Monday, June 11, 2007

Hold on to your wallets

Microsoft founder, Bill Gates, delivered a commencement address to Harvard Graduates last week. In his speech he encouraged them to be charitable with something called "creative capitalism."
"We can make market forces work better for the poor if we can develop a more creative capitalism—if we can stretch the reach of market forces so that more people can make a profit, or at least make a living, serving people who are suffering from the worst inequities," he said.
Gates knows what he's talking about. Since mid-80s his company has aggressively copied, purchased or suffocated companies with technology superior to Microsoft's. Lately Microsoft has taken to exploiting our broken US patent system and threatening its competition with patent lawsuits. Apparently that's where he learned to "stretch the reach of market forces so that more people can make a profit." Maybe he meant to say, ".. so that more Microsoft divisions can make a profit."

Imagine how different Microsoft may have been if Gates hadn't dropped out of Harvard and was similarly influenced by another infinitely wealthy person advocating then what Gates is today.
Gates also said we can press governments around the world to spend taxpayer money in ways that better reflect the values of the people who pay the taxes.
Here's a simple question: Who do you think better represents "the values of the people who pay the taxes," a) government or b) the people who pay the taxes? If you selected b it's a good bet you believe you know your values better than the government does. It's important to remember it doesn't matter which party controls the governor's mansion, state legislature, white house or congress. No one knows your personal values better than you do--except perhaps the charities cashing your checks.

Gates went on to say:
"If we can find approaches that meet the needs of the poor in ways that generate profits for business and votes for politicians, we will have found a sustainable way to reduce inequity in the world. This task is open-ended. It can never be finished. But a conscious effort to answer this challenge will change the world."
Gates seems convinced the solution to poverty can be found in politics. All at once he admits it can't be solved but proposes the government be responsible for administering our charitable dollars in perpetuity (for recent Harvard grads, that means forever).

It's hard to argue with success, but being rich doesn't make Gates right. I recently learned that from Dr. Timothy Dowd in his Introduction to Logic class at Oakland Community College. True, OCC is a long way from Harvard, but the lesson is worth more than Harvard's tuition. The fallacy is called argumentum ad crumenam, which is Latin for "argument to the purse." Admittedly, Gate's purse is bigger than most, but his success is in the software business, not social policy, and it's in software business management and related technologies (like monopolies).

Like dropping out, Gates wants graduates to do what he says and not as he does. Bill's not donating his foundation's billions to the government. He's spending those dollars consistent with his and his wife's values. Warren Buffet, another of the world's richest men, also contributed $1 billion to Gate's foundation. Apparently, Buffet doesn't trust the government to reflect his values either.

But Bill says you should.

Bill's talking-down to his audience may be evidence of arrogance or paternalism--or guilt. Until we learn otherwise let's give Bill the benefit of the doubt and believe he just wants us to to help him, through our taxes, donate to causes he believes in. Wait... that's just like another open-ended task of paying to upgrade Windows from 95 to 97 to XP, Vista and whatever comes after that because Microsoft's revenue is a cause Gates believes in.

Hold on to your wallets. There's a whole new graduating class from Harvard planning to help you empty it.


  1. What's your point? Is it, "I hate Bill Gates and Microsoft" or something else. Methinks you're using your scorn for the success of Mr. Gates as evidence of an erroneous politcial position which sounds like a logical fallacy to me.

  2. OK. I wasn't clear.

    It has nothing to do with Bill Gates, but it has a LOT to do with being suspicious of anyone exploiting their success in one field to curry credibility in another. Or more specifically, just because he's rich doesn't mean "creative capitalism" is an improvement over capitalism-as-we-know it.

    As important is recognizing Gate's comment about pressing governments to spend taxpayer money more in-line with taxpayer values is completely backwards, and people should remember THEY are best able to do that, and the best thing to "press" government into would be returning that money to the taxpayers by way of refunds or lower taxes and let taxpayers exercise their own philanthropy.

    Making fun of Microsoft was just a bonus.

  3. Bill Gates had done some major global issues with his philanthropy, yet I do have some issues with how it is being accomplished.

    Windows products are highly over-priced in the USA, with software sales margins 6-7 times higher than most other consumer products. A Windows operating system costs hundreds of dollars in America. Yet dig a little deeper and you will find that Microsoft has made deals with other nations (who are our biggest future financial competitors) such as India and China to sell the operating systems for a low as one dollar a copy. Thus ask yourself, is this transfer of weath out of America by the hundreds of billions (over decades), and the preferential treatment of non-USA residents a good thing? I could understand if there was competition and choices in America for purchasing an operating system, but the fact is that Microsoft dominates and has the best product....thus Americans are forced to spend the money if they desire a legal computer system.

    In summary, the method of super high profit margins and differential treatment between global customers has me questioning how much good Bill Gates is really doing for America when looking at the big picture, versus our economic competitors which are enjoying discounted products and more charity. In some ways, Microsoft has created a mini-trade deficit with overpricing practices and transfers of charity dollars to other nations...

    Yet Microsoft is no different than many other industries, like the drug companies that charge Americans a huge premium versus the huge discounts that nations such as Canada receive. It is common practice, with the major difference being the magnitude of weath transfered in the process.

    Perhaps Americans themselves are to blame for being to naive to barter, and too quick to flash the plastic and buy without questioning the true costs of making a purchase. If more Americans slowed down and did more research, they would be outraged how much more they pay for common products versus the huge discounts given to foreign nations.

    And such may seem like a small matter, until a few decades down the road when the USA has to bow to the pressures from the new financial superpowers, such as China and India, versus being on top of the world as we currently reside today...