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Servants to the Rich, 1/18
A perspective on the non-profit sector
National chains and online services are replacing many traditional Main Street businesses—the insurance and travel agencies, the local banks, the High Street retailers and restauranteurs. To make matters worse, local smallholders increasingly find themselves dependent on what analyst Mike Lind calls “toll booth” companies like Facebook, Google, and Amazon, tech megaliths which are able to coerce small businesses to give up their data. Amidst the supply chain crisis, firms like Amazon and the big box stores use their bargaining power to minimize delays in deliveries in ways not available to smaller businesses.
The traditional yeomanry—like the “kulaks” or wealthy peasants in Stalin’s day—is losing out. As executive compensation reached the stratosphere at the big tech and finance firms, small businesses faced what Harvard Business Review described as “an existential threat.” Experts are warning that one-third of small businesses, which comprise the majority of U.S. companies and employ nearly 50 percent of all workers, could ultimately shut down for good. Hundreds of thousands have already disappeared, including nearly half of all black-owned businesses.
Some of the components of the twentieth-century middle class are declining . The percentage of the work force that can be called manufacturing production workers is down. Many mom-and-pop retail businesses have been defeated by Wal-Mart and Amazon.
Ten years ago, I wrote Where are the Servants?
In an economy where some folks are very rich and many folks are unemployed, why are there not more personal servants? Why don’t Sergey Brin and Bill Gates have hundreds of people on personal retainer?
Perhaps we are now living in the New Servants economy. Tyler Cowen has a series called “those new service-sector jobs.” My favorites include Coffin Whisperer and Wedding Hashtag Composer. The demand for such services can only come from people with excess wealth, and the supply comes from people who realize that their best source of income is to cater to those with excess wealth. This is very different from the age of mass consumption, when Henry Ford tried to manufacture cars that his workers could afford.
Actually, I think that the biggest engine of the trickle-down economy is the nonprofit sector. I don’t have data on this, but I suspect that if you ask the next 10 young professionals you meet where they work, at least 3 of them will reply that they work for nonprofits.
In the 1970s, the catch-phrase “petro-dollar recycling” became popular among international economic technocrats. The idea was that oil-rich countries accumulated substantial wealth, and this wealth would somehow find its way to poor countries, primarily being channeled as loans.
Today, I think that what we are seeing is “techno-dollar recycling.” Winners in technology and finance have accumulated substantial wealth. This wealth finds its way to young professionals, primarily being channeled through nonprofits.
I think we would be better off with fewer non-profits and more investment in profit-seeking enterprises. I would rather see young professionals trying to work for businesses that are accountable to customers than having them work as servants to the rich. I would much rather see billionaires invest in businesses in minority communities than fund nonprofits that donate to BLM.
Has Glenn Loury identified a nonprofit that does what I would like to see?
And here is Sam Harris interviewing, and slobbering over, young billionaire Sam Bankman-Fried. Not once does Harris ask the question of why it is more ethical for Bankman-Fried to donate his money in an unaccountable way than it is for him to invest his money in profit-seeking business. I don’t count on Congress allocating resources wisely, so I don’t favor wealth taxes. But I don’t count on any billionaire allocating resources wisely without any feedback mechanism.
I find Bankman-Fried scary, and my guess is that I would find other billionaires with his approach to altruism just as scary. I don’t think that any one person has as clear a picture of morality as Bankman-Fried and Harris believe that they own.