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Zuckerberg and cash envelopes: Same kind of stupid

Facebook CEO Mark Zuckerberg delivers the opening kenote at the Facebook f8 conference on April 30, 2014 in San Francisco, Calif.
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Facebook CEO Mark Zuckerberg delivers the opening kenote at the Facebook f8 conference on April 30, 2014 in San Francisco, Calif.

Perhaps the two biggest stories in California today both involve very rich people giving away lots of money.

For the last week or so, a frenzy has been growing as an anonymous man who says he made a fortune in real estate has been leaving envelopes stuffed with cash in the Bay Area. On Thursday night, he brought the hidden envelope act to Los Angeles.

And on Friday morning, we learned that Facebook founder and CEO Mark Zuckerberg and his wife Priscilla Chan are giving a $120 million gift to Bay Area public schools.

I admire the generous spirit behind both of these stories, but they're also both examples of the same kind of stupid.

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First, let's talk about the cash envelope scavenger hunt.

It's not that I'm angry or jealous of the people who found the money. And I don't think it's an actual crime that the anonymous real estate magnate is obviously taking some pleasure in giving away money in a novel way.

The problem is that we're celebrating the lucky envelope finders while at the same time we continue to ignore and sometimes attack the people who actually worked hard to gain their fortunes. And we also are celebrating someone who is giving away money to random people regardless of need when we know of so many people in real need of that money.

We do the same thing with Lotto winners. We look upon them with admiration and we're actually grateful to the state governments who run the lotteries even though the money poured into them could be much better spent in and out of the public sector. But every time I see one of those big lottery billboards I cringe when I think that my tax money is being spent to induce millions of people poorer than I to throw their money away. And people get upset when big companies get tax breaks to actually hire people.

That's because America is seduced by what I call "The Cult of Luck."

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This picked up steam right when the 2008 financial crisis hit and "Outliers" by Malcom Gladwell was published. Gladwell is brilliant and discussing the luck that the most successful people enjoyed on their way up is certainly worthwhile. But more and more people are focusing only on luck and using it to excuse everything from punishing tax hikes to physical violence against the rich.

"Flash Boys" author Michael Lewis took that a step further in his 2012 commencement speech at Princeton where he insisted that the graduates there were much more lucky than good.

There's even a Cornell University professor and New York Times editorial page contributor named Robert Frank, (no relation to CNBC's Robert Frank), who actually teaches his high-achieving Ivy League students and New York Times readers that, "success has a lot more to do with luck than we realize" and thus should not be celebrated or admired all that much, (gee with that attitude, I hope he doesn't bother to hand out grades in that class).

People like Lewis and Prof. Frank often insist that focusing on luck's role in success will help richer Americans be more generous and grateful. That would indeed be nice, but wealthy Americans are already the most generous class of people on the face of the Earth. It's not the amount of gratitude and charity that's lacking in America, but where we send our charity and how effective it really is.

And that brings us back to Mark Zuckerberg.

Zuckerberg should have learned his lesson about huge gifts to already-failing government institutions like urban public school systems. Just a few weeks after reports showed that his $100 million gift to Newark Public schools is being greatly wasted, he and his wife are doubling down on the same mistake by pumping more money into the hands of the bureaucrats who made the school system a mess to begin with.

Let me ask everyone a question: If there were a failing department within Facebook, would Zuckerberg decide to fix it by pumping massive amounts of cash into without also making major changes to the management team and strategy? Of course not. And yet that's exactly what he did in Newark and is doing again in the Bay Area.

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This doesn't mean that Zuckerberg and Mr. Anonymous Envelope Stuffer are stupid or naive. Clearly they're not. But the skill set required to succeed in the private sector is different in many ways than what you need to make a real difference in philanthropy. The original billionaires John D. Rockefeller and Andrew Carnegie had to try many different ideas for years before they saw success in their charitable efforts on even a small scale compared to their business success.

Right now, Mr. Envelope Stuffer and Mark Zuckerberg are simply wasting their money. For the $220 million he's spent on the existing public schools, Zuckerberg could have set up maybe a dozen or more no-tuition private schools and filled them with the kids currently on long waiting lists to get into charter schools. That would make an instant positive impact much bigger than what he's doing now.

And even Mr. Envelope Stuffer could use his real estate smarts to build more housing in San Francisco, where affordable housing is the No. 1 issue. He could also lobby local governments and community organizations to remove their restrictive building rules that choke supply and make prices so high in the first place. The bottom line is that these "nice" money giveaways are a shameful waste that will solve nothing but killing time.

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