Dave Portnoy and the Barstool Fund Prove that American Capitalism is Alive and Well
Dave Portnoy, the brash and outspoken founder of Barstool Sports, has always kept his finger on the pulse of the American body politic. Unfairly derided by mainstream media and liberal groups as a wastrel, Portnoy has consistently proven – both through the meteoric rise of his company and his own personal fame – that he understands the average American. Often, he is more in touch with the sentiments of the average Joe than the political and cultural elites cloistered in our “respectable” institutions. Back in May, Portnoy made one of the most poignant observations of this entire pandemic. Portnoy, who unlike most of the professional commentariat has the actual experience of building a small company from the ground up, recognized the devastating effect of capricious shutdown orders. And it’s worth quoting at length: “Imagine working for a year, five years, ten years, two decades, grinding your fingers to the bone to build a business. Barstool, thank G-d, will be alright. I’m talking about other businesses. People who have jobs, who worked their whole fucking lives off to put food on the table and create a happy living. Are they just going to go out of business?” He added, “If you told me, because of Corona, I lost Barstool. I had to go get a 9-5 and start all over, I’d rather die of corona. Seriously. Or at least take my chances.”
Since then, prolonged lockdowns across the country, from New York to California, have ravaged small businesses. And we’re now facing the predictable fallout: business owners across the country are gasping for air, trying to make payroll and keep their companies from going under. With no reprieve in sight, many feel dependent on government money. Politicians act like heroes when they come to fix the problems they created, like modern arsonists-turned-firemen. In this, Portnoy taps into a rich American tradition of philanthropy, rooted in our belief in free enterprise and the capitalist system. Many people decry the capitalist system, saying it’s exploitative and that it drives other down in the pursuit of profit by any means necessary. But that casts the free market in entirely the wrong light. The entire moral justification of the free market is, in fact, its ability to support the most indigent among us. As Adam Smith put it in the Wealth of Nations in 1776, the key virtue of democratic capitalism is “that universal opulence which extends itself to the lowest ranks of the people” and thereby ensure that “a general plenty diffuses itself through all the different ranks of the society.” FDR later distilled that message into a much more digestable formulation, saying “the test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.” And the fact of the matter is that the free market has done the most for those at the bottom rungs of the economic ladder. For the first two millennia of the common era, the world economy was stagnant. Angus Maddison has found that economic growth between 1 CE and 1820 CE was about 0.06% per year, or about 6% per century. World per capita GDP in that period rose from $467 to $666. That’s an obvious increase, but it’s not great. But something changed around then: a new economic system came into being that promoted wealth and human prosperity. World per capita income skyrocketed from $180 per person in 1750 to $6,600 per person in the late 2000s. Life expectancy in England and Wales, for example, rose from 35.3 years in 1770 to 81.15 years in 2020. And between 1820 and 1990, the fraction of the world population living in poverty fell from 84% to 24% as a result of rapid economic development. These gains have all been a direct result of the rise of capitalism, a system that has created unparalleled wealth around the world by channeling our passions, boosting our productivity, and promoting our ingenuity.
And now Portnoy, with all of his material success, is contributing once more to that miracle with the Barstool Fund. Barstool, an enormous company worth millions of dollars, is plowing that money back into zero-obligation loans for those who need it. Beginning with humble phone calls to individual small-business owners, Portnoy is using the Barstool Fund to help out dozens of companies struggling to get by in these tough times. With almost 70,000 supporters helping to raise more than $7.5 million, it’s a remarkable accomplishment.
Perhaps the best virtue of this system is that Portnoy’s generosity, as a private venture, is not limited by the strictures of government regulations that have nevertheless failed to stop widespread fraud that have plagued programs like PPP. These regulatory programs are both costly and ineffective. The Barstool Fund will undoubtedly generate the same kinds of waste, fraud and overhead that plague every charity. The difference is that, unlike federal programs, none of that money has been taken from taxpayers and doled out without their approval. The Barstool Fund, more so than federal programs, puts a personal face on the suffering caused by COVID-19 to address the economic implications of our response.
Portnoy’s generosity taps into a deep, nurturing American tradition of philanthropy. Andrew Carnegie once said that “a man who dies rich, dies disgraced.” Now, Portnoy isn’t nearly as rich as Carnegie, whose companies once literally produced more steel than the entire United Kingdom. Nevertheless, Portnoy’s venture reminds us of the great philanthropic experiments of that bygone era. Many often remember the Gilded Age for its robber barons and Great Gatsbys, but it was also a remarkable era of private charity. These ventures helped the poor, beautified the public realm, and created great cathedrals of learning like Johns Hopkins University and the University of Chicago.
Since then, American philanthropy has taken a rather tumultuous path. With the advent of the Great Society, public programs gradually replaced private initiatives. Between 1960 and 1976, individual donations relative to personal income dropped 13 percentage points. By the middle of the Seventies, local, state, and federal governments spent about ten times more on social services than nonprofits, which themselves received half of their funds from the government.
But in recent decades, there’s been somewhat of an uptick in private giving. In 2001, total private charity was estimated at $239 billion, representing a 156% increase in real terms since 1973.
Portnoy and the Barstool Fund remind us that this strain of American philanthropy is alive and well. Capitalism’s goal isn’t greed or profits, but the pursuit of human flourishing. This is a lesson taught by none other than Adam Smith himself, the same man who spoke of the animating force of self-interest and the machinations of the invisible hand. Understood properly, though, Smith knew that capitalism was not solely about profits. “Man,” Smith wrote in the Theory of Moral Sentiments, “is sensible too that his own interest is connected with the prosperity of society, and that the happiness, perhaps the preservation of his existence, depends on its preservation.” Capitalism, in Smith’s thought, only works so long as we are “bound together” around “one common center” – a communal instinct embedded in Portnoy’s own work, consciously or not.
Portnoy’s generosity proves the fundamental soundness of the free market system. What’s more, it shows us that it is a positive good for the American people.