Bill Gates is good at making money and supporting charitable work, but weak on his understanding of how capitalism works. He called at Davos for a kinder, gentler, “creative” capitalism. As our own Tim Worstall points out on the Globalisation Institute site, that’s what capitalism already is. It harnesses desire for self improvement into social good. All right then, how much good does capitalism’s creative side do socially? Tim quotes William Nordhaus calculating how much of the benefit of technological change between 1948 and 2001 went to its producers.
The actual number he came to is that only 2.2 percent of the total value created by innovation remained with those who did the innovating. The other 97.8 percent went to the society at large: they got new, or cheaper, or more, gew gaws like edible food, clean water or even mobile phones as a result of the entrepreneurs’ attempts to enrich themselves.
That’s the point. It already benefits others. Bill Gates seems to have taken on board some comic book BBC view of a greedy, reckless capitalism which tramples the poor. Phooey. It’s the best thing in history that has ever happened to the poor.