Goldman Sachs llustrates the Problem with a Privatized Safety Net
The Chronicle of Philanthropy reported yesterday that Goldman Sachs drastically cut its contributions to charity in 2011:
The banking giant, announcing its annual results Wednesday, said its total compensation bill, including salaries and bonuses, declined 21 percent in 2011. Goldman reported profits of $4.4-billion, a 4.4 percent drop, and planned to hand out $12.2-billion in bonuses, down by 26 percent from 2010.
The company gave $320-million to charity in 2010 and $500-million in 2009, according to the Mail.
While this is certainly emblematic of the moral shortcomings of our 1%-centric economic system, there’s another important point here.
Opponents of a robust, government-funded safety net often say caring for the poor and vulnerable should be left to charity, churches and the private sector, but this report about Goldman’s drop in donations shows just how inadequate of a solution that is. Lots of bad things happened last year. The global economy stalled, poverty increased, the Horn of Africa suffered a famine of Biblical proportions, and let’s not forget the Fukushima catastrophe. But donations fell as needs rose.
This dynamic is inevitable. Expecting private charity to pick up the slack fails to account for the fact that economic forces that harm the poor can also affect the bottom line (and thus the contributions) of the donor class. Gutting a safety net that responds to rapid economic fluctuations and catastrophes with increased spending thus guarantees disaster. If Goldman Sachs responds to a 4% drop in profits with a 75% cut in charitable giving, we cannot take it on faith that the private sector is equipped to handle the needs of the poor in times of crisis.