Bill Gates: For a Bright Guy, He's Not Too Bright

Larry Kudlow (as of right now, my favorite business writer) writes:

Bill Gates, bloviating at the World Economic Forum in Davos, Switzerland, is issuing a clarion call for a “kinder capitalism” to aid the world’s poor. Mr. Gates says he has grown impatient with the shortcomings of capitalism. He thinks it’s failing much of the world. This, of course, from a guy who’s worth around $35 billion (give or take a billion).

Don’t you just love it?

A guy without a college degree who invented a new technology process in his garage that literally changed the entire world, a guy who took advantage of all the great opportunities that a free and capitalist society has to offer and got filthy rich in the process, is now trashing capitalism and telling us it doesn’t work. What chutzpah.

For all his do-good preaching, Mr. Gates is ignoring the global spread of free-market capitalism that has successfully lifted hundreds of millions of people out of poverty and into the middle class over the last decade. Think China. Think India. Think Eastern Europe. (Maybe even think France under Sarkozy.) Mr. Gates wants business leaders to dedicate more time to fighting poverty. But the reality is that economic freedom is the best path to prosperity. Period.

The latest stats out of China are revealing. Here’s a country that was a basket case not so long ago and today is the world’s fourth largest economy — hot on the heels of Germany, the third largest economy. China just reported 11.2 percent fourth-quarter GDP, its fastest growth rate in thirteen years. Total output for China is now 24.7 trillion yuan, or $3.42 trillion at current exchange rates.

At $14 trillion, the U.S. economy is still four times the size of China’s. But we’ve had free-market capitalism for more than three-hundred years. China’s only had it for about fifteen. China is still an undemocratic, authoritarian, and repressive society that lacks the benefits of political freedom. But it was the late Milton Friedman who argued that the onset of free-market capitalism was the precursor to full-fledged democratic capitalism. China’s on the right track.

Mr. Gates says he has witnessed steep income and cultural inequities in his travels around the world, in particular to Africa. But for this he should blame the absence of capitalist principles, not capitalism itself.

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Speaking of the economy, stock futures are up once again this morning.

Comments

[DRaftervoi]

And yet the fact remains that the capitalist economic system hasn't produced the same sort of economic growth in, oh, say, Equatorial Guinea or Burkina Faso, that it has in South Korea or Taiwan. Why?

[Gail]

Equatorial Guinea has been a victim of governmental thievery - they have oil and should be doing better than they are. The president needs to stop siphoning off funds.

Burkina Faso is a little less clear. They are landlocked, don't have enough rainfall to support agriculture (they could use some guidance on irrigation from the Israelis), and have few natural resources. They are receiving foreign aid. Would more help? Bill Gates has lots of $$ and time on his hands. Instead of criticizing the best economic system in existence, he should simply roll up his sleeves and do something.

His criticisms are too across the board. Of course things aren't perfect there's no such thing as utopia. But I don't think capitalism is failing "much of the world" as he claims. Some people will always need help and they should receive it.

The problem with Gates is that he is feeding right into the same stream as the socialists. It would be ok if he simply remarked, insisted even, that there are poor people in the world who are suffering and we need to help them. But he doesn't leave it at that - he condemns capitalism unfairly. It's a political statement from a powerful, respected man and it could be damaging.

[DRaftervoi]

Good. You took me literally, and the example of E.G. is instructive - they have a per capita income of over $50,000, one of the highest in the world, yet the average guy is dirt-poor because of government theft. B.F. has other problems, including a poor educational system.

This is the challenge: how and what kind of aid would work in these situations? Short of a military intervention, I don't see that we can do squat about E.G. In B.F., there are identifiable things that we could do....but so much of the aid to places like that have been squandered and contribute to the culture of corruption...

[Gail]

Give a man a fish, he eats for a day. Teach a man to fish, he eats for a lifetime. Send teachers, consultants and equipment. Help them learn to produce for themselves.

[draftervoi]

I agree. The problem has been intractable, but it doesn't mean that we can't help. It is a sad fact that in some cases, well-intentioned aid has contributed to the problem. The Emperor Jean Bedel Bokassa said: "The French Government pays for everything in our country. We ask the French for money. We get it, and then we waste it."

[Gail]

Sometimes it all seems so simple. In the thousands of years man has been on earth, I wonder why we haven't solved all such problems. There are people in need, there are people who wish to help them, what's so complicated? Well, number one, the evil and greedy people who want to steal the world blind. Two, the people who would prefer to be taken care of instead of taking care of themselves. Three, the people with resources who want to help, but can't seem to get their act together to work in concert. Too many cooks spoiling the broth, too many people who want to rush in and do without thinking. Too many who want to say, "Look at me! I am such a good girl/boy!" instead of really giving thought to what they are doing.

Looking down at us from above, we are a bunch of ants grabbing a hold of a crumb, each pulling in different directions.

[George Estes]

Mr. Gates seems to be saying that capitalism can be improved. That sounds like a fairly reasonable statement coming from a great humanitarian and a man who went from Windows 95 to Windows 98 to Windows whatever can be imagined for a better future. He doesn't seem to be saying trash capitalism. Capitalism survived not making 11 year olds toil for 16 hours a day in coal mines in spite of opinions to the contrary. Gee Whiz. If G. W. Bush can have "Compassionate Conservatism" there should be plenty of room for Bill Gates and humane capitalism. I believe these statements and criticisms against him are very unfair. Maybe the Waltons are your kind of capitalists.

[Gail]

...Gates missed the opportunity to make a crucial point: that the reason poor countries remain poor and their citizens can't afford life-saving drugs is not that they receive insufficient charity on the part of wealthy nations.

The reason is that governments in the poorest countries are corrupt, nondemocratic, and repressive. Property rights are not secure, denying would-be entrepreneurs the chance to take out loans against their homes to raise capital. Court systems are nonfunctional, limiting individuals' ability to enter into contracts with one another. Foreign aid is diverted by corrupt officials to Swiss bank accounts (in sub-Saharan Africa alone, the amount diverted was $150 billion in 2005). Food aid depresses prices, undercutting local farmers.

Those reasons, not "noncreative capitalism," tend to be the root causes of poverty and misery in those unlucky nations. Adam Smith, the father of modern capitalism, figured this out more than 200 years ago when he wrote: "By pursuing his own interest, (a businessman) frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good."

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