Monetary Policy

Bill Gates, the Chauncey Gardiner of the Great Decession?

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Michael Shermer, the libertarian-leaning skeptic and critical thinker who is as formidable and illustrious as he is implacable and indefatigable, lets his hair down in a paean to Bill Gates that is so fulsome I suspect it's a joke.

Not since Thomas Jefferson dined alone…

Describing a TED-related dinner organized last week in Long Beach by John Brockman, Shermer describes how the multibillionaire Microsoft founder wowed everybody at his table. (Imagine a man so brilliant he makes John Cusack seem like a minor league penseur by comparison.)

I understand—believe me I really understand—how wealth or success or hotness can make even the most trivial expulsions seem like nuggets of pangalactic genius. But while Gates' pronouncements on the economy offer something to please enemies of the ARRA stimulus package and plenty to infuriate enemies of the bank bailout, what unites his comments is their sheer heard-it-a-million-times-before banality:

I asked Gates "Isn't it a myth that some companies are 'too big to fail'? What would have happened if the government just let AIG and the others collapse." Gates' answer: "Apocalypse." He then expanded on that, explaining that after talking to his "good friend Warren" (Buffet), he came to the conclusion that the consequences down the line of not bailing out these giant banks would have left the entire world economy in tatters.

Arianna Huffington asked Gates about Obama's various jobs programs to stimulate the economy. Gates answered: "Let me tell you about what leads companies to create more jobs: demand for their products. My friend Warren owns the world's largest carpet manufacturing company. Their business has dried up because the demand for carpets has declined dramatically due to the drop off in the construction of new homes and office buildings. If you want to create more jobs you need to create more demand for products that the jobs are created to fulfill. You can't just make up jobs without a real demand for them." I believe that was the last thing Arianna said for the evening.

This led me to ask Gates this: "If the market is so good at determining jobs and wages and prices, why not let the market determine the price of money? Why do we need the Fed?" Gates responded: "You sound like Ron Paul! We need the Fed to steer the economy away from extremes of inflation and deflation." He then schooled us with a mini-lecture on the history of economics (again, probably gleaned from Timothy Taylor's marvelous course for the Teaching Company on the economy history of the United States) to demonstrate what happens when fluctuations in the price of money (interest rates, etc) swing too wildly. I believe that was the last question I asked Gates for the evening!

It's like that acid trip where you were just centimeters away from figuring out the whole universe! As noted above, I suspect this is all just a wheeze by Shermer, and if so I apologize for stepping on his joke. But in the interest of everybody who thinks Planet Earth would have survived if Goldman Sachs had been allowed to go out of business (and for reasons I'm happy to go into at greater length, Goldman Sachs would not have gone out of business even under the worst-case scenario), I'd like to point out something to Bill Gates:

It's 2010 now. If you're still trying to justify Hank Paulson's miserable experiment in lemon socialism, you're gonna need more synonyms for "apocalypse," "chaos," "meltdown" and "armageddon." They're definitely out there: I looked them up using Microsoft Word's thesaurus function.

Ladies and gentlemen, Chauncey Gardiner:

NEXT: Lower Pervian School District vs. Mike and Ikes

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  1. TED is the ultimate in smug wankers. It deserves mention in a South Park episode.

    1. I love TED. The talks are great.

      I imagine the discussion at the after events and dinners is enough to make a sane man commit multiple homicides with a spork.

    2. Ahem. I am not a smug wanker!

  2. Those that have achieved success in their craft are usually worth listening to. They aren’t always worth learning from. Just as you pointed out the article seems like more of a jab at simplicity than fawning adulation.

    Buffet’s genius is his self fulfilling investment strategies based solely on his marketing of Warren Buffet and his image. The buy it and hold it for eternity value investing strategy isn’t exactly novel, nor is Buffet’s application of it. Of course he was for the bailout. Every billionaire was. They stood to lose the most and gain the most from taking robbing the public coffers. $1 for $1 on AIG swaps paid for by you and I that bailed out the risk taking of the likes of GS, na that wasn’t a back room deal.

    I think pan-galactic is hyphenated.

    1. Well, there wasn’t always a Warren Buffet brand. He built that himself. And he did give an early warning about where all the complex default-risk insurance contracts would eventually end up.

      Which of course makes his support for bailing out AIG more contemptible. But Buffet’s and Gates’ achievements are real, even if their pontifical genius is finite.

  3. So I guess Gates must have really wanted to be Oracle instead of Microsoft.

    I just so want to envision Larry the Cable Guy delivering those lines above. That’s funny I don’t care who you are.

  4. It would have been nice if Shermer asked Gates why he thought Buffet understood much about the economy. If Gates had made the argument most would make–“He’s Warren Fu-king Buffet… He’s made billions” Shermer could correctly point out that this alone can’t make one understand the economy since Gates was in fact richer so by that reasoning Gates should be explaining the economy to Buffet. He could also point out, with Huffington at the table, that George Soros has made a tidy sum himself and yet he and Buffet likely have some disagreement on how economies prosper…

    1. Buffet and Soros are one in the same like Bush and Obama. Just two sides of the same coin.

      1. And two-headed coins really only have one purpose: to cheat people.

        1. Darth Vader had two heads under that helmet? Facts like these are why I keep coming here 😉

          1. Duh, James Earl Jones and the back of that white dude’s head.

  5. An armoured flight deck carrier reference? Where the hell did that come from, Cavanaugh? Next thing I know you’ll be making ‘triple screw’ jokes (and god knows there’s plenty of room for those on HnR.)

  6. Wow, you have to admit he does bring up some very valid points dude.

    Jess
    http://www.anonymous-tools.se.tc

  7. Gates should have stayed in school and finished his college degree.

    1. Why?

      1. I’d say that Vista is a pretty good justification for inventing time travel, going back to the late 1960s, and slaughtering young Billy as he sleeps.

        1. If time travel was really possible you could go back in time and make exactly the same comment at exactly the same time.

      2. I’d say that Vista is a pretty good justification for inventing time travel, going back to the late 1960s, and slaughtering young Billy as he sleeps.

  8. I can’t help but tie Sellers to David Niven. The Moon’s A Balloon got me hooked on autobiographies.

  9. “It’s like that acid trip where you were just centimeters away from figuring out the whole universe!”

    I laughed, I cried, I tripped the hell out!

  10. “We need the Fed to steer the economy away from extremes of inflation and deflation.”

    The lesson I take away from this is that you can be incredibly rich, even if you’re a fucking idiot, as long as you’re in the right place at the right time to catch IBM’s fumble.

    -jcr

    1. It is nice to see that a libertarian is admitting that the world’s richest man got there in large part due to dumb luck.

      Thanks for conceding that he really didn’t “earn” his billions, but rather captured them by being in the right place at the right time.

      1. Gates earned his billions by creating value, by creating products that millions of people have decided is worth more than the money they have voluntarily traded for it.

        Sure, if Bill Gates wasn’t born, or if chance had altered his life a bit so one of his other competitors had gotten that edge up on him, then someone else would have created that value and gotten insanely wealthy.

        But it takes a liberal like Chad to think that that wealth wasn’t earned — and then use that as an excuse to try and loot that wealth via taxation or regulation.

        Sorry, Chad, but you have no right to any of Gates’ billions. You didn’t create any of that value.

        1. Sure, if Bill Gates wasn’t born, or if chance had altered his life a bit so one of his other competitors had gotten that edge up on him, then someone else would have created that value and gotten insanely wealthy.

          Or if Gates had made some slightly different choice anywhere that lead to him being the person who won the lottery. You are right, someone else would have taken his spot and produced something of similar “value”. In that case, did Gates create the value, or did the opportunity for such value become possible, and he happened to be the person to capture it?

          1. Kind of like how you’re not creating value, just trolling? If Chad wasn’t here, someone else would troll.

      2. Dumb luck gets your foot in the door. That’s all. To say he didn’t “earn” his money is ridiculous. Luck isn’t going to help you if you provide a faulty product at an unreasonable price. Oh shit, I was trying to make a point, and it backfired.

        1. Or, Oh shit, I was trying to make a point, and I forgot to slant my view to fit in the libertarian ideology. FIFY

        2. Exactly right. Out of the thousands of people just as smart and hardworking as Gates, dumb-luck got him through a particular door. The rest of them wound up middle-class Joes. So, how, exactly, did Gates “earn” his billions any more than a lottery winner?

      3. Whether his wealth is earned by 99% hard work and 1% luck or 99% luck and 1% work is immaterial to you (or the government you support) having any right to his wealth. (standard caveats applicable)

      4. Chad, have you read Dalmia’s (sp?) article?

      5. Being in the right place at the right time and knowing that he was and how to take advantage of the circumstances is how Gates earned his wealth. Being in the right place and not knowing what do earns you nothing.

      6. That dumb luck only got his foot in the door. He managed to get his funky variant of CPM available to the PC under the IBM brand name. It was certainly a big opportunity, but it was only a first step. It was up to Gates to build on that. Microsoft didn’t have a “monopoly” for another two decades, with scads of competition along the way.

        But that still wholly irrelevant to the topic at hand. Bill Gates is not an economist. He’s brilliant at marketing and running a company, but his remarks on the Fed demonstrate that he has only a bad high school civics class understanding of economics.

      7. Poor chad only has the dumb part going for him — just his luck.

      8. I don’t know what others think, but I don’t think that the libertarians argument is that anyone who has money has actually earned it or deserves it. I’m speaking in general and not talking about Bill Gates necessarily. Most of us well know that few of the ruling class actually “earned” their wealth. In fact, libertarians are appalled by a system based on patronage and connections to power and authority, such as we have now.

        That’s what “progessives” don’t get – power will always serve the interests of those with access to it at the expense of the rest. Always. It always has and always will. There is a reason why three of the richest counties in the US are situated in close proximity to DC. The problem is not and has never been “capitalism” or free markets. It is collusion between government and those with influence over it. As far as Bill Gates goes, whether he earned his wealth through sheer brilliance or dumb luck, either way is fine. At least he did not earn it by virtue of his access to government authority through the use and manipulation of the legislative process and elected officials.

    2. as long as you’re in the right place at the right time

      How true. On a personal note from when I first started my construction business. I was in a local supply store. There was an old-timer at the counter, whom I didn’t know. I placed my order, and he said he recognized the name. (My grandfather had a successful business many years ago). He asked me if I was looking for work. I said, “I’m always looking for work”. Anyway, to make a long story, not so long, it turned out he was a real estate broker/agent/developer. He gave my business the jump start it needed to become successful.

      So, I guess I could attribute the early success of my business as 50% luck, 20% name recognition, and 30% “good answer”.

    3. He and his business partners got rich by knowing different things and working together.

      Gates didn’t get rich as an Economist. Wasn’t Ballmer the one who knew the business part?

    4. Bill Gates isn’t a “fucking idiot”. He is a very smart guy, who knows a hell of a lot about computers and how to make money off that knowledge, but whose area of expertise is obviously not macroeconomic theory.

  11. Deflation punishes greed and rewards prudence. Can’t have that.

  12. “We need the Fed to steer the economy away from extremes of inflation and deflation.

    Like it did in the 20s, the 30s, and the 70s?

    This article was a valuable reminder that being smart isn’t the road to riches. It’s knowing whose binary code is worth stealing, errrrr, copyrighting and which Congressthingy is worth polluting with campaign donations in case the investment fund hits a wall.

    At least I can choose to not watch a John Cusack movie; neither is his movie fee paid with a bailout by taxpayers. Therefore, his ideas – good or asinine – do not depress me nearly so.

  13. Sounds like Bill was enjoying all the attention!

  14. “If you want to create more jobs you need to create more demand for products that the jobs are created to fulfill. You can’t just make up jobs without a real demand for them.”

    Ariana’s could have been answer: More jobs are created by real demand by lowering taxes, not by bailing out wealthy financial friends, i.e. AIG, of wealthy GS Hank. Proof: Before bailout, unemployment was

  15. Very interesting that Ron Paul is on Bill Gates’ Radar. That’s a start.

    1. It seems he’s on a lot of people’s radar.

      Listen to all of the boos from the hardcore conservatives in the video. Is there still any question as to whether a libertarian could ever carry the republican base?

      1. Just heard he won the straw poll at CPAC.

  16. Nice pic. Gates as Yoda.

  17. Could you imagine having that kinda money?

    Jess
    http://www.anonymous-tools.se.tc

    1. He couldn’t have done it without all the anonymous tools.

  18. He then schooled us with a mini-lecture on the history of economics (again, probably gleaned from Timothy Taylor’s marvelous course for the Teaching Company on the economy history of the United States) to demonstrate what happens when fluctuations in the price of money (interest rates, etc) swing too wildly. I believe that was the last question I asked Gates for the evening! What do I know? I run a tiny nonprofit science education organization with six employees. I’m just hoping to be able to cover my daughter’s college tuition next year. Gates is the world’s richest man who founded a giant multi-national corporation and heads a powerful nonprofit organization that is trying to save the third world. He surely understands economics and business and finance better than I do, right? I sure hope so!

    This comes across, to me at least, as a very dry, wry, and deliberately understated takedown of Bill Gates’ knowledge (or lack thereof) of macroeconomics — you know, this college dropout who has made billions of dollars nonetheless has a goofy theory of macroeconomics, one that flies against the grain of common sense and the evidence at hand, that is based on the liberal spoutings of Warren Buffet and some lectures from an obscure audio book publisher.

    1. Macroeconomics in general flies against against the grain of common sense. Here’s a giant equation that explains everything, if this 4 mile list of assumptions and constraints holds true this equation may be correct on every other Thursday of every other month if the sun is shining.

      The ones that get macroeconomics right approach it from the point of there only being wisps of an understanding of the larger broad strokes and back far away from the presumption of the ability to micromanaging a macroeconomy.

  19. When, in the Campfire Tale that is Warren Buffett, did he come to be a “producer” of anything but money?

  20. Has Kindly Old Grandpa Buffett added anybody to his Omaha staff to “stimulate the economy”?

    1. Yes. He’s added a portion of your wallet and mine to his portfolio as we prop institutions that he buys into at bargain basement prices.

  21. “My friend Warren owns the world’s largest carpet manufacturing company

    My friend Warren owns the world’s largest carpet munching company. Business has gone down a little bit lately.

    1. Fiber is good.

  22. Any time I see “TED” I assume it’s a reference to this guy

    1. Please do not conflate me with the TED conferences. I do not have clever videos, soaring music, or canned applause on my website. Besides, those bastards still owe me royalties for stealing my moniker.

  23. “The crucial element is one’s aggregate position relative to actual competitors, not some hypothetically perfect competitors. As in a race, the award goes to the relatively fastest, even if all the competitors loaf. Even in a world of stupid men there would still be profits. Also, the greater the uncertainties of the world, the greater is the possibility that profits would go to venturesome and lucky, rather than to logical, careful, fact-gathering individuals.”

    Uncertainty, Evolution and Economic Theory, 19motherfucking50, bitches.

  24. I’m reminded of Henry Ford’s various troubling forays into the political during his life. The man was a genuine mechanical genius, and every bit as economically powerful in his time as Gates (and probably moreso).

    But his political and social ideas were, more often than not, screwier than a mad hatter (weird mix of international isolationism, domestic social control through employers, anti-smitism, etc).

    His ideas on mfg and innovation are still applied today (see Toyota and Ford Production Systems, then read H. Ford’s “Yesterday, Today, and Tomorrow” – fascinating).

    Gates is in many ways a modern Ford in terms of his product (immense global impact, changed the way people interact and live, spawned lots of spinoff products linked to their core products) – but caution to those who extrapolate success in business with wisdom or knowledge in any other sphere.

    So, while I might be interested in their thoughts on investing, innovation or marketing, I don’t think I’ll rely on the rent-seeking Mr. Buffett for guidance on the wisdom of policies in the bailout culture, nor from Mr. Gates on monetary policy.

  25. I met Michael Shermer at James Randi’s Amazing Meeting 6 in 2008. Being both a libertarian and a skeptic I found his book Mind of the Market to be a pretty good read. This was in summer of 2008 and Obama Love was all over the place there. Many of the speakers and attendees were greatly looking forward to having Obama as their next president and couldn’t quiet take the mental step of being skeptical about their beloved politician and the ideology of big government swooping in to save them. So naturally I gravitated towards the few presenters there that fit my own leanings…Penn & Teller and Michael Shermer. I was lucky to get a chance to talk to both Teller and Shermer one-on-one. Teller’s a great guy and a hard core libertarian.

    Shermer seemed to have come only recently to libertarianism, or political skepticism as I like to call it. I did get a chance to ask him if he thinks there is or should be a connection between skepticism and libertarianism and he said “Most definitely.” Bearing this in mind I would venture to guess that he’s not buying Gates’ bailout love for one minute but as he’s not a confrontational in-your-face sort of person he didn’t feel it was the place to really rail into Gates. But I would be very surprised if this article wasn’t intended to be at least a bit mocking towards Gates, who seems to think a lot of himself and other rich people.

    Benjamin

  26. I was lucky to get a chance to talk to .. Teller

    Wouldn’t that be a rather one-sided conversation?

    1. He’ on twitter (@MrTeller).

  27. I wonder if you can hear him scream when he uses all caps.

  28. I beg to differ. Bill Gates is a f***ing idiot. His products are crap. Word crashes like a DC-10. It sucks and so does he!!!!!!!!!!!!!!!

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