Alter: Goldman Owes Society a 'Social Ransom'

As you may have heard, NEWSWEEK is for sale, and we’re looking for a few good billionaires (actually, one will do). For all the anti–Wall Street rhetoric, there are good billionaires floating around—public-spirited people trying to do something worthwhile with at least some of their money. They don’t part with it easily, which is why they’re rich in the first place. But for the purpose of this exercise, I’m going to spend some of their fortune (though it’s partly ours, you’ll see). To be more specific: I’m going to spend $1 billion of Goldman Sachs’s cash, not on NEWSWEEK but on paying down the firm’s debt to society. If nothing else, it may help us ask better questions about what money is for.

Call it social ransom—the price paid for getting straight with the public. Lloyd Blankfein, Goldman’s chairman and CEO, became the predictable target of ridicule a few months ago for saying his firm was doing “God’s work.” But let’s take him at face value. For centuries, many of those aspiring to such work have tithed, giving away at least 10 percent of their income. For Goldman, that would amount to about $7 billion a year. Were the firm merely to give away $1 billion (as Ted Turner did to the U.N. in 1997), less than 2 percent of its annual profits over five years, it would make a splash, perfume its reputation as it goes through the SEC’s wringer, draw better recruits (smart applicants like social conscience), and begin to pay its debt to society. Lest you think this is totally unrealistic, at least one former Goldman chairman and one former board member have endorsed the idea—though, in the manner of the pinstriped, not yet in public.

Even if one believes Goldman is innocent of wrongdoing, its image is somewhere in Toyotaland. As I report in my new book, The Promise: President Obama, Year One, one day in the Oval Office last year, Obama said of Goldman: “Let me get this straight. They’re now saying that they deserve big bonuses because they’re making money again. But they’re making money because they’ve got government guarantees.” Austan Goolsbee, an economic aide, chimed in: “These guys want to be paid like rock stars when all they’re doing is lip-syncing capitalism! They’re the financial version of Milli Vanilli!” Given that, we should shame them into disgorging. The biggest bang for Goldman’s buck would be to give a cool billion to a single nonprofit—Teach for America (TFA), which places talented young college graduates in challenging schools. In case you haven’t noticed, huge numbers of young people, including 12 percent of Ivy League seniors, apply to TFA. The program has supplanted Goldman itself as the coolest spot to land after getting your diploma. But for budgetary reasons, fewer than one in 10 applicants are accepted. With a billion dollars, TFA could double in size and account for 20 to 25 percent of new hires in the 60 greatest-need urban and rural areas of the country. That would dent the biggest domestic crisis we face: the fact that at-risk kids have about as much chance of graduating from college as, well, college students have of getting into TFA. If those graduation numbers don’t improve soon, we doom almost all those kids’ chances of economic mobility and hurt our ability to be competitive in the global marketplace.

Or maybe Goldman could give the money to Year Up, a terrific work-readiness program aimed at 18- to-24-year-old high-school graduates who are neither employed nor in school. Year Up spends six months training them in computer and other skills, then places them in six-month internships with Fortune 500 companies, often leading to permanent work. There are 4.4 million such “disconnected workers,” and employers will face a severe shortage of skilled labor in the next decade. Unfortunately, programs such as Year Up only scratch the surface. “The question is, how do you leverage systemic change?” says Year Up founder Gerald Chertavian, a former investment banker.

The answer is with big money—mostly from a government with new priorities, but also from wealthy individuals and institutions. Many hedge-fund managers are already immersed in education reform. In late April, they used their influence in Albany to help advance an important bill in New York that would expand the number of charter schools. But try to fathom what they could do if more began to realize that another house, another boat, another way of keeping financial score with their friends is not the path to a life well lived. Instead they can help nonprofits like TFA and Year Up. That’s God’s work.

Jonathan Alter is also the author of The Promise: President Obama, Year One and The Defining Moment: FDR's Hundred Days and the Triumph of Hope.