Do Something for Other People by Getting Very, Very Rich

Smith letter to the editor in The Wall Street Journal

Robert Barro's commentary on Bill Gates illustrates again why the late economist Joseph Schumpeter was so gloomy in his assessment of the question: Would capitalism survive? ("¹," editorial page, June 19). Not likely, he argued, because intellectuals would (out of envy) delegitimize entrepreneurial wealth creation, while the entrepreneurs would not be allowed to realize their actions are virtuous in themselves. Thus, the confused language of, "Now that I'm rich, I must give back something to society." That there are few activities as valuable as wealth- and knowledge-creation in a world where poverty and ignorance are still far too dominant seems to pass by Bill Gates and his peers.

Traditional philanthropy is collective, tribal, even. The donor feels noble; paternalism reigns; poverty is perpetuated. Extending the institutons of economic liberty—even to the limited degree that this has occurred in China and India—has done more good than would have been achieved had Mr.Gates liquidated Microsoft and shipped all that money to Africa.

The tragedy of Gates-style philanthropy is less that it will do little good but, rather, that he has abandoned the entrepreneurial skills used so creatively in his truly significant wealth-creation work at Microsoft. Had he employed similar skills in dealing with the problems of Africa, he would not—as Mr. Barro notes he is largely doing—simply replicate the tried and failed policies of traditional paternalistic aid. Rather, he would be examining the barriers—political, cultural, tribal—that block entrepreneurial activity throughout Africa and explore ways to remove them. Could we, for instance, out-compete the oligarchs and tyrants by creating prizes that would bypass the bureaucracy and achieve success in health- and wealth-creation, in reducing corruption?