December 03, 2015

Zuckerberg shows that even among #skeptics, there's a sucker born every minute

Or maybe I should put "skeptic" in scare quotes. And, I definitely should advise you that I have a follow-up post, refuting pseudoskeptics who didn't want to accept what's in this initial one.

Marky Mark, Priscilla Chan and daughter Max.
Who could resist such cuteness? I could.
Early this week, Facebook founder Mark Zuckerberg announced that with the birth of his daughter, he was creating a new charitable foundation in his wife's name and that he would give away 99 percent of his Facebook stock.

Gawker, a day later, provided the reality of what this meant.

First, the Chan Zuckerberg Initiative isn't a charitable organization, it's an LLC. That means that it can spend those Facebook stocks, when cashed out, on whatever it damn well pleases.

I noted that, as well as the fact that Zuckerberg's announced desire to promote "connecting people and building strong communities" sure made it sound like he'd be giving all this Facebook stock to ...

Promote the use of Facebook.

Because, hey, Facebook connects us all, right? Into communities, right?

What's not patently self-serving in the announcement?

Well, much of it that isn't that is New Age drivel.
Advancing human potential is about pushing the boundaries on how great a human life can be. 
Can you learn and experience 100 times more than we do today?
Because that, too, is among what Marky Mark wants to fund.

If you can read that second sentence without barfing, you're probably not much of a real skeptic.

When I posted this on Facebook, alleged "skeptics" claim that I'm just a heartless cynic.

Since I don't normally post to "public," I can't name their names by my Facebook ethics.

Which, of course, is far more ethics related to Facebook than its inventor has ever shown.

Meanwhile, per BuzzFeed, which pointed out that the Chan Zuckerberg Initiative is not a charity, Marky Mark already has for-profit activities lined up:
A Facebook release this afternoon stated as much. “The Chan Zuckerberg Initiative will pursue its mission by funding non-profit organizations, making private investments and participating in policy debates, in each case with the goal of generating positive impact in areas of great need,” it said. “Any profits from investments in companies will be used to fund additional work to advance the mission.”
"Policy debates" could be translates as "lobbying," in my book.

But I'm just a cynic.

Other buzz phrases could be similarly translated. "Areas of great need" could be neoliberal tech-powered education, where Marky Mark's already been a flop, per the Gawker link.

Which, from there, goes on to note about said education initiatives:
“Micro-schools”? Putting Facebook software in public schools? Software, software, more software. If you have a headache, take a software. Jimmy can’t read? Give him software. The conceit that code can solve all social ills and free the species from the chains of aging, illness, and flatulence is the height of Silicon Valley bullshit, and Zuckerberg’s massive giveaway will clearly be predicated on that conceit.

Yep. Like Chris Whittle and others, Zuckerberg wants to get our schoolkids hooked on the tech-neoliberal version of Marlboros ASAP. 

Or, his attempt to ram Facebook down Indians' throats while offering a bait-and-switch with a lure of a crappy free Internet plan to try to get people to buy a slightly less crappy paid plan.

But I'm just a cynic. And the MSM, like "skeptics," are suckers. Right, NYT? Right again, NYT? Even while co-suckering others to play along?

And not mentioned by Zuckerberg is that this "giveaway" surely will allow him a sweet tax write-off.

Indeed, Pro Publica has now weighed in on exactly that issue
Mark Zuckerberg did not donate $45 billion to charity. You may have heard that, but that was wrong. 
Here’s what happened instead: Zuckerberg created an investment vehicle. 
In doing so, Zuckerberg and Chan did not set up a charitable foundation, which has nonprofit status. He created a limited liability company, one that has already reaped enormous benefits as public relations coup for himself. His PR return-on-investment dwarfs that of his Facebook stock. Zuckerberg was depicted in breathless, glowing terms for having, in essence, moved money from one pocket to the other.

Sounds about right. 

But, wait, it gets "better."
What’s more, a charitable foundation is subject to rules and oversight. It has to allocate a certain percentage of its assets every year. The new Zuckerberg LLC won’t be subject to those rules and won’t have any transparency requirements.
And, only one person makes the decision on how to invest this. 

But wait, Pro Publica goes further on this:
Any time a superwealthy plutocrat makes a charitable donation, the public ought to be reminded that this is how our tax system works. The superwealthy buy great public relations and adulation for donations that minimize their taxes.

Yep. 

And, Zuckerberg gets tax benefits from this:
So what are the tax implications? They are quite generous to Zuckerberg. I asked Victor Fleischer, a law professor and tax specialist at the University of San Diego School of Law, as well as a contributor to DealBook. He explained that if the LLC sold stock, Zuckerberg would pay a hefty capital gains tax, particularly if Facebook stock kept climbing. 
If the LLC donated to a charity, he would get a deduction just like anyone else. That’s a nice little bonus. But the LLC probably won’t do that because it can do better. The savvier move, Professor Fleischer explained, would be to have the LLC donate the appreciated shares to charity, which would generate a deduction at fair market value of the stock without triggering any tax.

Meanwhile, some pseudoskeptics are claiming that a California benefits corporation, which is the type of LLC this is in California, will keep him in line.

Per California's enabling statute, I don't see it that way.

That's in part because, per that same lawyer, and contra one neolib pseudoskeptic, Zuckerberg's money can be used for lobbying purposes, too.

The only way to "enforce" whether such a body is living up to its charter, etc., is through a "benefits proceeding."

However, such proceeding is all "inside baseball":
(a) No person may bring an action or assert a claim against a benefit corporation or its directors or officers under this chapter except in a benefit enforcement proceeding.
(b) A benefit enforcement proceeding may be commenced or maintained only as follows:
(1) Directly by the benefit corporation.
(2) Derivatively by any of the following:
(A) A shareholder.
(B) A director.
(C) A person or group of persons that owns beneficially or of record 5 percent or more of the equity interests in an entity of which the benefit corporation is a subsidiary.
(D) Other persons as have been specified in the articles or bylaws of the benefit corporation.
(c) A benefit corporation shall not be liable for monetary damages under this part for any failure of the benefit corporation to create a general or specific public benefit.
So, that would mean the Chan Zuckerberg Initiative corporately, or any shareholders or directors named Priscilla Chan, Mark Zuckerberg or cronies thereof, of such persons unlikely to hold more than 5 percent of the Initiative's stock, are the only people who can do anything about its performance.

As for whether such incorporation is better than a traditional 501(c)3 nonprofit? I think not.

True that they don't have tremendous amounts of oversight, either. However, theoretically, the IRS can come down on nonprofits more than these LLCs. The fact that IRS enforcement is bupkis in reality doesn't refute the theoretical angle. And, I'll take even minimal IRS enforcement over this.

And, places like Charity Navigator do annual reviews of charity performance, but, I assume, not of for profit LLCs, even if they're allegedly for a vague "public benefit."

As for the idea this boosts stakeholder value rather than shareholder value? Well, theoretically, but only if your LLC's board isn't a fount of nepotism.

Speaking, what is a public benefit? In Californias enabling law, it says it is:
(D)efined as a material positive impact on society and the environment, taken as a whole, as assessed against a 3rd-party standard, as defined, that satisfies certain requirements. 
But, that “third party standard” is undercut by lack of third-party enforcement.

But, I'm just a cynic.

Hey, alleged skeptics? (One of him is somewhere between right-neolib and libertarian, so understandable.) Sometimes cynicism is the proper social and emotional stance to adopt as a result of skeptical perusal of an issue.

Of course, I love being a deliberate contrarian at times. And a capital-C philosophical Cynic.

But, Zuckerberg doesn't even make a public announcement about going to the bathroom unless there's some self-interest involved.

Part of the problem is that many Americans, including said neoliberal pseudoskeptic, don't understand what philanthropy actually is. Per this piece, remember:

If you are giving money to somebody with the expectation that they will carry out your instructions, further your agenda, owe you compliance and assistance, or complete a project you've assigned them — you're not a philanthropist. If your giving is designed to give you power or control over an aspect of public life in our country — you're not a philanthropist.
Period and end of story.

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Update, April 12, 2016: Facebook's new Siri-on-Oxy-slow bot-apps are surely a public benefit, right?

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