Help Me Write a Book
Bill Gates retires as a full-time employee of Microsoft, the company he founded, this week -- ending the most successful capitalist career of all time. He is going to devote the rest of his active years to philanthropy. He is already the world's biggest philanthropist. And even before he begins this new chapter, he is arguably the most successful in terms of the impact the Bill and Melinda Gates Foundation has had. (Bias alert: As editor of Slate, I was a Microsoft employee for seven years. My wife, Patty Stonesifer, is CEO of the Bill and Melinda Gates Foundation, although she is leaving that post in September. I have good reason to be grateful to Bill Gates.)
Despite his move from capitalism to philanthropy, Gates believes that some of the world's problems -- especially the problems of the world's poorest countries -- are too big to be solved by philanthropy. Only capitalism can address them successfully. But -- as he argued in a speech at Davos in January -- capitalism is much better at serving the needs of the the prosperous than the needs of the poor. He goes on to argue that capitalism needs to be, and can be, reformed to solve this problem. He called this new system "creative capitalism."
The notion that capitalism, which is all about self-interest, can be amended somehow to be more about helping others -- and still be capitalist -- struck many (me included, at least at first) as hopelessly Pollyannaish and a little bizarre. Not only is Bill Gates the most successful capitalist of all time, but amending capitalism to serve the poor has not until recently been on his agenda. Gates' approach has been to take capitalism for all that it is worth, squeeze every penny out of it, and then take the money and give it all away. This is a much more traditional strategy, employed by the Rockefellers, Henry Ford, Andrew Carnegie and other giants of industry who became giants of philanthropy.
It's hard to remember how quickly Gates' reputation as a philanthropist -- and the reality behind it -- have blossomed. A couple of years after Slate started publication in 1996, we instituted a feature called the Slate 60. Now an established and respected circulation-boosting gimmick, the Slate 60 is an annual list that ranks people on the basis of how much they give away. It derives from an idea of Ted Turner's, who told Maureen Dowd, who wrote a column about it. Turner said that very rich people weren't giving away as much money as they might otherwise because they were afraid of falling off or moving down the Forbes 400. A replacement list based on giving money away was supposed to solve that problem.
The first year of the list, Bill Gates was number ten. He was asked constantly about why he wasn't giving more of it away, and he always insisted that he would do this as soon as he had the time to do it as intelligently as he tried to "do" software. The next year he came in first, and he has remained there or close most years since.
So why isn't his approach -- make the money, then give it away; "to every thing there is a season," and so on -- the right approach? That is one question raised by creative capitalism. There are others. Wouldn't the small-d democratic approach be: make the money and then tax part of it away? When corporations start giving money away or devoting it to good works, aren't they cheating their shareholders? (That was Milton Friedman's position, you won't be surprised to hear.)
To explore these questions, I'm producing a book. And "producing" is the right word. This is a literary experiment as well. The book will be derived from a private website and a public blog in which economists and others debate whether "creative capitalism" is meaningless, dangerous, useless, maybe useful, very useful, or brilliant. Anyone interested is welcome to join in at creativecapitalismblog.com. As the project progresses other contributions to the book will be published on this site and perhaps elsewhere -- all in the spirit of web collaboration. The book will be out by the end of the year.
And in the spirit of capitalism, contributors will be paid. The amount you get will be a proportion of the advance based on the number of your words that end up in the final product (as edited by me). We hope that this will create the right balance of incentives between writing long and writing deep. No guarantees, but we expect the payout to end up around a dollar or two per word. And if you're thinking that's not much, coming from Bill Gates -- Gates has nothing officially to do with this project. Nor does the Gates Foundation (unless you count glancing at printouts left by accident on the kitchen counter as "official"). The money comes from the bounty of Messrs Simon and Schuster.
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Contrary to the image generated by Wall Street, the essence of a progressive economic system is enterprise not capitalism as it has evolved over the last half century. The former is based upon ideas, initiative, equity, and drive with profit being the result of the successful application of those elements. The latter, while initially the means for providing through debt instruments or equity investment, capital for the enterprise, morphed into a speculative institution focused on exploitive methodologies whereby entrepreneurs and their derivitive services and products could be marketed to speculators. The brokerages developed profit centers, and through these devices a brokerage would profit whether the enterprise was successful or not.
Let's review:
Bill Gates only became a philanthropist because he married a woman who focused his attention that way.
That is the ONLY reason Bill Gates is where he is today.
He would have been his normal, greed-driven, selfish self if he hadn't met and married his wife.
Capitalism is war with money. It has nothing to do with society's needs. That's what GOVERNMENTS are for.
Capitalism is an ECONOMIC system - and a pretty damn vicious, male-dominated one.
It eats it's own.
> The first year of the list, Bill Gates was number ten. He was asked constantly about why he wasn't giving more of it away, and he always insisted that he would do this as soon as he had the time to do it as intelligently as he tried to "do" software. The next year he came in first, and he has remained there or close most years since.
So he's going to try and get a monopoly death grip on the world of philanthropy and ruthlessly crush any who don't see it his way? Oh, boy!
So you don't think Micrsoft and Bill Gates fulfilled a need - affordable, useful computer software? i beg to differ. Bill's company was one of many who advanced the status and facility of the PC. This in turn created a total revolution in how business was done and probably enabled millions to start businesses and support themselves that would have been unthinkable before PC's came along. This is not to mention the thousands of jobs and increased economic activity created by Microsoft itself. Many employees who hired on with not a dime to their name are now millionaires.
I always ask the question:
Who has done more for society? Bill Gates or Mother Teresa?
A good arguement could be made that at least from a material point of view Gates did much more.
Antoher question:
What would be a btter use of Bill'smoney? Giving it away to charity...or reinvesting it in new business ventures that create jobs and grow the economy?
Again, I think a good case could be made that Bill and society in general are not going to get as good a return on giving that money to charity.
Wiithout a vibrant capitalistic economic environment charitable giving is not even possible.
If you think Microsoft software is 'affordable' - we have a problem with communication right off the bat.
Mother Teresa by far. She lived IN the world, not ON the world...Gates, on the other hand, only started the philanthropy biz at the behest of his wife and his tax accountants.
Gee - he COULD have funded every regional and local fine arts program.
He COULD have funded community libraries.
He COULD have....if he had wanted to.
That's the difference between a true philanthropist and the guy who decides it's the best tax move.
A true philanthropist actually cares and has extensive knowledge of the programs he wants to support. Like Gate's wife.
The blogosphere is huge in its contribution to our collective ambitions. I think it's time to leave the abstract contemplation of lofty ideas behind us and focus on real solutions, debating the virtues/problems of capitalism is just puttin off the hard work that needs to be done.
We need to have our heads in "The Solution Room"... instead of "The Situation Room".
Problems with your site... needs more pictures. Which is lesson one. Dumb it down. It must first appeal to the masses.
Two: Your need a few narrowly focused points that people can rally around.
Three: Don't be concerned with solving problems in their entirety... big fan here of populating this country with electic/hydrogen cars. Expensive... yes. But we need to start somewhere.
Four: Have voting for idea (cause) specific funding capability. Let people see their votes and funds at work.
Get back to me after you've implemented my suggestions. Thanks! ;)
Creative Capitalism is brilliant, but hardly new. Unless I'm misinterpreting it, it won john Nash a Nobel Prize. Remember the scene in the movie- If we all go after the blonde, we block each other, noone gets her, then the other girls see themselves as second choices and rebuff our advances. If noone goes after the blonde and we all go to the others, they are our first choice, we all win. Adam Smith was wrong- Capitalism works best when people do what's in their own self interest AND the group.
Gates may be an incredibly successful capitalist but that doesn't mean he properly understands the mechanics of capitalism. "Creative capitalism" simply is not necessary.
In the process of selfishly building up his $60 billion fortune, he did more for the poorest of the poor in the remotest corner of darkest Africa than he ever did by donating to and running the Gates Foundation.
It's like a Zen Koan. When you understand the nature of the above seemingly contradictory and outrageous comment, you'll understand the ability that capitalism has in trickling down to the most needy the greatest bounties. But in order for the system to work most effectively -- and for the poor and needy to benefit maximally -- the capitalist shouldn't waste his money by giving any of it to charity; he must stay the course in being as selfish and as money-grubbing as he possibly can.
Your assertion has been proven to be absurd; trickle-down economics DOES NOT WORK.
so we have donated trillions to "poor" people in africa. What has it gotten them?
Our county has "poor" people also. but these folks own car in large percentages, color TV's, cable service with 300 channels. More of our "poor" would be considered absurdly rich in Uganda or some place like that.
Microsoft employes 1000's of people most of whom are not considered rich. Is that not trickle down in action, however? Who has disproven trickle down? Please cite your source.
If the system is working "most effectively," how do you explain the current state of wealth distribution in the world, and what do you think will be the ultimate outcome of the increasing disparity between the extremely wealthy vs. those who have enough to just-get-by down or less (besides the obliteration of the American middle class)?
The limiting factors which hinder the acceptance of pure capitalism are greed, making too much money by investing in a company without working, the ability to easily game the system, and any other overlooked aspects that lead to the disproportionate distributrion of wealth.
Perhaps instituting measures at the highest levels of the system could correct these deficiencies. Why not have such policies like dividing the shareholder outlays in two- half to shareholders and half to corporate philanthropy (charities/causes of the board's choosing)? In the same vein, why not tie the salaries of the CEO, COO, CFO, etc. to a reasonable percentage of the corporate revenue that maxs-out in the 5-10 million per year range?
I don't see where these ideas would take away any of the incentives to excel within the system for any individuals. And it would provide an avenue for societal needs to be met without the need to go through the government which seems to be a big issue for many people.
All large corps already give to charity. Look it up. I cannot even think of one exception.
Some of the poor cannot work because of emotional, intellectual or physical problems. Many do work, but for such low wages they still live in poverty.
The hatred for the poor in this country trickled down from Reaganomics.
This is the same as Muhammad Yunus' Social Business concept. He met with Gates a few days before Davos in 2008 and Gates read his latest book, Creating a World Without Poverty and then spoke of Creative Capitalism at Davos...
Yunus lives simply, no AC in his Dhaka offices, does not make millions...just helps others to help themselves..and Gates will spend the rest of his life doing the same...what a great team that could be!
The problem with capitalism is that capitalists, by and large, are not very smart. They pursue short-term self-interest. Capitalism with long-term self-interest is a different animal, one that tries to build society and spread prosperity for everyone because, in the long term, that is advantageous to the capitalist.
In the long term, capitalists will benefit from affordable health care for all. They will benefit from raising the incomes of the lower economic strata. They will profit from the increase in disposable income in all classes. They will benefit from social harmony. They will benefit from social justice.
If only capitalists could see that, be shown that, learn that lesson, then their self-interest, applied with long-term vision, could be the most powerful force for the greater good.
Philanthropy is a form of long-term self-interest, but it comes much too late in the process. It shouldn't be the end result of capitalism, and it shouldn't be thought of as "giving." It should be integral to capitalism and it should be considered the highest and most effective form of investing.
Well said.
Amen. Green and short sightedness. The world needs a major paradigm shift and soon!!
Correction: I meant "greed" and short sightedness.
Very nicely put, and I agree wholeheartedly with what you're saying, except for the intelligence of capitalists. I'd say they're smart but not very wise. With wisdom, what you state here comes naturally, but I don't mean to split hairs. You're on the money (no pun intended).
When I first saw the term "creative capitalism," I thought of all the small businesspeople of Thailand, the ones who work one job by day, then set up a booth to sell goods at the night market. But then it hit me: I was confusing free enterprise with capitalism. And digging deeper, it came to me that they are not siblings but sworn enemies. The true creativity is in the small business that needs only the owner's wits to survive. Capitalism by its nature requires third parties with money to invest, parties that have no actual knowledge of how to run the business but that can call the shots and skim off the profits that should go to the entrepreneur herself. This is Marx's great insight; the realization that the capitalist, who supplies the start-up money, was becoming the tail that wagged the entrepreneurial dog. So now the tail is going to get creative? Well, you know what: it already did, and it was called Enron.
The answer to your dreams Mr. Kinsley, is more of a Western European one, where taxes are high, education, welfare and health services are free, and the countries don't issue debt to buy what the citizens want. We have to stop the flight of billionaires to tax havens and teach them their moral responsibilities stay at home, so that their wealth can provide the taxes to benefit the many.
Yeah, we could call it Directive 10-289.
Micheal
I applaud your generous spirit to do good in this world, but the free market is limited and doesn't have the money and coordination to effectively accomplish what you dream of.
First, no matter how impressive a billion dollars sounds like, it really isn't enough money to accomplish much. Wikipedia states that Mr. Gate has donated $29 billion to his foundation since 2000. Given that the state of Kansas spends $3 billion a year for aid to public schools, Mr. Gates could have picked up the taxpayer's tab for the same amount of time.
The second arguement against capitalism is that an individual philantropist cannot have the power to determine what is a public good, only to finance what makes THEM feel good. They may prefer to battle the spread of aids, or provide scholarships to the needy, but the ultimate decisions for national defence, transportation and education policy must be determined and coordinated by the government, ideally, one that actually represents the interests of its own citizens.
For example, if I wanted to restore art and music education in the public schools nationwide, $25 billion would provide about 250,000 teachers and overhead for a single year . Though a worthy goal, no single philantropist would ever be able to accomplish this, and who is to say a $25 billion is better spent on the arts instead of a national energy conservation program? And is Harvard more deserving of an endowment than Emporia State University?
Capitalism, being the placement and positioning of large blocks of capital, is well beyond the reach of about 90% of Americans. So perhaps you can add a section to the book that deals with the fact that most people who extoll the virtues of capitalism will never partake of the same. Perhaps you could also add a section that represents the fact that capitalism and patriotism are inherently incompatible concepts; capital, in its chase for profits, fleas borders in the blink of an eye, leaving the worker doe-eyed behind.
The average person won't stand a chance as long as those with money can hire the lowest paid worker in any country.
It will fall down on them eventually, because there will be no buyers left, but many will be devastated by the loss of jobs, first.
An open, factual and non-partisan discussion about the current state of capitalism in the world would be useful. It would more be useful to look at real tangible proposals for possible change. The current corporate model is short-term orientated and the incentives, legal and tax climate supports this. The unintended negative consequences of capitalism are need to be addressed....At their worst these are well descirbed in Shock Doctrine There are also solutions, in the last chapter of that book and also in Mohamed Yunus' book on 'social enterprise'. A goal of 'reforming capitalism' not a criticisim of capitalism, just a natural evolutionary process. With new legal, tax policies, new corporate structures
Yunus speaks about transforming the system so that it appeals to better, more positive characteristics in human nature.
I wonder how much more Gates would give to charity if he didn't have to worry about Obama being elected and raising his taxes....
And on that thought, how many people obsolve themselves of their charitable responsibilities using the rationalization that "well, I already paid taxes so the government can take care of that problem!" When, in fact, if there were no income tax people would take their responsibility to help others more seriously....just a thought...
Bill Gates doesn't pay himself much income so he probably could care less about the income tax. And since he's giving most of it away I doubt he cares much in any case.
But under the last Democratic president, Mr. Gates, Mr. Buffet, Mr. Dell, et al made out like bandits because he dramatically lowered the capital gains tax that Ronald Reagan dramatically raised in 1986. Why would a Democratic president do such a thing? (1) Lowering long term capital gains taxes rewards entrepreneurship, investment, risk, and innovation, whereas lowering income taxes simply rewards status quo wealth; (2) with corporations no longer taking care of retirement for U.S. workers, they have no choice but to invest their retirement in the stock markets, so this was a boon to workers who chose to save, invest, and plan for retirement.
Gates and his ilk could give a crap about income - they pay themselves trivial low six figure incomes. What they care about is ROI, appreciation on their investments of risk and innovation.
(1) Lowering long term capital gains taxes rewards entrepreneurship, investment, risk, and innovation, whereas lowering income taxes simply rewards status quo wealth;
That would seem to say that earning money by investing was somehow more important to the economy than earning money.
> (2) with corporations no longer taking care of retirement for U.S. workers, they have no choice but to invest their retirement in the stock markets, so this was a boon to workers who chose to save, invest, and plan for retirement.
I suspect that most workers are saving the bulk of their money in IRAs or 401Ks; any capital gains in those plans are taxed as ordinary income whether they are capital gains or even supposedly tax-free dividends. Decreasing the capital gains tax will not reduce their tax burden in retirement.
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