Since 2007, Bill Gates has given away $28B, 48% of his net worth. Frugal Dad estimates that he’s saved almost 6 million lives. I haven’t double-checked his sources, but it’s a plausible estimate.
Back in the nineties, Bill Gates was experiencing far less favorable publicity – and legal persecution. The U.S. government sued Microsoft for antitrust violations. In 2000, Alex Tabarrok estimated that the antitrust case had cost Microsoft shareholders $140B. Yes, Microsoft ultimately reached a relatively favorable settlement. But Gates probably would have been billions richer if antitrust laws didn’t exist.
You might say, “Who cares? He can afford it.” But hold on. We’re talking about a great philanthropist. If Bill Gates were $5B richer, he almost certainly would have increased his charitable giving. A conservative assumption is that he would have stuck with his current ratio, giving away 48% of the extra $5B. It’s quite possible that he would have given away every dollar.
If Gates’ philanthropy is as efficacious as most people think, there’s a shocking implication: The antitrust case against Microsoft had a massive body count. Gates saves about one life for every $5000 he spends. If the case cost him $5B, and he would have given away 48%, antitrust killed 480,000 people. If the case cost him $5B, and he would have given away every penny, antitrust killed a million people. Imagine how many people would be dead today if the government managed to bring Microsoft to its knees, and Gates to bankrutpcy. It staggers the imagination.
You might object, “By the standard, Gates himself is killing millions by failing to give even more.” If you’re a consequentialist, that’s exactly correctly; we’re all murderers in the eyes of Jeremy Bentham and Peter Singer. But if we stick to the common sense distinction between “killing” and “letting die,” Gates is innocent, and the government remains guilty. Outsourced to philosopher Michael Huemer:
It is possible to harm someone not only by directly inflicting a harm, but also by actively preventing that person from taking actions to avert or remedy a harm. Suppose that, through no fault of mine, Marvin is in danger of starvation. He asks me for food. If I refuse to give him food, I thereby fail to confer a benefit on Marvin and, at the same time, allow Marvin to go hungry. If Marvin then starves to death, those who accept the doing/allowing distinction would say that I have not killed Marvin, but merely allowed him to die. And some believe that this is much less wrong than killing, possibly not even wrong at all. But now consider a different case. Suppose that Marvin, again in danger of starvation, plans to walk to the local market to buy some food. In the absence of any outside interference, this plan would succeed–the market is open, and there are people willing to trade food for something that Marvin has. Now suppose that, knowing all this, I actively and forcibly restrain Marvin from reaching the market. As a result, he starves to death. In this situation, I would surely be said to have killed Marvin, or at least done something morally comparable to killing him.
The same holds, of course, if someone robs a philanthropist who otherwise would have come to Marvin’s assistance.
READER COMMENTS
kevin
Jan 24 2012 at 11:52am
really? Starvin’ Marvin?
*slow clap*
asg
Jan 24 2012 at 11:53am
Doesn’t this estimate depend on how many lives were saved by the government’s use of the $5b in revenue? What if the government saves a life with every $4,000, compared to Bill’s $5,000?
Robert
Jan 24 2012 at 12:05pm
Bryan,
Thought provoking post, to say the least.
You’ve incisively demonstrated why government should enact even stricter copyright and intellectual property laws. When one considers the millions of people that government is allowing to die, nay, killing by not allowing rents to flow to other would-be billionaire philanthropists, the logic is impeccable. And of course these rents are entirely costless and don’t impact or reduce the standard of living or impede innovation for any other entity.
scott clark
Jan 24 2012 at 12:30pm
asg,
it’s worse than that. The gov’t didn’t get the money. It was lost in the form of wealth never created because Microsoft’s resources were instead spent in legal battles. Not only that, the gov’t was expending resources that could have been saving lifes in the form of lawyer time, legal filings, court hearings, etc. The resources that were spent went to lawyers and courts. The resources that we mourn are the ones that never got created.
Richard Allan
Jan 24 2012 at 1:04pm
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John
Jan 24 2012 at 1:18pm
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Komori
Jan 24 2012 at 1:26pm
Quite a case of “That Which Is Seen and That Which Is Unseen” going on here. You’re assuming that leaving Bill Gates unhindered in his trust-building efforts would have only positives. Unfortunately, if Bill Gates was allowed to have his way, the world would be a much poorer place today, in terms of technology never invented. Just think, we could all still be running Windows ME…
If you want a good idea of just what this could have cost society, check out Groklaw. They’ve got a good repository of case file information from the Microsoft anti-trust trial. I suspect you are not very familiar at all with their activities during this period.
I would also add that the punishment they actually received was extraordinarily light compared to the damages they had already caused. Certainly far too light to dissuade them from continuing to use much of the same tactics to this day. Although there is a positive there: they’re part of a shake-up that may well finally prove even to those who refuse to pay attention that the patent system in the US is irrecoverably broken.
Andy
Jan 24 2012 at 1:35pm
This also ignores ways in which anti-trust regulation might save lives in other ways.
1. Anti-trust can drive down the costs of life saving goods and services by breaking down monopoly of those goods and services.
2. Anti-trust can drive down the costs of other goods and services freeing up resources that could go toward charitable givings.
I don’t know what those numbers are, but it seems a bit unfair to say that anti-trust kills without some knowledge of what those numbers are.
Andy
Jan 24 2012 at 1:51pm
Follow-up:
Suppose anti-trust legislation saved Americans on average $500 a year for goods and services.
Based on estimates for how much Americans give to charitable organizations, how many Americans there are, and what the average household income is…we might say that Americans on average donate 2% of their household income.
(I know these are all highly debatable starting points…but they are close enough estimates to put some things in to perspective).
If we were to assume that Americans on average would donate 2% their income to charitable causes , then we’d get something like $3B to charity that anti-trust legislation is responsible for – half a billion more than your estimates for what was lost by depriving Gates of $5B.
Peter Twieg
Jan 24 2012 at 2:13pm
It seems like Bryan is making a weaker argument than he could/should be here by focusing on anti-trust – one could just as easily say that many, many things that cost Bill Gates income also cost people their lives. Why not just “taxation kills”, when it’s pretty certain that Bill Gates’ use of his marginal money is far more socially-beneficial than anything the government would do with it.
Finch
Jan 24 2012 at 2:44pm
> Suppose anti-trust legislation saved Americans on
> average $500 a year for goods and services.
That seems absurdly high. I would have thought it was negative when netted out. How much antitrust is opportunistic plaintiffs or administrations with axes to grind against bad campaign donors?
Ray Lehmann
Jan 24 2012 at 2:57pm
Bill Gates is a great philanthropist today, but he certainly was not one in 1998-2000. And it is assuming quite a bit that he would have become the philanthropist he now is in the counterfactual world where his public image was not first tarnished as a monopolist.
Pavel
Jan 24 2012 at 4:15pm
If I remember correctly, a part of the settlement was that he would step down from running Microsoft. It’s plausible that if he hadn’t stepped down he would’ve spent less effort on good deeds and would’ve been less efficient. Also, you are forgettng dimishing returns(10th billion saves fewer lives than first billion)
andy
Jan 24 2012 at 4:24pm
It’s absurd that this anti-trust case caused anything else than huge losses for microsoft and some profits for a lot of lawyers. No, that argument doesn’t hold.
What might hold is that antitrust laws in general are a benefit, though occasionally (like in Gates…IBM…looking forward to google…) it is a loss. Considering that antitrust laws ultimately boils down to ‘we don’t like what you are doing, and your are big and rich to boot’, it would be a miracle, if they were a net benefit for the economy.
Silas Barta
Jan 24 2012 at 4:49pm
Sorry, I can’t buy this line of argumentation. What Bill Gates does with his fortune is decisionally independent of how he earned it. If he had donated his fortune strictly to evil causes (“Arm the Homeless”), would that somehow be an argument *for* strong anti-trust laws? Then neither should his wise charity be an argument against it.
Doug
Jan 24 2012 at 5:30pm
How exactly did Microsoft antitrust improve consumers? The end result of the anti-trust case was:
“On November 2, 2001, the DOJ reached an agreement with Microsoft to settle the case. The proposed settlement required Microsoft to share its application programming interfaces with third-party companies and appoint a panel of three people who will have full access to Microsoft’s systems, records, and source code for five years in order to ensure compliance.”
http://en.wikipedia.org/wiki/Microsoft_anti-trust_case#Settlement
The opening of Microsoft’s API made exactly zero difference in terms of reducing its competitive position. The area that the anti-trust actually affected, desktop computers, Microsoft retains 95% global market share. Moreover the product was actually made inferior by the anti-trust action.
For example Microsoft was going to include anti-virus/adware software automatically in all copies of Windows. But it shelved that project because of the “bundling” accusation. Windows users suffered for more than a decade and still do with either A) computers slowed down by malware or B) crappy overpriced Norton anti-virus software.
Meanwhile the areas the anti-trust legislation had no affect on, phones, tablets and servers Microsoft has been crushed on in that past decade. Moreover Internet Explorer has now fallen below 50% market share, but not for a single reason having to do with the anti-trust settlement. Rather its dominance was lost many years after the anti-trust settlement because of strong competition from Firefox and Chrome (ironically made by a company that now is a potential anti-trust target).
Pandaemoni
Jan 24 2012 at 6:42pm
@ scott clark
Although the money mostly went to pay legal costs, obviously those dollars were not set on fire, they went to lawyers, court systems (which means the government, which used the funds to help run the courts and pay its employees) and to various other service providers. They in turn used it for something. We can assume, perhaps, that Gates would have put the money to better use.
Otherwise various other commenters made the point I was thinking when I read the post: that it can be read to assume that curbing monopoly practices yields zero benefits to society as a whole.
I’m inclined to think the government’s efforts were a waste of time and money, and thus that Caplan’s post is right, but I couldn’t assert definitively whether the antitrust suit had a net negative impact or not, even assuming it cost 500,000 lives in the way Caplan suggests.
I also would be skeptical of the government’s refusing to take legal action against a company because its founders may [i]in the future[/i] become philanthropists. I would hope that the Justice Department thinks about both the benefits and costs of such actions, but I think they can be forgiven for overlooking the possibility that Bill Gates might some day become such a philanthropist, and factoring that into the cost-benefit analysis.
Daublin
Jan 24 2012 at 7:13pm
Several commenters are implicitly assuming that the anti-trust action was legitimate and effective. That is, if Microsoft had been left unchecked, it would have engaged in anti-competitive activity that would have harmed the overall market and ultimately the public good.
History has not been kind to this interpretation. Despite the outcome of the case, the vast majority of Windows PCs continue to run the Microsoft web browser. Additionally, almost every other consumer device does the same thing Microsoft was fined for doing. Android, iOS, and Nintendo devices all offer a single web browser without any way for users to switch to a different one.
In short, the case didn’t change anything, and every other company is doing the same thing Microsoft did. The case was nothing more than shameless gouging of an unpopular company.
Brandon Berg
Jan 24 2012 at 9:29pm
I’ve been making this point for some time now with respect to taxation. Many of the wealthiest Americans have pledged to give away much or most of their fortunes to charity upon their deaths, or even during their lives. It really is outrageous that government is taking away money that would be going to save the lives of poor third-worlders and instead using it to fund middle-class entitlements. It’s mass murder, pure and simple.
There’s really only so much money that one person can spend. Once a person acquires a certain amount of wealth, his marginal propensity to consume approaches zero, and at the margin any extra money he makes will almost certainly be invested and/or donated to charity. Both of these have huge positive externalities, and it’s just plain bad policy to tax money that would be used for these purposes.
sk
Jan 25 2012 at 1:52am
Daublin, you can easily switch the browser on android. Can’t speak for ios but I’m guessing its the same. You just download a replacement browser. I personally don’t understand why a company can’t have control over what it has on its products. What’s wrong with Microsoft having ie as the default browser? Or android or Nintendo on their own products. Its one thing if they block certain softwares but I can’t see anything wrong with them promoting their own versions. I mean if Mozillas of the world have what it takes why not create an os from scratch and spend money and market it?
sk
Jan 25 2012 at 1:57am
Oops, sorry daublin, I think I agree with your point.
Victoria Rivero
Jan 25 2012 at 5:33am
I think you could also kill imposing your monopoly. Microsoft forced people to use Windows and pay for it. I use Linux, that is free,
Mordatar
Jan 25 2012 at 7:39am
What Komori said. Great comment.
I would only add that you can only call an act immoral if the bad consequences of your act are predictable. If I give you poison thinking – reasonably – that it is medicine, I didn’t murder you.
No one could have known for sure that Bill Gates would actually give that much away (many rich people don’t, like Steve Jobs), but mostly no one could have imagined that he would actually be effective through charity.
I find it funny that people who defend charity because government is wasteful cannot see how incredibly wsteful the absolute majority of charity is (Bill Gates being the greatest exception).
Yancey Ward
Jan 25 2012 at 11:29am
Kept some lawyers alive.
infopractical
Jan 25 2012 at 1:03pm
I enjoy this kind of analysis as a thought experiment. We make this kind of analysis with full understanding that it’s not perfect and never will be, but it makes an important point about expanding our cost benefit analysis that few people consider (though people trained to think like an economist often do).
Personally, I’ve never been certain of the legality/ethics/effects behind Microsoft’s business practices, so it’s hard to know what to weigh against the lives he might have saved. I suspect that most people who are certain of the effects are fooling themselves, so the final numbers seem quite obscured from view.
Squarely Rooted
Jan 25 2012 at 1:51pm
Bryan,
This is equally fascinating and foolish. Fascinating in a prima facie way; foolish in that it fails to ask the always-key question – compared to what? Compared to a world without antitrust laws? Compared to a law with laxer enforcement? Compared to a world where Bill Clinton issued a pardon/amnesty to Microsoft? If the enforcement of antitrust laws against Microsoft resulted in a $140B loss in stock value, wouldn’t you say that’s the market pricing in the existing law? If those laws were repealed then maybe Gates would have been wealthier and donated even-vaster sums to life-saving philanthropy but would that outweigh the other, likely pernicious consequences of permitting monopoly firms? I doubt it.
Kevin Hill
Jan 25 2012 at 1:54pm
I believe you forgot to read the phrase: “…knowing all this…” in Michael Huemer’s words.
There is undeniably a tangental connection, but morality is tied to perceptable connections. If you could have proposed a coherent argument using only facts available at the time of the anti-trust suit you’d have a better point.
Gepap
Jan 25 2012 at 2:45pm
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foghornleghorn
Jan 25 2012 at 4:07pm
But if we stick to the common sense distinction between “killing” and “letting die,” Gates is innocent, and the government remains guilty.
Bruce
Jan 25 2012 at 8:04pm
How often do people who are subject to anti-trust laws end up as philanthropists comparable to Bill Gates?
Ben W
Jan 26 2012 at 12:13am
If Bill Gates didn’t have such a terrible reputation for being a monopolist and a bully in the late 90’s he may never have become a great philanthropist at all. Perhaps it was the government’s case that caused him to donate all of that money to charity.
The logic of this post is horrendous.
Seth Roberts
Jan 26 2012 at 8:58am
I agree with the commenters who link Gates’s current (good) behavior with his past (bad) public image.
According to your link, most of Gates’s philanthropy revolves around disease prevention, such as vaccines. Consider polio. Before 1910, polio was not important. After 1910, polio cases in America and elsewhere became more and more common until summer came to be called “polio season”. When the polio vaccine was introduced, polio cases went way down. Fine. A great invention. But a larger question remained: why did polio become so much more common? The polio vaccine suppressed thinking about that because polio stopped being a big problem.
In other words, the Gates Foundation is in the business of taking solutions developed in rich countries (which, like vaccination, are easy to publicize) and applying them to poor countries. This isn’t bad, exactly, but it suppresses the ability of poor countries to develop their own solutions (which is hard to publicize). What is being maximized, it appears, is the short-term improvement of Bill Gates’s reputation rather than the long-term health of the poor countries.
Mark
Jan 26 2012 at 9:04am
The same logic applies to capital gains taxes, yes? I think I see a new Republican debate talking point!
whowhawhen
Jan 26 2012 at 11:34am
It’s funny that almost every comment on this post tries to make some concrete argument as to why this post is correct/ incorrect. It’s a thought experiment. This is no “concrete”. Everyone take a deep breath and go on about your day.
Matt
Jan 26 2012 at 3:19pm
It seems that even Bill Gates wants to kill people….
http://www.bbc.co.uk/news/world-us-canada-16714480
Joe Eagar
Jan 26 2012 at 3:31pm
Why yes, Mr. Caplan! We must all tolerate monopolies and price-fixing cartels, all so those cartels can use the rents they extort from us for a higher good!
This is nothing more than standard arguments for absolutism.
Troy Camplin
Jan 27 2012 at 11:38am
Don’t forget all the businesses that were destroyed in the wake of the tech bubble bursting when it did precisely because of the anti-trust suit. Microsoft could not have had a better plan to destroy most of its competition. It may in fact be as strong and wealthy as it is because of the anti-trust suit killing off all their potential competition.
Of course, Microsoft was never a monopoly. Natural monopolies don’t exist. Only government-created ones exist. (Regulations are a good way to do this.)
mjay
Feb 9 2012 at 2:40am
The real conclusion is that out politicians and parasitic legal system kill people.
Comments are closed.