Ah, there are days when I pick up (or click into) the Wall Street Journal and just get infuriated by the first article I read. Today we have the richest man in the world arguing for something called "Creative Capitalism" to help the worlds poor. Bill Gates, Microsoft Founder and Chairman, gave a speech today at the World Economic Forum in Davos Switzerland that is anything but a defense of capitalism.
"We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well," Mr. Gates will tell world leaders at the forum, according to a copy of the speech seen by The Wall Street Journal.
Mr. Gates isn't abandoning his belief in capitalism as the best economic system. But in an interview with the Journal last week at his Microsoft office in Redmond, Wash., Mr. Gates said that he has grown impatient with the shortcomings of capitalism. He said he has seen those failings first-hand on trips for Microsoft to places like the South African slum of Soweto, and discussed them with dozens of experts on disease and poverty. He has voraciously read about those failings in books that propose new approaches to narrowing the gap between rich and poor.
In particular, he said, he's troubled that advances in technology, health care and education tend to help the rich and bypass the poor. "The rate of improvement for the third that is better off is pretty rapid," he said. "The part that's unsatisfactory is for the bottom third -- two billion of six billion."
Gates' first fundamental mistake is mistaking capitalism as purely an economic system. Proper laissez faire capitalism is first a political system, one based on individual rights. When viewed in that light the claim that capitalism has failed the poor seems tinny. Look at the world's poor in China, India, Southeast Asia, the Middle East and the entire African continent. Capitalism as a political system could hardly be said to exist here. Capitalism hasn't failed these people, but rather Communism, Islamofascism, and plain barbaric tyranny have. To lay that guilt at capitalism's feet is poorly placed blame, and this coming from one of the world's great capitalists.
As I've previously blogged, in pockets where enough basic individual rights exists, beginning with such things as private property rights, then the profit motive serves even the poorest of the poor effectively.The answer then is not to cast a new form of capitalism
With today's speech, Mr. Gates adds his high-profile name to the ranks of those who argue that unfettered capitalism can't solve broad social problems. Muhammad Yunus, the Bangladeshi economist who won the 2006 Nobel Peace Prize for his work providing small loans to the poor, is traversing the U.S. this month promoting a new book that calls capitalism "half developed" because it focuses only on the profit-oriented side of human nature, not on the satisfaction derived from helping others.
Here is Gates' other fundamental error, altruism. He plans to quote from Adam Smith's The Theory of Moral Sentiments on the pleasure man derives from taking an interest in the fortunes of others. What's Gates solution? It's nothing new, just the good old mixed economy of course.
Key to Mr. Gates's plan will be for businesses to dedicate their top people to poor issues -- an approach he feels is more powerful than traditional corporate donations and volunteer work. Governments should set policies and disburse funds to create financial incentives for businesses to improve the lives of the poor, he plans to say today. "If we can spend the early decades of the 21st century finding approaches that meet the needs of the poor in ways that generate profits for business, we will have found a sustainable way to reduce poverty in the world," Mr. Gates plans to say.
No, Mr. Gates, instead of calling capitalism a partial solution, and calling for a new kind of capitalism based on altruistic sentiments, you should be calling for the establishment of capitalism in the first place, where none exists.