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Comment by mateuszb | Hacker News Reader

Things you might have missed in 2013:

The Gates Foundation's Hypocritical Investments

http://www.motherjones.com/environment/2013/12/gates-foundat...

Oh for fuck's sake. How do you think a double-digit-billion endowment gets managed? By Bill Gates sitting around with a copy of the Wall Street Journal and a cup of coffee, picking stocks?

No. The money manager roles for the Gates Foundation are extremely serious, and extremely high-status. The guy who runs money management for the Gates Foundation was the former CFO of Merck. Presumably, managing the endowment for an organization with goals like "eradicate polio from the face of the earth in the name of Bill and Melinda Gates" is a job done with at least as much deadly seriousness as your average pension fund or university endowment, both of which are organizations that handle their money the same way.

"Hypocritical investments in Wal Mart". Sheesh.

Universities can (and sometimes do) take a more ethical aim than some other funds. Example: http://en.wikipedia.org/wiki/Disinvestment_from_South_Africa...

The article we're talking about does not accuse the Gates Foundation of investing in apartheid South Africa.

Yes, it just says he invests in oil companies in Africa and child detention centers. I'm sorry you just are familiar with the mcdonalds logo and nothing else.

Getting angry at me isn't going to make your argument any more valid.

OT: People have made arguments that Harvard is virtually a hedge fund

http://www.cnbc.com/id/100291522

http://theamericanscene.com/2008/05/12/is-harvard-just-a-tax...

Dude, wtf. How about a private juvenile detention centers ran by a company with a history of child abuse in those prisons? At least more due diligence?

Circulate a petition to end the private prison industry? I will sign it. Come up with a credible plan to fix that public policy problem? I'll donate.

Meanwhile: if you're going to manage a forty billion dollar endowment to maximize its impact on global poverty and disease, you're going to be working with large-scale corporate debt and equity. It would be very difficult to maintain diversified exposure to those markets without investing in something that would piss someone off.

That's great propaganda. What are a couple juveniles being abused compared to curing polio?

Yes, yes, I understand. I've been here as long as you have and I know where you're coming from. You do. not. like. Microsoft.

https://www.hnsearch.com/search#request/comments&q=rbanffy+m...

But you're getting yourself into trouble in this argument, because Bill Gates self-evidently hasn't abused any juveniles, but actually is working to cure polio.

I love the way you start your argument with an ad hominem. It's delightful how consistently you mention my public position in an attempt to discredit me.

So, tell me the difference in his money going to companies that abuse juveniles for profit and his money going to companies that try to eradicate polio. He is not eradicating polio himself either - he pays people to do so.

For one thing, Richard Henriques doesn't actually invest in "companies that abuse juveniles for profit", but the foundation actually does deliberately work to end polio.

That seems like a pretty relevant distinction to me, but, hey, if we weren't arguing over private prisons, you'd be telling me how evil Coca Cola (another foundation investment) is instead, because the real point here is spelled out in your HN profile.

The Microsoft you dislike still exists, and, worse, has communicated itself spiritually to other tech giants. It is downright weird that you'd focus your attention instead on something that really is exclusively an effort to work on global poverty and disease.

McDonalds and Coca-Cola could be perfectly explained by your comment.

But surely a for-profit juvenile detention center is a bit of a stretch? And the other private prison the Foundation invested in listed "reductions in crime rates" as one of the risks to its bottom line. Surely common sense (or better-than-common in the case of Gates) would lead you to not invest in a company that literally grows with the crime rate... I find it hard to believe that it was so hard to find viable investments that they had stoop to investing in private prisons.

The Gates Foundation is awesome, but that doesn't mean they don't make mistakes. And hopefully they might consider being slightly stricter in deciding which investments they are morally opposed to if they are currently investing in private prisons.

I am morally opposed to private prisons and have a very low opinion of juvenile justice in general, but unlike say marriage equality, where I assume most reasonable people are bound to share my beliefs, I do not assume that everyone believes private prisons are evil.

Consider that juvenile abuse is endemic in the entire juvenile justice system, and that (a) a reasonable person might believe that private prison systems are actually more accountable for abuse, since the market can respond to their mismanagement (and because it is far easier to sue a private enterprise than a government agency), and (b) the statistics could conceivably bear this out. I don't know. My problem with private prisons has to do with incentive alignment. But maybe Richard Henriques disagrees with me?

Remember: the Gates Foundation endowment is basically a large private hedge fund that happens to have a charity as its beneficiary rather than a bunch of rich old dudes. The expectation that it be managed differently than any other fund clearly exists, but I'm not sure why that explanation would be valid. There are probably a bunch of universities that hold that private prison stock too.

But here's where we get back to how silly the article is, especially here on this thread: that private prison company is a tiny fraction of the endowment's equity portfolio. It isn't even listed above the fold in the article! The article concerns itself with the suggestion that any support of western consumerist capitalism is hypocrisy on the part of the Gates Foundation. What makes me think that? Because the first page of the article concerns itself with the Foundation's investment in Coke, McD's, BK, Taco Bell, and Pepsi. The article has an unmistakeable and ridiculous thesis.

Yup, agreed about the consumer type companies. As I was reading the article I was thinking the same thing. I was just a little surprised and disappointed when I got to the prisons. I actually think lobbying and long-term contracts remove the theoretical benefits of privatizing prisons, to the extent that reasonable people would probably agree at levels close to those for marriage equality--but that's for another thread.

That article is so cringe-worthy. As if investing in McDonald's is in some way against the goals of the organization. The organization's goal isn't to reduce McDonald's stock price by a few points, or help people who can afford McDonald's eat more healthy. It is to combat, if not cure, Malaria, HIV, Polio, Tuberculosis, Pneumonia, various intestinal problems (millions die a year from diarrhea) and hundreds of other horrific maiming illnesses that ravage many places. It is to invest in technologies for vaccines, energy, clean water and attempt to end malnutrition (read: starvation).

Even today, 21 children die of preventable causes... per minute. The Gates foundation is attacking all the more prevalent causes (70%+). It is rare to see an article miss the point so astoundingly hard, while managing to be completely without empathy AND clueless. Just utterly detached from reality.

Have you read about all the oil and coal companies that the Foundation invested in? Or the private prisons and military contractors? I mean, maybe they aren't a part of Bill's current pet project, but climate change and human rights are both very important issues, as important as diseases.

I'm shocked that the response seems to be "Where's the problem in investing in companies that make the world a worse place if he uses that money for other good purposes?". The good you can make doesn't magically erase the bad you made.

It's hard to invest in poverty or only in businesses with very high moral standards. I think none of the listed companies is particularly evil and they just happen to give the best return.

Discarding what Gates does just because he still thinks and invests like a businessman is a little unfair. There are plenty of charities that fail to deliver just because they are too concerned with being perfect in every little step they take. It's not like you can take all the money donated, go to Africa and "help". You need to invest, do marketing, rent offices and so on. The better it is executed, the more impact per $ donated you get.

Not a carefully-written article. When you buy stock in a public company, that company is not getting your money -- the seller of the stock is! So if you buy a Pepsi stock or a Shell stock, you are investing in that stock, but not investing in the company in a traditional sense (in which they get money from you and expect to pay out more money later, with the surplus coming from their activities).

[There is the small factor that the company usually owns some of the stock and demand for the stock usually pushes the price up slightly, the company's stock assets do benefit slightly in a case like this, but this doesn't matter unless they sell, which is a rare activity compared to general volume of investment.]

Since the article does not differentiate between stocks, bonds, and loans, it is essentially useless. I guess they didn't care enough to differentiate, and just wanted to say bad stuff about the foundation; or, maybe they just don't understand finance much at all, and didn't think about it.

Come now.

If unethical corporations faced divestiture, amoral investors would expect less profits, which would drive down prices all the way to the IPO/VC buyin and the RSU packages for management.

You can't seriously believe that the stock market exists while disbelieving that buy-side demand is a fundamental component of launching and running business.

Of course not, but look: you manage the investment arm of a charity fund and your job is to provide more income for that fund in the future.

If you put money into stocks, and get a return on that, that return means very concrete things: more people who get polio vaccines, more people who get dewormed, etc, etc. Very concrete results.

If you don't put money into stocks, because they are unethical ... well, how exactly? As we have mentioned the stock has already been sold. So, you don't do it because by doing so you are helping support a market system that may provide a setting for future unethical corporations to arise in and go public? (Along with many ethical corporations?) Or because by providing demand for the stock now, you retrocausally made it possible for that company to have IPO'd years or decades ago?

These are very abstract and weird concerns when your job is very directly to help people.

You say "if unethical corporations faced divestiture", but even a large fund like this one has no say in that. If they don't invest in McDonald's or Walmart or whatever, it doesn't matter in the grand scheme of things.

So seriously, if you were running the fund, what would you do? For real. If you make less money, actual human beings die who would not have died, in volume.

(All of this said, I would feel pretty dirty about buying the stock of a prison company, anyway. But railing on them for stuff like McDonald's and Walmart just ... doesn't make sense.)

Over 200 million people get malaria each year, and approximately 1 million die. [1]

If the Gates Foundation money managers think holding Coca-Cola stock will help fund their fight against the disease, that seems like an extremely easy call.

[1] http://www.ncbi.nlm.nih.gov/pubmed/22305225

To be fair though, investing in Coca Cola or McDonald's is like taking money from fat rich people and then distributing it to poor thin people. I see no hypocrisy, just stupid rich people accidentally helping to feed poor thin people, with the foundation taking the arbitrage.

Not sure I'd call the McDonald's clienteler rich. But richer than average Africans.

Everyone's focused on the problem of whether the foundation should be focused on societally responsible investment, but without noticing the problem with the article's analysis: to get a handle on whether they're investing in that fashion you need to measure the market cap of those decidedly irresponsible companies against those same companies representation in the overall market.

My reaction looking at that list was "wow, he managed to invest less than a billion in oil companies." They do make up a fair chunk of the market, after all.

What would you prefer to see, $xx billion burnt in a hurry in 10 years and then run out of money, or have a foundation that keeps on working for upliftment of the most vulnerable human beings decades or centuries using money from its past investments after Bill and Melinda run out of time in this world?

Also, lets say the foundation did not invest in Walmart shares. How much evilness of Walmart would've been reduced?

Seems like the Gates Foundation is mostly a front for a profit-seeking venture.

Yeah, Bill Gates has sure pulled the wool over all our eyes on this one.

Please explain what sense it would make for a gargantuan liquid fund not to try to invest profitably?

If you read the tax return, you'll see that your statement is literally not true.

It is the other way around. If you are doing effective altruism, you want to make sure you have money coming in that you can be altruistic with.

The bit about Walmart was especially badly done. If the author of this article thinks Walmart employees are poor on the same scale as the poor that the foundation targets, he really has no clue about world poverty. If the minimum standard of living throughout the world were equal to that of a typical Walmart employee, the world would be tremendously better off.

So, your argument is that it's right to make Walmart employees poor in order to maximize profits because they are not nearly as poor as the poorest people in the world?

If there is something poor here, it's the excuse.

How does buying a lot of Walmart shares make Walmart employees poor? I am frankly baffled here. Walmart buyers should probably get more blame here.

Have you ever spared a thought about who made the electronics you own and under what conditions?

When you buy shares you send the signal the company is doing the right thing. It says you support the company and its business practices and, ultimately, enables the company to continue them. If everybody refuses to buy their shares, their stock will plummet and prompt changes.

As for my electronics (and consumables), yes, I try to avoid manufacturers and brands that are associated with poor working practices. Nice try attacking me to try to disprove my argument against the Gates foundation.

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