Robert Barro: Bill Gates' Charitable Vistas

Charitable giving seems to be the topic of the day. Here, Harvard's Robert Barro is unimpressed with Bill Gates philanthropy:

Bill Gates' Charitable Vistas, by Robert Barro, Commentary, WSJ: Bill Gates ... earlier this month collected an honorary degree from Harvard University. ... In collecting his degree, Mr. Gates delivered a commencement address that focused not on the information age, the rise of personal computers or the relentless efficiency his software has brought to nearly every industry. Instead, he focused on his own personal philanthropy. His implicit theme was that so far what he has accomplished may have been good for him and Microsoft shareholders, but it has been no great contribution to society. He suggested that with a personal fortune of about $90 billion ... it is time for him to give something back.

I find this perspective hard to understand. By any reasonable calculation Microsoft has been a boon for society and the value of its software greatly exceeds the likely value of Mr. Gates's philanthropic efforts.

Here is a sketch of a simple model of Microsoft's social value. ...

In 2006, its revenue was $44 billion, with earnings of $13 billion. This money was generated by creating something consumers value. ...

Suppose that a copy of a new version of Windows sells for $50 (and is typically charged as part of the price of a personal computer). Microsoft's revenue from Windows would then equal $50 multiplied by the number of copies consumers snap up. ... But that's not the social value. That comes from the increase in productivity created when businesses and households use the software. The social benefit equals the value of the extra product, less the total paid for the software. Almost by definition, the benefit has to be positive. Otherwise, why would consumers willingly pay for Windows?

A conservative estimate ... is that the social benefit of Microsoft's software is at least the $44 billion Microsoft pulls in each year. When capitalized with the same ratio (22) that the market applies to earnings, this flow corresponds to a valuation of $970 billion. Thus, through Microsoft's future operations, Mr. Gates is creating a benefit to the rest of society of about one trillion dollars -- or more than 10 times his planned donations. And this counts only the likely future benefits, giving no weight to the past.

Mr. Gates has pointed out that it's difficult to give away such a large sum of money in a productive way. ... Mr. Gates's plan is ... to use the Bill and Melinda Gates Foundation to reduce world poverty, with an emphasis on advances in health. This is a noble goal. But it will likely just supplement the much larger existing programs ... that have been carried out for many years by international organizations and governments. These programs have, at best, a checkered record. Although Mr. Gates is probably smarter and more motivated than the typical World Bank bureaucrat, he likely won't do much better.

To find policies that are likely to alleviate poverty, it is best to look at actual successes and failures. In recent decades, the biggest single accomplishment is the post-1979 (post-Mao) economic growth in China. ... The second-best story is the economic growth in India...

Also illuminating is the greatest tragedy for world poverty -- the low economic growth in sub-Saharan Africa. In this case, the number of people in poverty rose by around 200 million from 1970 to 2000.

These examples suggest that the key question for poverty alleviation is how to get Africa to grow like China and India. An important clue is that the triumphs in China and India derive mainly from improvements in governance, notably in the opening up to markets and capitalism. Similarly, the African tragedy derives primarily from government failure. Another clue is that foreign aid had nothing to do with the successes and did not prevent the African tragedy.

One reason for this is that foreign aid is typically run through governments and, thereby, tends to promote public sectors that are large, corrupt and unresponsive to market forces. Perhaps the Gates Foundation will run more efficient aid programs than we've seen in the past, but I wonder. ...

Of course, Mr. Gates is free to do what he wishes with his $90 billion. But I think he is kidding himself if he believes that the efforts of the Gates Foundation are likely to provide society anything like the past and future accomplishments of Microsoft...

Another calculation that can be carried out, but wasn't, is how much society has lost from Microsoft exploiting its market power.

On the charitable giving part, the question isn't how much social value Microsoft will create in the future, that will be pretty much the same no matter what Bill Gates does with his 90 billion. The question is, given that the goal is to reduce world poverty and improve health, is there is a better way for him to spend this money than through the efforts of the Gates Foundation? Comparing the potential accomplishments of the Foundation's work to the past and future accomplishments of Microsoft is not the correct comparison - giving billions back to Microsoft is unlikely to help achieve the goals of reducing poverty and improving health so that's not the opportunity cost of the charitable giving. Given Barro's criticisms of Gates' plans, I would have preferred that he tell us better ways these billions could be spent in pursuit of these worthy goals rather than using his scarce column space to provide a very rough calculation of Microsoft's future societal value.

Update: Brad DeLong follows up (and actually addresses Barro's main point).

Comments

[Barry]

One of the things that I realized recently concerned the distribution of commenters on the WSJ editorial page.

If they need a junk scientist on most topics, they go with a denizen of a 'think tank', who probably doesn't have a degree in anything relevant to the topic (heck, why would a propagandist need relevant knowledge?).

If they don't go with a 'think tanker', they'll go with somebody who has a (semi-)relevant Ph.D., but either is not a professor in a real university, or who is a professor in a third-string university.

However, when they need really bad, or outright fraudulent *economic* analysis done, they frequently go with a Ph.D. in economics, who is a professor at an excellent university.

This doesn't say much for the ethics of the field; it'd be as if creationists could get biology professors in the top 10 bio departments to endorse creationism.

[Joe]

Robert Barro and the like do not understand what development is.

He states:
"... the key question for poverty alleviation is how to get Africa to grow like China and India."

No disagreement there. But then comes,

"...the triumphs in China and India derive mainly from improvements in governance, notably in the opening up to markets and capitalism."

Yes, improving governance, but not a straightforward opening up to markets and capitalism. Capitalism in India and China has been state-managed. It is therefore different from the no holds barred capitalism adopted by many countries in Latin America-which ultimately led to economic crisis and riots on the streets.

He goes on:
"...the African tragedy derives primarily from government failure."
It is not government failure, but a failure to establish strong governments--that could follow their own independent policies.

[Bruce Webb]

"Mr. Gates's plan is ... to use the Bill and Melinda Gates Foundation to reduce world poverty, with an emphasis on advances in health. This is a noble goal. But it will likely just supplement the much larger existing programs ... "

This is just profoundly ignorant of what the Gates Foundation has done and has in the pipeline. It is already by far the biggest charitable foundation and is focusing precisely on those areas where the NGO's and International Organizations are falling down. In particular it is funding development and deployment of vaccines and other preventive measures against disease. Which is significant because otherwise Big Pharma won't touch them, no profit you see.

All together a totally slanted, ideological pitch against private works to alleviate poverty, probably in the end designed to avoid similar public works that work locally rather than in the interests of American corporations.

It is interesting that Barro misleadingly infers that all of this is future tense. The Gates Foundation is up and running but has a new model, rather than just write out grant checks it is actively working to make real change by participation. Anyone in the Seattle area (where day to day developments are local news and reported) will know this is nothing more than a hit piece.

http://www.gatesfoundation.org/GlobalHealth/

[robertdfeinman]

Three topics lumped together:
1. Is private charity a "good thing"?
2. Is Microsoft doing "good" through the (monopoly) sale of its products?
3. Is growth in poor regions the way to solve existing social problems?

1. I've already stated I think private charity on this scale in anti-democratic and thus not a "good thing". I have an essay on this for those interested in reading my arguments in detail.

2. The costs to society because of Microsoft's monopoly have been discussed many times. The obvious costs include over charging for their products, but there is also the opportunity cost of the inhibition of innovation that has been suppressed by the inability of new firms to enter the market. The lack of competition has also allowed them to sell an inferior product which has raised the cost of support for those who use it. It is estimated that firms spend over $2000 per year on support for each PC they own.

3. Given the checkered results of development in the world since WWII it is clear that there is no one true path to solving social problems. Some places like Singapore have done well while being an autocracy, while others have done poorly as in Africa. Even the availability of natural resources hasn't led to improved conditions for the average person as Nigeria, for example, shows. Those who claim to have the magic bullet are oversimplifying for ideological reasons.

[TigerPaw]

Bill is simply following in the footsteps of others like himself with extremely questionable business methods - Carnegie and Nobel for example. Due to the whitewashing they did of their reputations by giving away money at the end of their careers virtually no one remembers what they were like when they were amassing their fortunes. A hundred years from now people will think Bill a kindly saint and will have totally forgotten the tactics he used to collect the money he's now passing out.

So yes it's nice he's passing it out, and the causes are likely worthy, but one should never forget how he got the money in the first place.

[me]

"Given Barro's criticisms of Gates' plans, I would have preferred that he tell us better ways these billions"

I guess Barro thinks Gates should buy a couple yachts or planes or bigger homes so he could employ more people.

Barro, another compassionate conservative.

[Sam]

Robert Barro ignores the investments in human capital that were made by China (and to a lesser extent India) prior to "opening up to markets and capitalism". The social and economic policies of China and India were (and are) not the same as those followed by governments in Latin America and Africa. It is mainly the size of China and India that enabled them to often ignore the advice while copying the practice of western nations on socio-economic issues.

[anne]

Having read this essay several times, I find understanding beyond me. Is the point a rationale of being entirely self-serving? Is there an ethic, other than that of being self-serving here? Who can tell what will be the effects of any little-ish help extended to a supposedly insignificant African? I do not understand this other than a nihilist tract.

[Esben]

There seems to me to be a major flaw in Robert Barro's logic here. He assumes that the total benefit to society of Microsoft's business equals the value of the extra product, less the total paid for the software. This view completely ignores the fact that even if Gates and Microsoft had never existed we would most likely still have software companies that would offer similar (perhaps even better) products.

Let's be totally generous to Microsoft and assume that they are dominating the market for OS and other products, not because of any original first mover advantage, predatory practices or other unfair behaviour, but simply because they are the best in the field. In that case the benefit to society of Microsoft products is not the extra benefit minus software cost but rather that figure MINUS the same figure for the hypothetical products which would have come from the companies and products that would have arisen in stead of Microsoft if Gates had never been born. This is likely a much, much lower figure and - if we relax the generous assumptions regarding Microsoft - perhaps even a negative figure.

So I think it isn't so bad for Gates' karma after all that he is a charitable giver.

[cm]

Esben: Even though I agree that it is often useful to compare/contrast Microsoft's (or anybody else's) merit to plausible alternatives, you cannot deduct a supposed amount of value hypothetically provided by somebody else. The meaning of "creating value" is not "the differential above/below a postulated hypothetical alternative".

Or are you suggesting that hardly any individual is creating any value, as any of them can be hypothetically replaced with somebody else doing the same job?

[Esben]

CM, of course we cannot actually know what would have been in a different world. We can however make a rough estimate based on the best information available. I think it is meaningless to say that Microsoft is contribution billions or trillions to society if what they are providing is something which could easily have been produced by someone else in their place.

I am not suggesting that individuals do not create value. Some people create enormous value: Guthenberg or Einstein for example gave us knowledge which we would otherwise have had much later or not at all. Anyone who does something much better than anyone else could, or thinks of some great idea no one else would, will obviously add lots of value to society.

However since adding an extra person to the pool also means one extra set of hands producing stuff, but also an extra mouth to eat. So a person with average abilities might not add much net value to society, although an extra labourer will enable a slight increase in the division of labour, which should contribute slightly to society.

[chris]

I can't believe Barro. I liked the RBC model back in college, but come on.

In bad faith he's conflating loaning money to kleptocrats with financing vaccine research. Stopping malaria would be an enormous achievement. Good for Bill for trying.

What a jerk!

[BruceW07]

anne: "I do not understand this other than a nihilist tract."

Barry: "it'd be as if creationists could get biology professors in the top 10 bio departments to endorse creationism."

While Gates and Buffet, the two richest men in America, have committed the bulk of their fortunes to worthy projects, which would not otherwise attract needed resources, the next 8 richest families -- heck, the next 23 -- in America give away practically nothing, and most of what little they do give away, is directed at status-enhancing cultural subsidies or reactionary political causes, including, of course, the millions spent on repealing the estate tax.

In my own city of Los Angeles, we have the fantastically expensive Gehry-designed Disney Hall, side-by-side with the Ahmanson Theatre, the Chandler Pavilion and the Taper Forum. (And, not so far away, the dissolution and horror of skid row.)

It is not that I doubt the social value of raising the L.A. Philharmonic above the musical level of an Orange County marching band, or the crying need to import pretentious academic theatricals into a city lousy with small theatres and under-employed actors, writers and directors. I just question whether it needs to cost hundreds of millions of dollars. The cost-benefit ratios of such charities are not likely to attract the attention of Professor Barro.

Still, less likely to attract Barro's critical attention are the charity work of Howard Ahmanson, Jr. or Richard Mellon Scaife. Howard, Jr., heir to Sr. (it's Sr's foundation that funds many L.A. cultural works) dedicates himself to funding Christian Reconstructionist and Dominionist efforts to turn the U.S. into a theocracy. He's also a major funder of the Discovery Institute, which promotes intelligent design creationism and opposes the teaching of scientific biology.

Scaife's "charitable" funding of the "Whitewater scandal" and the impeachment of Clinton has done so much to improve the quality of governance in the U.S., I am surprised Barro did not find space to offer it as a contrast to Gates' foolish priorities. Barro might draw attention to the career opportunities afforded to Kenneth Starr by Scaife's contributions to George Mason and Pepperdine.

I understand Barro's tract, as I understand the whole Wall Street Journal editorial page. Think of it as a display window for intellectual fashions designed to cover and decorate the fetid, festering soul of America's would-be plutocracy.

[anne]

http://delong.typepad.com/sdj/2007/06/mark_thoma_is_i.html

June 19, 2007

Mark Thoma Is Irate This Morning: Modelling the Social Value of Microsoft
By Brad DeLong

The problem, of course, is that although Barro's model is a simple model, it is the wrong model.

In the absence of Microsoft, people would not sit in front of dark screens and do all calculations and sorts by hand. In the absence of Microsoft, its programmers would work for other computer companies--IBM, Sun, ATT, Digital Research, Apple, Go, et cetera. In the absence of Microsoft, its customers would buy operating systems and office suites from other computer companies as well. In the absence of Microsoft, production would in all likelihood be somewhat less efficient--in the absence of a single dominant software near-monopolist like Microsoft, more programmers would spend more time essentially duplicating one another's work as competitors went head-to-head with directly competing products. In the absence of Microsoft, margins would be lower because of lower market power--and so distribution would be somewhat more efficient. In the absence of Microsoft, invention and innovation in software might be faster (because a dominant, innovative monopolist can break the lockin effect created by obsolete standards) and might be slower (because a dominant, non-innovative monopolist that has a reputation for predatory pricing like Microsoft can create a "death zone" around it in which no profit-seeking firm dares innovate).

Whether the net social value of Bill Gates is positive or negative depends on his impact in creating and shaping Microsoft: relative to its competitors and to its alternative paths of development, did he make it more of a lockin-breaking innovator or a death zone-creating predator? Did he do more to make Microsoft a company that takes advantage o economies of scale or more to make Microsoft a company that raises profit margins? I'm on the side that thinks that Microsoft has been a considerable net plus. But others I respect see it is a net minus. And my judgment that the net social value of Bill Gates is large and positive is not because I attribute the total producer plus consumer surplus in the industry to him and him alone: I am not that naive, and not that slow-witted.

[anne]

Ah, "Mark Thoma's ire is roused by Robert Barro, in the Wall Street Journal. Mark sends us to an article in which Barro attributes the entire consumer plus producer surplus of the personal computer industry to Bill Gates."

Vintage Brad DeLong

says...

Actually, I always thought Mark Thoma was ireless, or nearly so, which shows why I have always known that Brad DeLong was a better reader than me. So I check to make sure. But, here Brad shows an intimation that he might be willing to lean a little further away from a utilitarian stance which I have been nagging about for a while.

[anne]

Huh? That was me, I think, bringing up the question "would I really be me were it not for Bill Gates and Microsoft so who needs a generous spirit anyway? I think. Where is Kant when needed? When I am finished caring for a baby mockingbird I have to get back to Kant anyway which Mark Thoma asked for and I promised and have not forgotten to do but have not done because I am thinking and now caring for my new found mocker.

[supersaurus]

the last copy of XP I installed cost me $149 retail. since I have installed it I have spent more than that amount on antivirus, antispam and so on, plus I have spent a pretty big chunk of my time on doing the maintenance. an economist will no doubt inquire "why spend it if it isn't worth it?"; the answer is "because I can't buy quicken for linux". does MS's ruthless suppression of budding competition some years back have anything to do with the lack of choice? your call.

another example of the true cost of the OS: not long ago I worked for a large US company whose IT department charged $9000 per seat per year to provide 1 PC every 3 years, email, network, antivirus, office software, OS updates and backed-up disk space (1G limit?) (whether or not the seat in question actually used IT hardware or Windows). a parallel quasi-IT department charged another $5000 per seat per year to pick up the slack where the big IT didn't cover it. would an economist say this means Windows is actually worth $14,000/year minus approximately $300/year for the PC hardware and some amount for the wires or that the company in question is insane?

[ken melvin]

Commenters here are too smart to read WSJ editorials.

[Bruce Wilder]

thanks to anne for that link to Brad DeLong's take on Barro.

The thread following DeLong's comment takes up many and varied views of the good and bad of Microsoft. It is a topic worthy of much more investigation and analysis -- investigation beyond everyone's favorite rants on the subject, and certainly beyond the simplistic Econ 101 model of monopoly restricting supply to raise price.

There are some profound questions about the nature and sources of value, how we ought to associate value with progress and "growth", and how to identify and attribute the progenitors of progress, as well as its inhibitors.

[cm]

Esben: "I think it is meaningless to say that Microsoft is contribution billions or trillions to society if what they are providing is something which could easily have been produced by someone else in their place."

I'm not trying to quibble about the quantification of the contribution, but I precisely disagree that it is meaningless to say so. What anybody contributes they contribute (positively and negatively), regardless of what somebody else would have otherwise contributed.

Neither am I trying to defend MS in particular. MS is frequently accused of lacking in innovation and having knocked off prior art, which is overall correct, but in some significant cases they did what those prior creators couldn't or wouldn't do, which is productizing the technology, for which they deserve at least the technical merit. In more cases than one would like, unethical and even illegal business practices were part of the picture.

For example, MS managed to establish a particular brand of desktop "look and feel", which was subsequently imitated at least in spirit by several other players, e.g. Linux desktop themes.

"Some people create enormous value: Guthenberg or Einstein for example gave us knowledge which we would otherwise have had much later or not at all."

Why? Perhaps some other guy would have been about ready to propose movable type, or something substantially close to relativity, and was deterred by the first-mover advantage, or did not pursue research into something that was already discovered.

[Esben]

Well CM, firstly I will refer to Brad Delongs follow-up to this piece. He says:

"In the absence of Microsoft, people would not sit in front of dark screens and do all calculations and sorts by hand. In the absence of Microsoft, its programmers would work for other computer companies--IBM, Sun, ATT, Digital Research, Apple, Go, et cetera. In the absence of Microsoft, its customers would buy operating systems and office suites from other computer companies as well."

Which is almost exactly the same point I was making. So I am glad to see I am not alone in this. But okay, let me answer your objections without just referring to others.

My answer will be that it all depends on perspective and what question you are trying to answer. Of course Microsoft produces what they produce to the value of others, so if you ask whether they deserve to be compensated for it, they do. Because THEY created the software, not someone else. Just like a bus driver deserves to be compensated for his work driving a bus - not because another bus driver couldn't easily have been found, but because this is the guy who got up at 5 in the morning and spent 8 hours of his day driving the bus.

But looking at Gates net value to society is different. Here the obvious standard must be what society would be like if Gates had never been born. There is no other reasonable way to answer this question. Saying that his value to society is the same as the consumer plus producer surplus of all Microsoft's products can ONLY rest on the assumption that in his absence no one else would have figured out to make something similar to Windows. Otherwise it is simply wrong.

To stay with the bus driver analogy. How do we find the net value to society of an average Joe who works as a bus driver? Are we to assume that in his absence his particular route would have to be shut down and the bus would stand there without a driver? Hundreds of people wouldn't have a bus to go with, so they would have to invest thousands of dollars in cars or simply give up their job far away. So using this logic the net value of a man working as a bus driver is potentially millions of dollars. Or perhaps society wouldn't be much different without him because someone else could easily drive the bus?

As for Guthenberg and Einstein I mentioned them because I have understood from reading about them that they both made unique discoveries that immediately had a huge impact on the world and which no one else were very close to. I'm not saying we wouldn't have had movable type without Guthenberg but it could have happened much later in history (from what I have read nobody else is known to have been close to the same idea), with enormous negative consequences for global GDP. Of course this is all counter factual speculation.

[calmo]

Well I thought Bruce Wilder's encapsulation of the WSJ was mighty good...here 'tis again:Think of it as a display window for intellectual fashions designed to cover and decorate the fetid, festering soul of America's would-be plutocracy.
Ok, the poet in Bruce nearly blinds me from that other interesting note about the philanthropy of the other billionaires.
Now would Professor Barro of Harvard, and Nobel laureate, B a little miffed at dropout boy Gates getting an honorary degree from Harvard?
Not only is this little brat worth more than ten thousand Barros, he has the audacity to mispend his fortune (according to this popper Barro) by throwing it away on a starving continent.
Well, I B amused.

[Esben]

CM, A small add-on to clear up some semantics. Perhaps it is the term "create value" which is causing our disagreement. Let me concede that MS creates plenty of value (consumer plus producer surplus). However I see this as distinct from the net value to society (or "social benefit"). I see the net value to society as "value created by MS" minus "value created by plausible hypothetical alternative". And it is THIS figure I see as relevant to Robert Barro's piece about the social benefit of MS.

[reason]

Ebsen,
that is a very, very good point. It is one reason why cost-benefit analysis often comes to such crazy conclusions.

[Lafayette]

Barro: "Otherwise, why would consumers willingly pay for Windows?"

Because Gates imposed Windows as a "natural monopoly".

It is therefore legal, both the Windows monopoly and Gate's windfall riches. What he does with them is his business.

And yes, had Gates not imposed Windows, Jobs would have imposed the Mac, or Kildall would have imposed CP/M. Or Torvalds with his Linux would have arrived. The market, at that time in the evolution of computing, was wide open for a PC operating system - and the pretenders to the throne were many.

Whoever imposed their system would now be a "Bill Gates" dispensing his/her riches to the needy poor. So, this persona called BG is somewhat irrelevant.

Meaning, Bill's philanthropy is not the point, really. The point is that the world paid monopoly prices to buy succeeding copies of Windows. A monopoly can be "natural", we know that. But, what political system allows those monopoly riches to be aggregated by a few? The one in the US.

We've not looked fully enough at the why of aggregating capital, regardless of its "social value" or its utility (if any in either case). Frankly, I see none, no where.
- No arguable raison d'être justifying it, except that it always has. (And, please, no more Lafer-curves.)
- No social value of any consequence, since taxing and redistributing it to finance public services would have generated a good deal more.
- And, no generalized utility since it's concentration in a few, benefits only that few. Had it not been allowed, the corporate cash-cow would have been distributed (after taxes) by stock dividends or been given away in higher (taxable) salaries.

Where's the inherently crystal-clear benefit/utility/goodness of allowing capital to accumulate excessively in the hands of a select few?

Where? Pray tell, elucidate me.

[cm]

Esben: "Value" is a very much overloaded term. One must be careful to not (unwittingly) engage in sophistry. "Creating value" and "net value to society", as defined by you, are entirely different beasts. (Not to suggest you are not aware of that of course.)

Keeping that in mind, our positions are probably not that far apart.

The value contributed by Bill Gates is of course not the total (presumed) value created by MS, but for the most part his (presumed positive?) contribution of presiding over and orchestrating/influencing the happenings at his firm. As with any massively collective phenomenon, projecting aggregate indicators onto any individual taken out of context is next to impossible, even for very presumed-influential players.

[Esben]

Yes mc, they are very different beasts and yes, I am very well aware of it. The original problem I tried to point out (and Brad DeLong also) is that Robert Barro doesn't seem to be aware of this difference - or simply chooses to ignore it. Don't know which is worse.

Barro is pointing to MS's value creation and treating it as if it was net value to society ("social benefit" as he calls it). I think this is highly misleading and rather staggering coming from a Harvard Economics Professor.

[Lafayette]

esb: The original problem I tried to point out (and Brad DeLong also) is that Robert Barro doesn't seem to be aware of this difference - or simply chooses to ignore it. Don't know which is worse.

Neither. Both CM and ESB are nitpicking, based upon a bit of shoddy journalism more aptly called a "pissing contest" between Barro and DeLong. Boys will be boys.

The rise and dominance of MS is just one more story of a hi-tech success ala Uncle Sam. But, does it have any real significance as regards economics, or economic utility?

None, nada, nixt, niente, rien. Only if one wordsmiths economic philosophy to do so, which both journalists have done.

One cannot determine or debate "social value" the way either Barro or DeLong have tried to do and, yes, it is all a bit of tedious blather. Neither "utility", which is best described as a Benthamite notion.

In terms of Benthamism, then hi-tech industries that generate hallucinatory riches for a select few, do also serve the general purpose utility in terms of salaries and services. But, as someone mentioned in a post, those salaries and services would have occurred anyway - regardless of whether the innovator is called Gates, Jobs or Donald Duck. The market made these millionaires every bit as much as the they made the market.

More importantly, who/what constitute the market? Answer: economic agents or people like you and me ... consumers. All of us - called a "collective of economic agents/actors". Or, more simply, the "economy".

The fallacy in Conservatism is to think that the Jobs and Gates are necessary agents to innovation and therefore their rewards are justified by the risks taken. But, what reward justifies the risk admittedly taken? All the reward/booty possible? There is no limit?

OK, let's presume there's no limit. Commerce and trade are a jungle, and the strongest (smartest, wiliest, most daring) prevail. What then? The rest of us must content ourselves with the crumbs left on the table? That doesn't make sense.

But that, precisely, is the kernel of contention between conservative "winner take all" and socialist "we are all winners". Neither can be true, but the truth can be somewhere in between.

The hard part is finding it.

[T. Fry]

I find it interesting that the poster of this article deleted from his posting of Mr. Barro's article the most important part i.e., the data. In the same Barro article posted in the WSJ it includes the following facts conveniently left out on this blog - to wit: The adoption of capitalism in India and China has from 1970 to 2000 resulted in 390 million people being lifted out of poverty. I repeat: This was due to the adoption of capitalism, not from foreign aid or new inventions in the west. This is the data, this is the fact. Why this was left out of the Barro article on this blog is an interesting question. This is what the article was about. It was not really about Bill Gates. The data are indisputable. I dare any posters to this blog to show me, with data and evidence, anything that can compare to this. accomplishment.

If bill had developed ten cures new cures for malaria it would not make much difference in Africa without a relatively honest, efficient and incentified system to deliver the cures, i.e., capitalism. There are already cures for malaria in case some posters here did not know. The problem is the corrupt socialist and communist governments in Africa who prevent wealth creation, wealth distribution, and steal practically everything.

And for the poster who said the problem in Africa had to do with the governments being weak. It seems to me he has absolute power. Please. Does he think Robert Mugabe is weak? Was Idi Amin weak? Magabe has used his power in a very short time to turn one of the most prosperous countries in Africa into a destitute hell hole. That is generally the model in Africa. It used to be the model in China and Africa until they adopted capitalism.

Mr. Barro is right. Gates giving us all $300 would be a better use of his wealth than distributing it in Africa. Funny how people who are brilliant in one field think they are brilliant in others. Mr. Gates is but the most recent example. In his offer to the leftist of Harvard of his wish to "give back", I guess he is somehow admitting that he must have taken what he has by less than moral means. Nothing could be further from the truth.

Gate's would be better off spending his time doing what he does best, that is, being a capitalist. Instead of going to Harvard and essentially apologizing for his past deeds with his offer to "give back", he should instead stand up at Harvard in front of all the left wing socialist there, defend capitalism, and then go to Africa and use his money to attempt to change their systems from kleptocracy, socialism, communism, etc. to capitalism. Then Africa could simply partake of all the good things that already exist in the world. I will be the first to invest my money there when they change the system. I am certain trillions of dollars more investment will follow me. Just as it is now doing in India and China.

[CL- Oregon Girl]

Supersaurus:

I agree. How many of us have wasted time using the POS "innovative" windows-- rebooting freezing re-installing never finding the wireless network etc.. I am not sure but I would gander the social value of Windows is a negative.

[Esben]

T. Fry, why is it "convenient" that data regarding India and China was left out? Both countries' experiences are still mentioned in the article above, and I haven't seen anyone here actually dispute that the economic liberalisation of India and China has been an overall successful. That is not what the debate is about. So I really think you are missing the target on that one.

On a side note I might add that at least in case India the politicians are NOT betting on capitalism alone to solve the problem of poverty. India has a very activist government trying to alleviate poverty through all sorts of social schemes. In fact the current PM Singh who was the man behind the great economic reforms of '91 is now dependant on support from the communist parties in Parliament. One of the most ambitious schemes is the National Rural Employment Guarantee Act, guaranteeing government jobs for 100 days a year for almost each rural family in India.

By the way, I have seen you point out that Africa is suffering under corrupt and nepotist government, on which I agree. You prefer honest capitalism as an alternative, I prefer honest government - both are wishful thinking at the moment. But as for direct aid to the people of Africa, I haven't heard a convincing argument as to why it wouldn't do an enormous amount of good for some people who badly need it.

[Esben]

LaFayette, I understand you don't like the debate of net social value, social benefit or whatever we call it. What I didn't get clearly from your comment is why. But as far as I could tell - and please correct me if I'm wrong here - you are actually saying that the individual doesn't make any difference at all in the market? You don't see any extra utility created by virtue of a unique software innovator creating something that wasn't there before? I'm a little puzzled regarding your views on this.

Then you go on to debate how people should be compensated for their efforts, which is a wholly different debate as I see it.

[Emeka Okafor]

Does anyone ask what the African's themselves think about this aid vs trade vs wealth creation debate? Or is this conversation devolving into the Westerner knows best pattern, that we in the developing world are all to familiar with? To get a sense please look at commentary from the recently concluded TED Global Conference
here,here,here and here for example.

[Don't Read This If You Know EVERYTHING About Anti Aging]

People die because they are old, because parts of their bodies refuse to function anymore. At least that is what many folks think. This is why they continue to press for methods of slowing that process down, or reversing it completely......