The Schwarzman school of philanthropy

Something completely unexpected happened to me this week. As I was sipping my coffee one morning, Steve Schwarzman appeared on television to discuss his philanthropic work, and I suddenly started feeling genuine affection for the co-founder and chief executive of Blackstone, the asset management group.

I should have known better. I am old enough to remember when Mr Schwarzman threw himself a 60th birthday party so ostentatious The New Yorker magazine dubbed him Wall Street's "designated villain". He also failed to raise a smile when he quipped that an Obama administration proposal to raise taxes on private equity investors reminded him of "when Hitler invaded Poland in 1939" (he later apologised for the analogy).

But I felt myself being seduced by this very same Schwarzman and I would argue that my reaction points to an emerging problem for all citizens of the American republic. Our land is replete these days with newly minted plutocrats giving away large sums of money - with the inevitable tax advantages, of course - and that means the rest of us are going to have to work very hard to keep these folks in their proper place.

The danger is that we will start seeing the world through the eyes of our rich benefactors, as I did briefly while Mr Schwarzman was giving his reasons for donating a whopping $150m to his alma mater, Yale University. The money will go to transform an old dining hall and adjoining areas on campus into a high-tech social and cultural hub that will be known as the Schwarzman Center.

Mr Schwarzman's sales pitch moved me because I realised we had a good deal in common, at least in our younger days. We both attended public high schools in the suburbs of big cities - his outside Philadelphia, mine near New York - and we both made our way as teenagers to the alien territory of an Ivy League university (I did my time at preppier-than-thou Princeton after I was rejected by Yale).

As he discussed the loneliness of his early undergraduate days, Mr Schwarzman might as well have been speaking for me. For the first time in his life, he told Bloomberg Television, he found himself in a large place where he knew nary a soul - and that left him with an abiding interest in making his old university stomping grounds welcoming. The Schwarzman Center is intended to make the next Schwarzmans feel right at home while at Yale.

It is a nice thought, and it almost made me forget that there is an under­lying structural problem with philanthropy: the philanthropists. These people are not like everybody else. Some combination of talent, luck and persistence has set them apart from their fellows and that inevitably shapes the way they see the world and act in it.

Only minutes into the Bloomberg interview, Mr Schwarzman proved himself a classic example. Like your humble narrator, Mr Schwarzman failed to gain admission to his first-choice university. He said he really wanted to go to Harvard. But unlike anyone I have ever met, Mr Schwarzman didn't take Harvard's no for an answer. Using a pay phone at his high school, he called Harvard's head of admissions in the hope of changing his mind. Mr Schwarzman compared the experience to "dialling God".

Such was the impression this Pennsylvania teenager made on the Ivy League deity that the official wrote to him many years later to say that Harvard had made a mistake in his case, Mr Schwarzman said. So competitive is he that, even at the moment he was helping Yale, he could not resist telling the world of his standing at Harvard, as well.

The lesson, for me, is that Mr Schwarzman was a force of nature from the start, a doer destined for big things. It makes sense that he is worth more than $13bn, according to Forbes, and that Blackstone is one of the most successful financial companies of our era.

Mr Schwarzman's money will un­doubtedly work wonders at Yale - just as it will for the 100 students from around the world who are set to participate next year in the Schwarzman Scholars programme at China's Tsinghua University and just as it has done for visitors at the New York Public Library's Stephen A Schwarzman Building.

Americans, in turn, should be thankful that Mr Schwarzman and so many other billionaires in this country are so generous. But we should be vigilant, too. These well-heeled folks should be free to do as they please but they should not be allowed to set our national agenda.

The risk for the republic is that the philanthropists will put their names on lovely buildings and finance projects that will be as successful as their investments, and little will be done about the problems that lack easy solutions. The billionaires still need to pay their fair share to the Internal Revenue Service and the people still need to make decisions collectively about policy.

Philanthropy is a very good thing. But philanthropy isn't the same thing as justice. It will take more than the beneficence of our billionaires to cure all that ails us in the US, especially when the benefactors in question struggle in their less generous moments to tell the difference between a tax bill and a blitzkrieg.

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