John Stossel had a response to Gates's speech here: http://www.realclearpolitics.com/articles/2007/06/bill_gates_needs_an_econ_cours.html
Also, on foreign aid, here's William Easterly: http://www.latimes.com/news/opinion/la-oe-easterly6jul06,0,6188154.story?coll=la-opinion-rightrail Text below, of both pieces: Bill Gates Needs an Econ Course *By* *John Stossel*<http://www.realclearpolitics.com/articles/author/john_stossel/> Dropping out of college didn't stop Bill Gates from making tons of money, but it kept him from classes where he might have learned about the beauty of spontaneous market processes. Never mind. I forgot that he attended Harvard. He might not have learned about markets after all. Gates spoke<http://www.gatesfoundation.org/MediaCenter/Speeches/Co-ChairSpeeches/BillgSpeeches/BGSpeechHarvard-070607.htm>at Harvard recently, urging graduating students to take on the "world's deepest inequities [including] world hunger ... the scarcity of clean water ... children who die from diseases we can cure". All of us want those problems solved, and through their charitable foundation<http://www.gatesfoundation.org/default.htm>, Gates and his wife, Melinda, have certainly put their money where their mouths are. But Gates seems unaware that these problems can't be eliminated in the simplistic way he advocates. He told the grads, "The market did not reward saving the lives of these children [in poor countries], and governments did not subsidize it. So the children died because their mothers and their fathers had no power in the market and no voice in the system." What is Gates talking about? Can he name one poor country that permits the free market to operate? The problem is not that the market doesn't make it profitable to save lives -- it most certainly does. The problem is that Third World countries have overbearing, corrupt governments that are obstacles to private property and freedom. That's why the children's parents have no voice or power. Poor people in the West and in East Asia lifted themselves out of poverty by relying largely on the *unplanned* market process. That process -- countless individuals pursuing their own interests by trading with one another -- is, as Nobel Prize-winning economist F.A. Hayek put it, a "discovery procedure." Through the price system and free competition, it clarifies tradeoffs of scarce resources, generates the lowest-cost solutions, and provides feedback about success and failure through profit and loss. This spontaneous order is far better at "saving the lives of these children." Maybe the Gates Foundation's private charity will work wonders, but more government-to-government subsidies won't do the trick. The trillions spent in foreign aid have little to show for it. As William Easterly<http://tinyurl.com/2jgo9c>writes in "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good," "Economic development happens, not through aid, but through the homegrown efforts of entrepreneurs and social and political reformers. While the West was agonizing over a few tens of billion dollars in aid, the citizens of India and China raised their own incomes by $715 billion by their own efforts in free markets". At Harvard, Gates said, "We can make market forces work better for the poor if we can develop a more creative capitalism -- if we can stretch the reach of market forces so that more people can make a profit, or at least make a living, serving people who are suffering from the worst inequities." He misses the point. Gates faults the free market for problems caused by governments. What constricts the reach of the free market is the state. Gates seems oblivious to all the ways that governments here and abroad cripple enterprise. In poor countries, corrupt bureaucracies smother entrepreneurship while enriching cronies. The lack of formal property rights and stable law keeps average people from accumulating capital. So the poor stay poor. That's what causes "scarcity of clean water" and kills "children who die from diseases we can cure." Gates said, "We also can press governments around the world to spend taxpayer money in ways that better reflect the values of the people who pay the taxes." He should know that for spending to better reflect people's values, governments must butt out. Politicians are notoriously bad at improving the lot of their populations. What they are good at is confiscating money and spending it the way they want it spent. It's only when governments do * less *, and tax people less, that people are free to earn and keep their own money. Only then does their money really "reflect their values." You want poor countries to get rich, Bill Gates? Work for free-market reform. Copyright 2007 Creators Syndicate Inc. What Bono doesn't say about Africa Celebrities like to portray it as a basket case, but they ignore very real progress. By William Easterly, WILLIAM EASTERLY is a professor of economics at New York University, Visiting Fellow at the Brookings Institution and the author of "The White Man's Burden: How the West's Efforts to Aid the Rest Have July 6, 2007 JUST WHEN IT SEEMED that Western images of Africa could not get any weirder, the July 2007 special Africa issue of Vanity Fair was published, complete with a feature article on "Madonna's Malawi." At the same time, the memoirs of an African child soldier are on sale at your local Starbucks, and celebrity activist Bob Geldof is touring Africa yet again, followed by TV cameras, to document that "War, Famine, Plague & Death are the Four Horsemen of the Apocalypse and these days they're riding hard through the back roads of Africa." It's a dark and scary picture of a helpless, backward continent that's being offered up to TV watchers and coffee drinkers. But in fact, the real Africa is quite a bit different. And the problem with all this Western stereotyping is that it manages to snatch defeat from the jaws of some current victories, fueling support for patronizing Western policies designed to rescue the allegedly helpless African people while often discouraging those policies that might actually help. Let's begin with those rampaging Four Horsemen. Do they really explain Africa today? What percentage of the African population would you say dies in war every year? What share of male children, age 10 to 17, are child soldiers? How many Africans are afflicted by famine or died of AIDS last year or are living as refugees? In each case, the answer is one-half of 1% of the population or less. In some cases it's much less; for example, annual war deaths have averaged 1 out of every 10,800 Africans for the last four decades. That doesn't lessen the tragedy, of course, of those who are such victims, and maybe there are things the West can do to help them. But the typical African is a long way from being a starving, AIDS-stricken refugee at the mercy of child soldiers. The reality is that many more Africans need latrines than need Western peacekeepers — but that doesn't play so well on TV. Further distortions of Africa emanate from former British Prime Minister Tony Blair's star-studded Africa Progress Panel (which includes the ubiquitous Geldof). The panel laments in its 2007 news release that Africa remains "far short" of its goal of making "substantial inroads into poverty reduction." But this doesn't quite square with the sub-Saharan Africa that in 2006 registered its third straight year of good GDP growth — about 6%, well above historic averages for either today's rich countries or all developing countries. Growth of living standards in the last five years is the highest in Africa's history. The real Africa also has seen cellphone and Internet use double every year for the last seven years. Foreign private capital inflows into Africa hit $38 billion in 2006 — more than foreign aid. Africans are saving a higher percentage of their incomes than Americans are (so much for the "poverty trap" of being "too poor to save" endlessly repeated in aid reports). I agree that it's too soon to conclude that Africa is on a stable growth track, but why not celebrate what Africans have already achieved? Instead, the international development establishment is rigging the game to make Africa — which is, of course, still very poor — look even worse than it really is. It announces, for instance, that Africa is the only region that is failing to meet the Millennium Development Goals (MDGs in aid-speak) set out by the United Nations. Well, it takes extraordinary growth to cut extreme poverty rates in half by 2015 (the first goal) when a near-majority of the population is poor, as is the case in Africa. (Latin America, by contrast, requires only modest growth to halve its extreme poverty rate from 10% to 5%.) This is how Blair's panel managed to call Africa's recent growth successes a failure. But the reality is that virtually all other countries that have escaped extreme poverty did so through the kind of respectable growth that Africa is enjoying — not the kind of extraordinary growth that would have been required to meet the arbitrary Millennium Development Goals. Africa will also fail to meet the second goal of universal primary education by 2015. But this goal is also rigged against Africa, because Africa started with an unusually low percentage of children enrolled in elementary school. As economist Michael Clemens points out, most African countries have actually expanded enrollments far more rapidly over the last five decades than Western countries did during their development, but Africans still won't reach the arbitrary aid target of universal enrollment by 2015. For example, the World Bank condemned Burkina Faso in 2003 as "seriously off track" to meet the second MDG, yet the country has expanded elementary education at more than twice the rate of Western historical experience, and it is even far above the faster educational expansions of all other developing countries in recent decades. Why do aid organizations and their celebrity backers want to make African successes look like failures? One can only speculate, but it certainly helps aid agencies get more publicity and more money if problems seem greater than they are. As for the stars — well, could Africa be saving celebrity careers more than celebrities are saving Africa? In truth, Africans are and will be escaping poverty the same way everybody else did: through the efforts of resourceful entrepreneurs, democratic reformers and ordinary citizens at home, not through PR extravaganzas of ill-informed outsiders. The real Africa needs increased trade from the West more than it needs more aid handouts. A respected Ugandan journalist, Andrew Mwenda, made this point at a recent African conference despite the fact that the world's most famous celebrity activist — Bono — was attempting to shout him down. Mwenda was suffering from too much reality for Bono's taste: "What man or nation has ever become rich by holding out a begging bowl?" asked Mwenda. Perhaps Bono was grouchy because his celebrity-laden "Red" campaign to promote Western brands to finance begging bowls for Africa has spent $100 million on marketing and generated sales of only $18 million, according to a recent report. But the fact remains that the West shows a lot more interest in begging bowls than in, say, letting African cotton growers compete fairly in Western markets (see the recent collapse of world trade talks). Today, as I sip my Rwandan gourmet coffee and wear my Nigerian shirt here in New York, and as European men eat fresh Ghanaian pineapple for breakfast and bring Kenyan flowers home to their wives, I wonder what it will take for Western consumers to learn even more about the products of self-sufficient, hardworking, dignified Africans. Perhaps they should spend less time consuming Africa disaster stereotypes from television and Vanity Fair. -- Amit Varma http://www.indiauncut.com
