To share wealth you first have to create it

Allow us to join in the chorus of praise for the charitable giving of Mackenzie Scott, the exwife of Amazon founder Jeff Bezos, who announced last month that she had given away another $2,739,000,000 to 286 organizations. Private philanthropy is part of what makes the world go round. It fills gaps that markets, for all their wonders, leave unfilled. The Montreal Economic Institute, for instance, which pays both of our salaries, is funded by the voluntary contributions of individuals, charitable foundations, and private organizations that support its mission.

But while a lot of good can be done by giving away $2.7 billion, that wealth must first be created. In the case of Scott, her fabulous wealth comes from the phenomenal success of Amazon, which she had a hand in. That company’s success was built on the creation of value for a great many consumers, employees, suppliers, and shareholders. The benefits of online shopping became even more obvious during the pandemic, when many stores were forced to close.

So, while we applaud the philanthropist for her donations to causes she considers worthy, we take issue with her fuzzy criticisms of the system within which she and her husband created great wealth in the first place. Without this system, which connects billions of people around the globe irrespective of race, gender or any such characteristics, they could not have earned the riches that made these huge donations possible.

Yet, in announcing her most recent round of charitable giving, Scott writes that she is “attempting to give away a fortune that was enabled by systems in need of change.” Now, admittedly, there is always room for improvement in our messy democracies. But it seems to us that the fortune in question was enabled (a strange choice of words) first and foremost by the creation of a company that found innovative ways of connecting consumers and suppliers better than anyone else had before.

Online retail companies like Amazon constantly force traditional brick-and-mortar stores to innovate and lower prices. At the end of the day, it is we consumers who benefit from stronger competition and a wider array of products of varying prices. This “Amazon effect” allows us all to find more products within our budgetary constraints. While we all enjoy paying less for the same items than we otherwise would, these savings are especially beneficial for larger families and poorer individuals.

Not only is Amazon substantially improving the purchasing power of the less well-off, it is also providing employment to roughly 1.3 million people worldwide. In fact, Amazon’s uncanny ability to create jobs and provide educational opportunities for its employees remains unparalleled, and is clearly a great force for good.

Scott also writes in her announcement that “it would be better if disproportionate wealth were not concentrated in a small number of hands.” But to the best of our knowledge, the wealth that found its way into the hands of Mr. and Mrs. Amazon did so through countless voluntary interactions — positive-sum exchanges that as a rule make everyone involved better off. And with our progressive taxation regime, many low-income families also benefit from wealth creation in another way, through tax credits and direct subsidies. Let’s not forget that Canada’s top 10 per cent of income-earners pay 54 per cent of all income taxes.

To be sure, some portion of the inequality that exists in the world does have illegitimate sources, and there will always be ways to improve the system we live in. If Scott wants to use philanthropy to help right historical wrongs, more power to her. If she is aware of any crimes or instances of corruption that helped her get rich, she should fess up.

As far as we can tell, Mackenzie Scott and Jeff Bezos got fabulously wealthy, not by plundering their fellow man and woman, but by providing them with a tremendously useful service. When Scott downplays and obscures the great good she and her former husband accomplished as entrepreneurs, she undercuts the good that will also surely come from her acts of great generosity.