Commentary: Bill Gates wants the world's businesses leaders to embrace what he calls "creative capitalism." But would that really be wise?
Editor's note: Two writers from ZDnet.com.au's sister site CNET News.com, Michael Kanellos and Declan McCullagh, debate Bill Gates' call for businesses to allocate resources that could alleviate problems in the developing world.
Declan McCullagh:
Consider what the Microsoft chairman said in a speech Thursday to the World Economic Forum in Davos, Switzerland. The outlines are a little hazy, but creative capitalism seems to centre around companies spending money (or taking on money-losing projects) that are seen as socially desirable. To Gates, it's "market-based social change" that amounts to "doing work that eases the world's inequities."
If this sounds familiar, it should. It's an attractively repackaged call for activism that's been kicking around for more than four decades under labels like "corporate social responsibility" and "caring capitalism." Gates' well-intentioned suggestions would shift these efforts from domestic charity to international charity aimed at poorer nations.
But what his Davos speech didn't acknowledge is that corporations already provide money to communities and charitable causes. They pay employees and managers, who are able to write checks to charities as they see fit. They pay suppliers, which do the same. Perhaps most importantly, they return profits to shareholders, who have the choice of what charitable projects to support.
And Americans tend to be incredibly generous, even after the government mandates forced giving through taxes. After the Asian tsunami, the US government coughed up $900 million in taxpayer-funded relief. But private individuals donated around US$2 billion. Overall, Americans give a staggering US$260 billion to 1.4 million charities a year. (By comparison, NASA's entire budget for 2007 is around US$16 billion.)
Would the world be well-served if this ecosystem became subject to the whims of managers writing checks to charities they personally prefer? There's no reason to believe CEO's can claim special competence in deciding how charity should be dispensed. If anything, the individual shareholders who participate and research non-profit groups and churches (and know firsthand which are most deserving) are in a better position. Not all decisions benefit from centralisation; there is wisdom in distributed decision-making.
Michael Kanellos:
If you want to meet someone who's enthusiastic about his job, talk to Don O'Neal.
An engineer, O'Neal is the vice president of Helps International, which has devised an inexpensive, highly efficient wood-burning stove that's distributed to poor people in Latin America.
A ceramic layer inside the cinderblock stove raises the temperature in the combustion chamber to 1,400 degrees Fahrenheit. At this temperature, nearly all of the wood -- and oil from the wood -- burns. As a result, the amount of firewood a family needs to survive drops by 70 percent, says O'Neal.
With it, families spend less time foraging for firewood and regional deforestation is slowed. Perhaps more importantly, fewer kids suffer debilitating burns (from traditional floor fire pits) or carbon monoxide poisoning.
And at $120, "it pays for itself in six months," he said. It was one of the best sales pitches I'd heard in years.
The Tech Museum of Innovation recognised Helps, among others, in 2007 for devising interesting, sustainable solutions for the developing world. Proctor Gamble was recognized for its PUR water purification powder: a 3.5-cent packet of the material can disinfect 10 litres of water. D.R. Mehta showed off a prosthetic foot made out of high-density polyethylene which, at US$35, is one-tenth of the cost of ordinary ones. Cambridge University's Helen Lee, meanwhile, exhibited the FirstBurst, an inexpensive urine tester.
When Bill Gates talked about fostering "creative capitalism" at the World Economic Forum in Davos, Switzerland, these are the kind of projects he had in mind. In Gates' vision, private companies should be encouraged to tweak their structure slightly to free up their innovative thinkers to work on solutions to problems in the developing world. It's gung-ho, rather than hairshirt, philanthropy.
"This kind of creative capitalism matches business expertise with needs in the developing world to find markets that are already there, but are untapped," Gates said. "Sometimes market forces fail to make an impact in developing countries not because there's no demand, or even because money is lacking, but because we don't spend enough time studying the needs and requirements of that market."
Read more of the debate over the page.
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There is more to this than publicity, staff morale, or the pre-emption of crisis spots. It is also a tried and true business ploy, the "loss leader", designed to gain custom and marginalise competition. See http://boycottnovell.com/2008/01/17/finland-gates-finnish-children-shackled/ for a compendium of what Mr. Gates is already doing.