Memo To: Website browsers, fans and clients
From: Jude Wanniski
Re: Repeat on Bill Gates' billions
[On October 17, 1996, the following appeared here as an open memo to Michael Lewis of The New York Times Sunday Magazine, in response to a column written by him earlier in October 1996. — JW]
Your “Capitalist” column in the NYTimes Sunday Magazine takes an interesting tack in pondering the accumulation of wealth by an individual. I was happy to see you question the practice of a sloppy philanthropy. Is Ted Turner a better man for giving away $200 million to a private charity than Bill Gates, who allows his wealth to accumulate and compound into the billions? For Turner to give away $200 million, he has to liquidate $200 million of his wealth, which means a collection of people who would otherwise invest their $200 million in other enterprises would instead acquire Ted’s paper assets. Those individuals who would have tried to create new wealth with that $200 million now tied up in Turner’s assets instead would be turned away at the bank or credit union. That wealth will not be created. Still, if the $200 million Turner gives away is given wisely, it can produce a return of higher value than if it had found its way into the hands of would-be entrepreneurs attempting to build better mousetraps. Money that goes to feed and house the poor through churches and Salvation Army missions is clearly well invested. Philanthropy used to found museums and libraries and parks, and other deeds that provide public goods will often provide a greater community return than if devoted to better mousetraps at least in good times, at least in good times. On the other hand, if Bill Gates is as consumed as he seems to be in creating global wealth through his genius, with a tiny portion of that accumulated as his billions, I would not encourage him to take the time to figure out where his wealth might better be invested. There is plenty of time left of his life for him to sort through the philanthropies that will offer a positive return to the American people, with satisfaction to him for having chosen wisely. His announcement the other day that he will make sure every school in the country is hooked into the Internet by the year 2000 is a marvelous and, to him, obvious use of philanthropy -- an exact equivalent to Andrew Carnegie endowing public libraries a century ago out of his great wealth.
The greatest misuse of accumulated wealth by men of means has always been the buying of political power to rapidly multiply the funds invested. Those who make such investments generally tend not to be the citizens of entrepreneurial genius who accumulate wealth as do Bill Gates or Ted Turner, but their silver-spoon progeny who seek to defend and expand their inheritance the easy way -- buying politicians to either prevent ordinary people from becoming new entrepreneurs, to challenge their share of market, or by voting public funds from the public treasury to subsidize their obsolete mousetraps. Karl Marx believed capitalism was probably doomed because of this dark practice -- saying the only thing that could prevent it would be active, universal suffrage. In this election season, we have to keep a sharp eye peeled for which of the political candidates for President seems most likely to fit into this category of corporate scoundrel.
Your suggestion that Gates finance a way to understand how we can make the poor rich is the most notable of the ideas you presented. Alas, Gates has hired as his Slate team the likes of Michael Kinsley, Herbert Stein, and Jodie Allen, a washed-up crew of obsolete Keynesians who have spent their adult lives making the poor poorer by advocating tax increases, currency devaluations, and balanced budgets. In that sense, Gates is already showing a tendency to misuse his surplus wealth for ultimately evil purposes. Maybe we should have a wealth tax to limit all citizens at an even billion.