in trying to avoid a doom loop of oligarchy we instead wind up with a doom loop of technocracy, in which elite research universities grow ever larger and more powerful and non-profit organizations press for the expansion of a government that operates largely through private administrative proxies. This doom loop might move at an even faster clip than the doom loop of oligarchy, as non-profit organizations are tax-exempt, a fact that has had significant consequences for jurisdictions like New York city, where non-profit medical providers have been growing robustly. Imagine “profitable non-profits” that offer their employees lavish salaries, thus drawing talented workers away from firms engaging in productivity-enhancing business-model innovation, and devoting just as much of their effort to preserving and extending their privileges as they do to their ostensible social missions.
Consider three groups that might decide how to allocate large concentrations of wealth:
1. Private individuals and money managers, seeking the highest return.
2. Government officials.
3. Non-profits.
Progressives fear (1). Conservatives fear (2). Salam is saying that at some point we should start to worry about (3). He has a point.
This has happened before. The Catholic Church ended up controlling a huge amount of the the land in Europe before the monarchs expropriated it. That’s, in part, why currently foundations are required to spend a minimum portion of their endowments and why we have laws against perpetuities. In the long run, this is likely a problem that could be solved by just modestly raising the minimum payout rates for charities.
It’s not just in New York, either. In Pittsburgh, there has been a very bitter fight the last couple of years between University of Pittsburgh Medical Center, a non-profit which operates almost every hospital in Pittsburgh, and Highmark, another non-profit which is the local Blue Cross affiliate and also happens to operate the only non-UPMC hospitals in the city. Acute care in Pittsburgh has literally become a duopoly of Highmark and UPMC, and UPMC seems to be successfully squeezing out their last competitor. You have to take a pretty long drive out into the suburbs to find a facility that isn’t run by one of those two entities.
In regards to worrying at some point about 3): Read Matt Continetti’s admittedly partisan write-up of the Heather and Tony Podesta divorce, and then read up on who is donating to the Center for American Progress run by Tony’s brother, John, AKA the once and future Chief of Staff. It’s easy to conclude “some point” is now.
Especially when 2) often funds large part of 3)….
Who controls 3? Largely 1.