CSR or Socialism

*Disclaimer: This is a policy rant that could get boring if you are not that into development. 

Corporate social responsibility (CSR) is perhaps one of the more complicated emerging subjects in development today. From hyper collective actions to community needs assessments the data supporting CSR is lacking and the impact and outcome measurements show it.  Beyond the economic developmental flaws that private development assistance can inflict on a community it is also in my opinion something of an illegal tax on consumers from the corporation that provide us with a particular service or good. If you imagine large corporations as something akin to mini-governments – indeed some of them actually have annual revenues larger than many middle income counties GDP – they collect money and then use that money to do “good” in the form of CSR programs designed to help the needy. All while also getting a tax write off for it, thus limiting the amount of money governments have to promote their own public programs.

Some believe that if they instead were to pay a more fair taxes percentage to the governments (and indeed also to their employees) the governments could then do better and limit the need for these types of charities to exist in the first place. Now I know what some of you might be thinking, “hey, whoa! This is sounds a whole lot like socialism.”  The recent row over the Wal-marts food drive is a perfect example, one could argue that it is a form of goodwill and charity for them to hold this drive for their employees, while the more obvious solution would be to simply pay them a fair wage in the first place and the food drive would fail to be necessary.

Another issue which receives even less criticism, but which is cut from the same cloth and may be even more damaging to development practices is Bill Gates and Warren Buffett philanthropic initiative called The Giving Pledge. On paper it sounds like such a great thing, all of these multi billionaires pledging to give away at least half of their fortunes to charitable causes. But this isn’t about charity, it’s about inequality. I see the rise of super-philanthropy as the flip side of astonishing new levels of inequality that deserve serious scrutiny.

Some columnist such as Joe Brewer and his colleagues at The Rules, have said the trend is not an accident of Adam Smith’s ‘invisible hand’ running its natural course. Rather, Brewer and others say, inequality today is increasingly the product of deliberate practices used by the super-rich, political elite and corporate entities to avoid paying a fair share of taxes and to influence – or undermine – the role of government.

Nobel-Prize-winning economist Joseph Stiglitz, interviewed for an article in Rolling Stone, is another one of those arguing that rising inequality is one of the most destabilizing phenomena at work in the United States today. I would argue the same case globally.

Back when the Gates and Buffett launched The Giving Pledge, Georgetown University’s Pablo Eisenberg (an expert on the non-profit sector) was among the few who questioned its value. Eisenberg contended The Giving Pledge could actually make things worse by undermining public programs and the role of government in maintaining a level playing field and prohibiting concentration of power. Eisenberg, in a piece for On Philanthropy, offered special criticism for the media’s unquestioning reporting on the initiative:

“The media … never thought to ask about what this new money would support, or how it would do so…. They never questioned whether the prospective, phenomenal growth of mega foundations, some possibly larger than Gates, might be a dangerous development for American democracy. They never asked whether these new funds would be publicly accountable, or merely managed, as with the Gates Foundation, by two or three family members, without any public discussion or political process.”

Is the rise of the super-philanthropy and CSR becoming the new alternative to government? Indeed different governments around the world have struggles for ages to battle issues relating to poverty, security, education and sanitation and have made only moderate achievements.  Perhaps we would be better to just leave these bigger issues to the billionaires instead.

To their credit, the Gates family and Buffett have long stressed that philanthropy cannot, and should not, be seen as an alternative to government or of policies aimed at creating a level playing field. Bill Gates has long been a leading voice for fair taxation – and even was so bold as to once say he favored ‘wealth redistribution’. Now that sounds like socialism!

In the end I do not know what the answer is. I am only left with more questions. And I believe that is my point, we all need to be asking ourselves a lot more questions as we begin to walk down this new path of development.

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