Thursday, January 24, 2008

Capitalism and the Poor

According to an article in todays Wall Street Journal, Bill Gates will be delivering a major speech, calling for kinder capitalism. What form that kinder capitalism would take is not entirely clear.

Gates "was emphatic that he's not calling for fundamental change in how capitalism works. " Instead, he would prod businesses to "take their innovative thinkers and think about the most needy." Adam Smith's ideas expressed in "The Wealth of Nations" shouldn't change "one iota."

Yet Gates also thinks that "governments should set policies and disburse funds to create financial incentives to improve the lives of the poor." This policy suggestion would seem to contradict the support for Adam Smith's free markets.

Gates goes on to note that Adam Smith argues in "The theory of Moral Sentiments" that "humans gain pleasure from taking an interest in the fortunes of others."

I hope Bill Gates derives much pleasure from taking an interest in the worlds poor. I also hope he does not lose sight of the fact that capitalism and freedom has done far more to help the poor than government incentives ever will.

Free people from oppressive governments and wealth will follow.

29 comments:

Anonymous said...

I guess it is time for all good conservative righties to call Bill Gates a Commie Pinko Leftist.

What an irony, that one of the richest people in the world, when speaking honestly about capitalism in the world, essentially says the same things as those branded as socialist-leftist.

Thanks for being honest, Bill.

Denis Navratil said...

Anon, thanks for addressing the subject at hand. I have no intention of dismissing Bill Gates' ideas via the ad hominem attack.

However, this does not mean we can't have a substantive discussion about the best means to deliver help to the world's poor.

The evidence suggests to me that capitalism is the best means to help the poor. The poor in India and China are far better off than in previous decades because their governments began to permit more private enterprise. Billions of people's lives are being improved by capitalism.

But capitalism by itself has its limitations. There just might not be much money in trying to serve the poorest of the poor. Of course in many cases we can't know that for sure, as oppressive governments don't allow capitalism to take place.

Regarding your second paragraph, I think it is a stretch to suggest that Gates message is the same as the "socialist-leftist," although a portion of it arguably is.

colt said...

Sorry maybe Bill should talk about his wealth gained because of his mother working at IBM and the anti-trust issues at Microsoft.

-----------------------------------
If I may, sir..
There was a show on the Discovery a few weeks ago, in this show a group of small businessmen and investment Banks (think IMF) visited a small town in I think Ghana. After going around the town the IMF thought about meetings, lunches and long term planing. The small busnessmen inported a few welders and other tools to help.
When the small busnessmen when back a fewc weeks later the sshops they had bought the tools for had hired more works and everyne was doing much better.
The IMF group had yet to meet.
Small busness works.

Nemo said...

Gates said, "governments should set policies and disburse funds to create financial incentives to improve the lives of the poor." That statement is pretty ambiguous. Is he saying that tax rates should be lowered along with wasteful government regulations to create a more prosperous population or that money should be taken from the workers and given to the slothful? The former has a track record of success, the later a record of failure. Capitalism is capitalism. Any modification, either “kinder”, “meaner”, “greener”, or “redder”, that attempts to bend the market to it’s liking will be, in economic terms, necessarily inefficient.

Anonymous said...

How will you deal with this commentary by Gates? Jeffrey Sachs, vonderkinde of the post-Soviet economic reorganization, has said this same thing for decades, and the right has never dealt with this issue.

Like Brookes said, I am sure the right will be 'contrarian', and reject Gates as a 'leftist- do gooder - sympathiser'.

Anonymous said...

Anon, thanks for addressing the subject at hand.
--------------------------------
I ALWAYS address the issue at hand - just not in the 'way' that you want me to - I address the underlying belief structures that 'blind;;;;' people to the truth of the factual world.

The ideological/pre-cgnitive framework that underpins answers here have NO WAY to address Gates's observations regarding capitalism...and have not for decade upon decade - seeminly trapped in some 'Soviet - United States/good v. evil' mind construct.

Anonymous said...

...like th0ose in AA, the brliever in the sanctity of capitalism has to admit that they have an addiction and fixation on the system of capitalism - and they capitalism ideologues have not reached that level of self-help yet...

Nemo said...

Anon, you argue as if there is some debate on socialism verses capitalism with respect to efficiency. There isn’t. It would be easier for you to contend that 2 is less than 1. More believable too.

Denis Navratil said...

anon, you regularly rail against capitalism, yet I have not seen a single post by you, in your own words, articulating a reasonable criticism coupled with an alternative suggestion. Why not give it a try?

Anonymous said...
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Anonymous said...

Blogger Nemo said...
Anon, you argue as if there is some debate on socialism verses capitalism with respect to efficiency. There isn’t. It would be easier for you to contend that 2 is less than 1. More believable too.
1:21 PM
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Of course the proponents of unbridled capitalism ignore all the FACTS that they never account for:

1.) Externalization of costs, such as pollutions, use of the vast majority of resources for the few, just to name 2...

2.) The huge discrepancy of wealth distribution - where all the wealth gains of the 1990's-current were accrued to the top quintile of the population. There are US Govnt stats to show this.

3.) The wealth gap being created globally between rich and poor nations and peoples.

4.) The fact that the CONSUMER economy of the United States would need 6 planet earths to support consumer economic on a global scale.

etc..............

Anonymous said...
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Anonymous said...
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Denis Navratil said...

Use your own words anon. No quotes, no links. let's hear your alternatives to capitalism.

Anonymous said...

Blogger Denis Navratil said...

Use your own words anon. No quotes, no links. let's hear your alternatives to capitalism.

7:03 PM
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Denis,
The people I linked to actually worked in the Nixon, and during Reagan administrations...they have made this issue the center of their lives for decades, and are trained economists.

Why would I speak on the subject when THEY are the experts?

Alernatives? Is the only choicr capitalism and state regulated economics?

George Wiegel quoted Pope John Paul II as saying he believed in a mixed economic model.

Anonymous said...

BTW, capitalism is what it is, in it's various forms, depending on how the government makes rules. The Scandinavian capitalism model, the German capitalism model, and the US capitalism model, for instance, are all different forms of capitalism.

What you seem to want is laisse faire economic models, where the government rules and regulations which govern capitalistic behavior, are all made BY and FOR the ownership groups, wherein 75% of all stocks and bonds are owned by 10% of the population(IRS figures show this).

Is THAT how you want it to stay?

eric said...

A couple thoughts/questions:

1. Was the Gates piece a tease for something he's supposed to elaborate in the future? If so, then we're only engaged in speculation about what he will say.

2. Did Gates differentiate between the poor in developed states and the poor in failed states? A significant number of the world's poor live in failed states where there is either no government or inadequate government to meet the fundamental needs of their people.

Anonymous said...

Bill Gates lawyer/father is very active in United States issues of social fairness. Why should his son be any different? Perhaps it took Jr. a little longer to understand the issue, and perhaps he does not see the issue clearly, but at least he has the guts to address it.

It does not take a rocket scientist to see the failings and ethical issues in capitalism - unless one prefers to be blind toward them.

If that is the case, be prepared for a revolution in the future, as injustice cries to heaven for justice!

Denis Navratil said...

anon 4:20 and 4:26, if I understand you correctly, you would prefer a hybrid economy, mixing capitalism with socialism, which is what we have now. So I suspect that you want a bit more of the socialism and a bit less of the capitalism. If I am correct in assessing your preferences, it would then be neccessary to remove some of the power, money and decision making from the capitalist. If so, whom would you empower and entrust to make the right decisions, and why?

Pariah Jeep said...

Yes, let me have access to $35 billion in personal wealth then tell people making more than six orders of magnitude less per year how they should behave. I have mine now I'm going to tell you how to be moral with yours. Maybe I'll even throw several $ billion around and look generous - it's tough to live on a few less $ billion these days.

Anonymous said...

I would start with these facts presented here, and go from there...

http://www.askquestions.org/articles/taxes/

Who Really Pays Taxes in America?

In the year 2000, at the height of the last economic boom and before the most recent round of tax cuts were enacted, IRS data shows that the richest 400 taxpayers paid 27% of their income in federal, state, and local taxes. On average, these 400 taxpayers each had taxable income of $151 million. All other taxpayers had average taxable income of only $34,600, and yet their tax burden was 40%.

Fifteen years ago, socialite Leona Helmsley bragged, “only the little people pay taxes,” but then she went to jail for tax fraud. Unfortunately, Helmsley's statement is even more accurate today than it was at the time.

Tax fraud is estimated at $311 billion this year, more than the entire budget for Medicare, and more than last year's revenues at Walmart or General Electric. Most cheaters go unpunished. What’s worse, the legal tax system is rigged to favor rich people and large corporations ...

Middle class spending is the growth engine in a free market economy, and when taxes rob the middle class in favor of the rich, the economy shuts down. Huge fortunes also produce political power...

Nemo said...

Anon said

"In the year 2000, at the height of the last economic boom..."

Height of the economic boom? As I recall it, the markets were crashing due to the dot-com bubble popping in April 2000 and we were in recession by November 2000.

Nemo said...

Anon, considering your entire post (1:55 PM) it’s an amazing collection of meaningless statistics, twisted truth, and lies. The facts are these: The rich are over taxed. The poor are under taxed. Depending on how you define it, the middle class are either over or under taxed. As for tax cheating, I thought that the progressive party was all for it. It was President Clinton that pardoned the biggest tax fraud in US history, Mark Rich (charged with 51 counts of tax fraud and with running illegal oil deals).

Anonymous said...

Nemo,
I guess you know more than myriads of economists and tax experts.

Nemo said...

No, I am just more honest than the myriads of government economists and leftist tax experts (and you.) The numbers don't lie. The economy was starting to contract in the late fall of 2000.

Pariah Jeep said...

Hey Nemo - remember that Flintstones episode when Fred had to stand in for some bigwig. He had three lines that he was supposed to repeat to everyone - "what's your baby", "what's your angle" and "I'll buy that". Everyone danced for him and no one supsected that he was just a shmuck.

Bob Smith said...

So capitalism is good for the poor because when the feds cuts intrest rates to support the stock market, the prices of the things that the poor need to survive go up? Is that good? No!

What is capitalism? Is it the power of the market and the companies in it who exploit their employees? Is it the top 20% of America owning 70% of the wealth? Is it the increasing gap between the rich and the poor? Is it that the minimum wage is not enough for a family to support themselves on? No!

Capitalism should help the poor. We are going into another Gilded Age. Stop the increase of power that the market has, if you do not, you will choose to have another Gilded Age with robber barrons, corruption, and the biggest gap between the rich and the poor America has ever seen!

Nemo said...

Bob, you ask, “What is Capitalism?” and then go on to attribute some of the more ugly aspects of the human condition to it. Exploitation of workers, the gap between rich and poor, and under-employment are not caused by a system but rather by people. You have those same problems under other economic models also, but multiplied by the systemic inefficiencies that those other practices have with respect to capitalism. Capitalism, when combined with freedom, leads to the most optimum economic model derived to date that allows men to achieve their maximum potential. All arguments against Capitalism contain the seeds of mediocrity.

Nemo said...

PJ, I do remember that one! Thanks for the smile!