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berniesrevolution · 6 years ago

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JACOBIN MAGAZINE

Meet Ajay Banga. The son of an Indian army officer, Banga was born in Khadki, a cantonment a few hours outside Mumbai. After studying economics at Delhi University, he took an MBA from the Indian Institute of Management and began an illustrious career working for corporate giants like Nestlé and PepsiCo. In 2010, Banga was appointed CEO of Mastercard, headquartered in Purchase, New York.

He is one of only a handful of Fortune 500 heads to complete his primary, secondary, and post-secondary education entirely in India.

Banga took on a healthy company and made it even more profitable. In 2009, Mastercard earned a profit of $1.5 billion on revenues of $5.1 billion. In 2013, profit reached $3.1 billion on revenues of $8.4 billion. The company’s stock has jumped 330 percent over the past five years.

He’s been rewarded well for his efforts: last year Banga took home over $13 million and cemented his status as a darling of the business press, saluted in magazines like Fortune, and named the world’s “Top Wealth Creator” by Chief Executive magazine.

He specializes in innovation. At least, that’s what business papers proclaim: Banga has “doubled down on technology,” “launched an in-house innovation arm,” and introduced Mastercard Contactless, a new wireless payment system.

Most innovatively of all, he has narrowed his gaze on the world’s 2.5 billion “unbanked” inhabitants. As a feature in Fortune describes, Banga realizes that “much of the opportunity for the company is in parts of the world where a digital wallet is still decades away.” He’s at the forefront of a growing group of business leaders who appreciate that there are profits to be made in global poverty.

What Fortune doesn’t add is where the money for Banga’s investments in the “unbanked” masses is coming from. A good deal of it is, in fact, not coming from the company he leads. It’s not coming from Mastercard shareholders, and it’s certainly not coming out of his ever-expanding pay packet. It’s coming from the coffers of the world’s most powerful philanthropic organization: the Bill and Melinda Gates Foundation.

In 2014, the Gates Foundation announced an $11 million grant to Mastercard to establish a financial inclusion “lab” in Nairobi, Kenya. The grant will last three years, after which Mastercard has indicated that, should the venture prove sufficiently lucrative, the company may be willing to foot the bill for further financial expansion in the region.

Mastercard’s management rationalized the grant in economic terms: investing in developing nations such as Kenya is risky, and there’s no guarantee that investments will pay off. As Mastercard explains in a press release, the money from the Gates Foundation enables the company to reach “new markets that may otherwise be commercially unviable.”

The gift to Mastercard — and it is a gift, rather than a loan or an equity investment — is the latest in a long list of donations that the Gates Foundation has offered to the world’s wealthiest corporations. From Vodafone, a British company notorious for paying zero corporate tax in the United Kingdom, to leading education companies such as Scholastic Inc., the Gates Foundation doesn’t simply partner with for-profit companies: it subsidizes their bottom-line.

The Business of Altruism

Increased charitable giving to the world’s wealthiest corporations is simply one novel aspect of a much bigger phenomenon: the growing power and clout of private philanthropic actors over global institutions such as the World Health Organization.

With an endowment of $42 billion, the Gates Foundation spends about $3 billion each year towards causes that, at first glance, seem irreproachable. But the giving has hidden costs.

Take donations towards the World Health Organization. In 2013, the Gates Foundation gave over $300 million to the UN health agency — the largest contribution from any donor that year, including the US government. What the Gates Foundation spends on global development yearly is almost as much as the overall operating budget of the WHO, and that doesn’t include its other philanthropic programs.

The foundation expects something in return for its efforts. As Laurie Garrett suggested in a 2012 Foreign Affairs article, “few policy initiatives or normative standards set by the WHO are announced before they have been casually, unofficially vetted by Gates Foundation staff.” Some people argue this is a positive development. The Gates Foundation is praised often for its results-oriented philanthropic approach. Peter Singer, the controversial Australian philosopher who helped launch the “effective altruism” movement, has praised Gates and Warren Buffett for being the “most effective altruists” in history.

The problem is that there’s little evidence to back this remarkable assertion. On the one hand, there’s no doubt that the Gates Foundation has done some good in the field of global health. But at the same time, it’s clear that, whatever the opinions of Singer and others, the foundation is not spending its money on the largest global health killers.

Until recently, Gates was not even a proponent of a decades-long goal — championed since the WHO’s 1978 Alma-Alta Declaration — to strengthen primary health care systems and achieve universal health coverage. Far from being uniquely “effective,” grants made by the Gates Foundation “do not reflect the burden of disease endured by those in deepest poverty,” as the editors of the Lancet, the world’s leading medical journal, pointed out in 2009.

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#politics #the left #jacobin #jacobin magazine #bill gates #philanthropy #economic inequality #capitalism #billionaire class

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