Why The Rich Care About Inequality Up to A Point

Bill Gates via WSJ: Why the Rich Care About Inequality.  You could say that the article is at odds with the (alleged) creation by Microsoft of a backdoor into Windows for the National Security Administration. When none of us has privacy, including financial privacy, we are equal only as are prisoners who are montitored 24/7 by the unseen guards from behind smoked glass.  Hard to call markets free when the political authorities  can monitor the private conversations of all market players and then act upon that information in secret, preserved from public scrutiny by a rubic (figthing Terror) so all-emcompassing as to deny the right of citizens even to ask questions.  Yet, in reality, the Gates pieces does not contradit his practice:  The piece is all about maintaining social order, appeasing and co-opting dissent, that wealth might be preserved, not about freedom or equality.  Gates does much good, but the river of life as it wends its way from Eden is turbulent and muddy, with many a garbage bag, tree limb, and here and there, a floating body.  We should be glad that our betters, the wise and the good, are handling this for us.  I for one would like to see more cooperation between business and the state security apparatus. We're all in this together.

Comments

[Holden]

That isn't at all what Gates said. Check out the actual text of his speech. I thought it was great - big-picture, inspiring, and all about fairness and morality, not "doing well by doing good" or "do good, feel good."

This guy you're linking to asks, "why, you might wonder, is it in the self-interests of Gates (and Mr. Rockefeller before him) to care about inequality?" That question misses the point about as cleanly as you can miss it. That writer doesn't get it. But Gates might.

[Phil]

Thanks, Holden, the speech is indeed much better than one could detect from the WSJ account of it. The most impassioned speeches for egalitarianism are generally made by members of an elite at a Yale, Harvard or Oxford. I find that a good thing, actually.

[Holden]

Sure, even if it still doesn't come out to much. There's only so much you can do with a speech.

A blog, on the other hand ...

[O Lucky Man]

Sometimes when I can't sleep I get up and disable all the security in my windoze system. Strange, I know, but it makes me feel safer.

Go USA NSA!

[Phil]

Right, Holden, point well taken.

[bUM fREE]

Pardon me, Master, but might I intrude for just a moment? A few thoughts were born in this humble old head while reading Master Gates full speech, provided so graciously by Master Holden, if I may be so bold? Perhaps it would do no one any lasting harm to hear them? I promise you need not suffer me long.

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I believe we have more caring than we know what to do with.

Why not lobby to change the legal definition of Corporation so that all that excess caring can be leveraged through "legal individuals" reformed to care about something other than their own expanding success? Reformed to rebuild and extend - at least recognize - the foundations of the social contract, maybe?

Instead, we get:

We can make market forces work better for the poor if we can develop a more creative capitalism...

and

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.

Offset that with this:

The withdrawal of the colonial powers was in many ways merely a tactical move to get out of the limelight, but to retain the control in all practical ways. In fact it turned out to have been even a better idea than running these colonies, because now you could get what you were getting before without the responsibility for administering it. You handed responsibility back to the natives, but continued to control the economy in all kinds of ways.

In addition to this, the powerful nations did not leave us alone. If you remember what happened in the Congo, for instance, in 1960, you know the country was not really handed over to the Africans. There were people masterminding what was going on there and determining that some things would never happen and other things would. We saw the same situation with the Biafran experience.

Even though Biafra was a self-governing, independent, sovereign nation, Britain was able to say things like, "We will not tolerate the dismemberment of this great market." They always talked in terms of markets, as if people were created for markets. [emphasis added] So this is part of the problem - that we were not really left alone. In addition, there were other things - real calamities, like drought.  -Chinhua Achebe

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Bill says in his speech that he starts a new job next year.

Q: How is the new job like the old job?

A: Bill - controls - everything.

Here is the complexity that drives Bill most, I think. The world will always be complex in a way that requires Bill, and people like Bill, to guide it. And if it's not complex enough, you can be sure it'll be further complicated through the device of fake free markets and the political structures that drive them.

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I realize that this information is known to many already and can be easily dismissed as ... what, old news?

Why not come up with a "new" approach, something constructive, to offset inequity, pursue the world we want?

Well, when presented with the same old stuff from the powers that be - old news? - why is there any burden on the oppressed to invent new descriptions of, and adaptations to, the same old mechanisms of their oppression? Shouldn't the burden be on the PTB to cut the SOS? Wouldn't that predict a novel outcome?

(For what it's worth, Achebe's commentary is from an interview conducted in the late 80s.)

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Thank you, Masters, all. A bit of impertinence now and then might be good for the system - or so say the impertinent, at least...  ;-)

[klaus]

I knew nothing about the millions of people living in unspeakable poverty and disease in developing countries.

It took me decades to find out.

I guess this could be a dopey, rhetorical, self-serving, retroactive reconstruction of an ignorance that did not truly exist, or a candid description of a strain of sociopathy so novel and rare that the market, in a moment of celebratory self-recognition, could only reward it by buoying it with stupendous wealth, rather than allowing the specimen to sink to its natural depth - the final irony being that this sea squab is then raised to an atmospheric height from which it bloviates mock profundities about social issues.

[Phil]

Philanthropy is the ornament, if you will, on the hood of the owner's limousine. That is how it can be seen by those those who stand at the factory gates seeing the owner drive through. But caritas, as in faith, hope, and charity, is another matter. Love, solidarity, community is a force that predates money and may outlast it. We still do have "due order and degree" as in the Dark Ages. But who will guide us if not the wealthy and the wise? The second point in the post seems the more sinister: One way transparency. For the ruled, or the consumer, or dupe, or electorate to be seen in their most private lives by the powerful who are unseen in their machinations, except through the lens of propaganda they create, is the most dangerous element here. I expect to be ruled by the brilliant, amidst my peers who are unawakened, but I resent being taken for stupid myself.

[Gerry]

You know, the funny thing is actually how flat-footed he is in any public appearance. He reveals his private creepiness even in this speech, though he doesn't know it. He could never stand the sort of spotlight on his personal life that even the lowliest politician must face. The ultra-rich are invisible, or more to the point visible only in ways they consent to.

[Holden]

Is there anything the rich could do that would not bring on these complaints? Anything they could buy with that money, besides dynamite to blow the entire system to pieces and start over? That may be what you want. Both you and Gates see that the current system has so far proven far better at providing ingenious solutions to boredom and baldness than to suffering and injustice. You conclude that we need to start over; Gates thinks we need to figure out how to apply the power of the former to the goals of the latter. That seems like an honest disagreement.

[Holden]

Why is Bill Gates so rich? Because of his unbounded greed? Honestly, I don't really think so. I think he's so rich due to a combination of (a) luck (b) his unbounded love for computer software. It's a weird, nerdy love, but a genuine one. When he was sitting in his dorm room obsessing over his operating system, it could have been because of his master plan to control the world, or because he was geeky and found it fun. Which one would you bet on as the motivator for a college student?

And why does he now care about suffering? As part of a master plan to make himself even richer, or for the opposite reason: because he can afford to? If you think the former, I accuse YOU of not truly understanding the question we always ask the rich: "Why do you need more and more and more? When do you have enough?" Gates has come up with a reasonable answer to that question ("I have enough") - by refusing to accept it, you imply that you don't really understand the concept of "enough" yourself - that you think the only true motivator is greed for more and more - and that this question has been insincere all along.

There is a simple, reasonable explanation for Gates's behavior: he realized that money couldn't improve his life any more, and looked for something more worthwhile to work toward. Then there is a complicated, sinister explanation that attributes more deviousness and elaborate planning to him than I believe a person is practically capable of. I don't know why you'd prefer the latter unless you believe, in your heart of hearts, that altruism CAN'T be a true motivator. Then I'd say, Gates gets it, and you don't.

[Gerry]

Holden, I don't understand why you are so set on defending Gates. Is it because he is iconic of anyone who makes money in the market? I have many specific critiques of Gates and his choices that don't extend automatically to all entrepreneurs. There is not space here to get into the details, but Gates exploitation of his initial position and the power that flowed from can be criticized with some depth and validity. I'm not leveling a general criticism here, it is specific to Gates and his public actions (most of them taken in secret with no transparency).

[Holden]

I'm not set on anything, and I'm certainly not defending EVERYTHING about Gates.

A couple of the criticisms above are spot on. I will heartily endorse any accusation that he is a cowering wuss who fears transparency and has shown a determination to do things his way, rather than pulling in other brilliant minds that might shoot down his ideas. This is because his foundation is ridiculously opaque. For its size and significance, it should be making more noise and attracting more criticism.

But I do think it's ridiculous to question his motivations. He says that he never really thought about all the suffering in the world before, and as he did, and realized he had the power to do something about it, he wanted to fight it. That's totally plausible and even inspiring. For anyone who assumes that these can't possibly be his real motives, my only response is that you must not understand altruism, period.

[bUM fREE]

When anyone honestly yields, it is a remarkable thing, a gift, really, to those who witness/experience it.

If Mr. Gates honestly yields something, I expect it will be kind of creepy, maybe something like a seizure, given the degree to which he has developed his grasp.

He - will - be - out - of - control.

I suppose it could happen at church. Or in intimate relations with his wife. Or because of a serious illness, injury or assault - sometimes you only give up when God forcibly takes from you.

But, by and by, everyone must truly yield.

I don't know Gates. I've never thought of his as greedy for money. Seems likely the dollars are just a scoring mechanism for him. He is a quantitative dude, though, eh? Demonstrable results?

Demonstrate "yield" to me, Mr. Gates, numerically.

What does "it" yield? ↔ What do *you* yield... to?

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In deadly earnest, it's not the power of Gates that is so troublesome. It is the power of the entity that he and his historical peers have created, developed and defer to. This entity created to thrive and survive them, while all else prays - or decays - at its feet.

What is the "single best solution" to any problem?

Ask an evangelical.

Ask Mr. Gates.

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Single question:  Why should the legal definition of "Corporation" not be revised?

[Phil]

This thread for me is a blogging high point. Let's say, bUMfree that the legal definition of a corporation has been revised, say it becomes more like the b-corp that has stakeholders as well as stockholders and the stakeholders have power over the management. Who will enforce these rules and beat down the profit maximizers incorporated, say, off shore, under other rules? Is a B-corp or or sociallly responsible entity going to have to compete, as one option among others, against the profit maximizer in the market, as Microsoft does against Linux?

Holden, I don't think Gates is greedy per se, but clearly he has an enormous will to power that is expressed in both business and philanthropy. The views he expresses in that speech, the provenance of those views, is not original with him, it is pure noblesse oblige. I happen to find that kind of aristocratic sentiment congenial. Although I live in a Dumpster, we Fools prefer the Company of Kings.

[bUM fREE]

Yeah, enforcement would be a good place to start.

WASHINGTON - More than 60% of U.S. corporations didn’t pay any federal taxes for 1996 through 2000, years when the economy boomed and corporate profits soared, the investigative arm of Congress reported. [WSJ,2004]

If US loopholes were closed and tax laws enforced across the board, wouldn't nascent B-corps stand a better chance? And wouldn't the people benefit doubly?

[Gerry]

The unfairness of the current system is epidemic. I can write about what might be a fair system all I want, but it doesn't seem that we can have a reasonable public debate about it.

I'd target income tax for elimination, move the SS and Medicare taxes to a progressive system and get universal health care at the same time. Take the money system back from the banks and manage currencies prudently, and you might not even need a corporate income tax. A patchwork of transactional taxes and fees, and property taxes (reformulated as rents paid to the commons for the intensity of the use and include charges for extracted resources) could complete the system.

It isn't that hard to work out if you have a reasonable model or wealth generation, social and other costs. If you keep measuring the repair of windows broken by vandals as a GNP uptick, you are lost.

[Phil]

The profit maximizer and the steward. Two quite different roles, two quite different ways to raise children. The steward has honor. The profit maximizer believes that selfishness works for the good of all through the market. Then, as lord of the land, he gives back a little here and there. Thus, he is doubly lauded, as a captain of industry and as a generous man. Torvalds, of Linux fame, just went ahead and created a commons from the beginning, forgoing the profit and the philanthropy. He to me is a greater hero of giving than Gates.

[bUM fREE]

It isn't that hard to work out if you have a reasonable model or wealth generation, social and other costs.

Would Mr. Gates counter that this is a super complex system and any "simple"/"direct" approach to fixing it is naive, if not imperiling?

Would he dismiss or ignore systemic anomalies, those obvious even to the layman with an active memory and half a brain and heart?

Or would he applaud those who focus on unanswered questions and their vigorous public debate, marvel that these "amazing times" call equally to us all?

You probably didn't think I did, but I heard
You say that fair is just a four-letter word

?

[Phil]

bUMfRee, in philanthropy what connects a donation or investment to a desired result (in the thinking of the investor or grantmaker) is a "theory of social change," or a "logic model." Getting the logic model right, even by trial and error, getting a "map" of the issue area, and its ecology, is a critical piece. I suspect that Gates Foundation has a map of its issue areas, and will continue to refine its logic model, around, say, diseases in the third world. But that is far from here. Whether Gates will develop a map of social injustice, or economic apartheid, is another question. I hope he will. His father is lobbying for retention of the estate tax, to prevent an American plutocracy/oligarchy/artistocracy. The last gilded age went down in muck-raking, trust busting, and populist backlash. I wonder how this one will end?
Although Gates speech was not about that, the WSJ article was. How to protect the gains made at the top, against the gradual dawning awareness of the losers that they are being duped.

[O Lucky Man]

They say the undisputed leader of the free world is the first of his kind to hold an MBA. Think he traffics in logic models and maps?

Just wondering.

[Phil]

I didn't laud him as a philanthropist. But sure he does. We liberate Iraq from an evil dicator. Freedom spreads throughout the middle east. Simple.

[Stuart Johnson]

The lights dim on the luncheon plenary and a video fires up on ten enormous screens: it's a tribute to Mrs. Penelope Something-Or-Other.

When her husband was alive, he was able to put the small pinch on tens of thousands of workers who, in exchange for modest wages and 15 days of paid time off each year, dutifully produced big screen TVs in his factories. This wasn't slave labor, not technically, anyway.

Having accumulated more than he, his various wives and children could ever consume, and harboring certain popular notions about the concept of "immortality," he decided to establish the Something-Or-Other Foundation to provide skills training to the chronically under-employed.

On the video screens we see the grateful supplicants receiving, on their fevered brows, the cool hand of their benefactor.

When the lights come up, there isn't a dry eye in the house. Penelope walks to the podium and makes some self-effacing remarks. No wrinkle mars her brow; her voice has an eery calm. This is clearly the genius of philanthropy, that uniquely American institution that makes virtue of a pathetic inevitability.

[Phil]

Penelope's sister did better. She inherited twice as much money from her husband, who invented a quick chill beer can. Instead of messing with philanthropy she bred and raced horses. She now owns a vast ranch in OK. "Who," she asks, "Penelope or I, have done more for America and the American dream? I employ 300 Mexican grooms, stablehands, and farm workers. Better a hand up than a handout."

[Stuart Johnson]

Penelope's sister has a strong hand, but Penelope's company employs the workers trained by the nonprofits funded by her husband's foundation. Penelope installed no-flush toilets so she could run a margin on her third bottom line and receive a hefty tax credit from the state for going "green," under legislation introduced by her best friend's husband's golf partner. Being a conscientious woman, she permits her underpaid employees to leave work an hour early on Cesar Chavez Day.

[Phil]

Well, the market will sort these things out. We are not wise enough to second guess the hidden hand of providence.