Gates: Underwhelming

Bill Gates, dishevelled as ever, launched into a hugely-anticipated speech this evening in Davos, the closest thing that this conference has to a keynote. Gates managed to splash the speech all over the front page of today’s WSJ even before he gave it; I’m not sure how much reaction he’ll get now that it’s in the past. If the coverage is commensurate with the number of new ideas he came up with, there’ll be very little.

There was nothing in Gates’s speech which every Davos delegate hasn’t heard a hundred times already. But the speech was webcast and highly flagged, so maybe Davos wasn’t really Gates’s audience. The basic idea of what Gates calls "creative capitalism" is simple: that companies should use their power to innovate for the greater good. "Breakthroughs change lives primarily where people can afford to buy them," he said. "But economic demand is not the same thing as economic need."

Gates seems convinced that "recognition", whatever that might be, will step in and make up for foregone profits: I think he’s mildly delusional on that front. Yes, some companies (Ben & Jerry’s, say) do well by doing good. But more often, companies will not receive much if anything in the way of extra profit if they put the kind of effort that Gates wants into helping out the bottom third of humanity. Gates knows this, which is why he says that the profit motive alone won’t do the trick. And I think he’s right when he says that once a company has signed on to this kind of corporate citizenship, it becomes such a central part of what makes its employees proud to work there that it is quite easy to sustain. But I think he’s going to have to do better than "increased recognition" as a carrot to incentivize CEOs to go there.

Still, the new economy does change the rules, sometimes. The internet can help shine a light on companies which do really good work, and also companies which are very bad in such matters. And more importantly, many of today’s products, such as software and vaccines, have a low marginal cost. That, in turn, allows variable pricing where the poor pay less.

But if Davos was hoping for a paradigm-breaking speech, they didn’t get one: they got a recitation of standard corporate-citizenship bromides instead. Which is all well and good: it happens every day at Davos. It just isn’t very special.

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