. The focus shifts from smallholders to business, with the assumption that improvements in the market will lead to a better life for farmers. Issues of gender equality and the improving life for the poorest people take a backseat. I think that a democratically elected government is the designated institute to invest money in things like health care, education and food security. In that way, the public interest is served, and not the wallets and the egos of the privileged few.
- Oxfam (2016) An Economy For the 1%
- Tielbeke, J. (2015) Zonder rijkdom, geen mecenas. De Groene Amsterdammer
- Cartoon from otherwords.org