Bill Gates' wealth: where did it come from?

Bill Gates' wealth: where did it come from?
Jenny Brown
April 2000

Bill Gates of Microsoft now has $160 billion dollars in personal wealth, more than 40% of Americans combined, more money than 160 million people. Indeed, the top 5% of the U.S. population holds 62% of the U.S.'s wealth.

Some argue that Gates deserves at least some of this wealth because he was smart orcreated something useful. "We're raised to believe that those who become very rich must be extraordinary, must have intellects that let them see what the rest of us can't," according to Too Much, the newsletter of United for a Fair Economy.

In fact, as many people have surmised (including most Microsoft users), it was not Gates' great genius which brought in the dough, but being in the right place at the right time. In 1980, IBM gave Gates and Microsoft the contract to develop the software for their first PC. "Gates didn't write that software," Too Much points out. "He bought an existing software program, QDOS, for $50,000, renamed it MS-DOS, and ended up collecting a royalty every time a PC was sold."

But was it just good luck?
If it was just good luck, maybe we should be magnanimous and encourage everyone in their entrepreneurial spirit by over-compensating a few people, right? Isn't that the "free market"?

"Thousands of links in the chain of development--our shared inheritance--were in fact required before Bill Gates could make his contribution," says historian Gar Alperovitz. "The personal computer itself--without which Gates' software would not be possible--owes its development to sustained federal funding." Private industry rarely puts much money into research and development for such a long-range effort. Of the 25 most significant early advances in computer technology, according to the Brookings Institution, 18 were funded by the federal government--your tax dollars.

Albert Einstein, who was much smarter than Bill Gates, said, "Many times a day I realize how much my outer and inner life is built upon the labors of my fellow-men, both living and dead."

Work hard and you'll be rich, too
Some argue that Bill Gates worked really hard in the early days, so now he deserves his fortune. But a lot of people work hard every day and end up in debt, so what made the difference for Bill? It is not Bill Gates' hard work that makes him richer every day (if it ever was), it is the sweat and brainpower of Microsoft's workers that make Bill Gates (and Microsoft's shareholders) richer every day. The key to getting rich, political scientist Michael Parenti points out, "is not to work hard yourself. It's to get other people to work hard for you." As Stokely Carmichael once observed, looking around the cotton fields of the Mississippi Delta, "If hard work made you rich, black people would own this country."

Of course, Microsoft's workers, like all workers, are also a product of the society at large, the women who gave birth to them and the parents who raised them, the people who taught them in school, who raise the food they eat, who build the houses and highways and who take care of them when they're sick. All this work makes possible Bill Gates' enormous wealth, too.

Gates is unusual in that he didn't start of fabulously rich, he "made his millions" through enterprise. And this "rags to riches" story is how we are supposed to believe all rich people became rich, starting without much money and making theirs through some special talent or genius and some amount of hard work. In fact, the vast majority of the rich in this country were born into it and never did a thing to earn the money they have.

But what about rewarding the entrepreneurial spirit?
We hear this argument all the time, that the chance to earn great wealth rewards the "entrepreneurial spirit" which leads to more, better products. Bill Gates once laid off thousands of workers for a month so that he wouldn't have to pay their health insurance. That's also entrepreneurial spirit. Microsoft also, according to a recently released court decision, squelched competition and unfairly monopolized the computer software market. Cut-throat competition that puts profits before human values or the law is really what is encouraged in this "marketplace."

The money ends up in charity anyway
Some argue that since the rich end up with so much wealth, then they give it away in foundations so it ends up benefiting the public anyway. In fact, the vast majority of universities, libraries, museums, parks and zoos are publicly funded, the private sector is notably stingy. Only 7% of donations to non-profits come from foundations set up by rich individuals to give away their money.

If it was the general public who created the wealth, why should single individuals have sole say in how it's distributed? Maybe we need a hospital more than we need an art museum, but we get a museum because we don't have a democratic say in how the money is used. If wealth were taxed and the money put in the public till, then the public could decide on the priorities.

A con game
The justification for such extremes between the wealthy and the rest of us is based on several of these illusions--that if we work hard enough, or we're smart enough, or lucky enough, any one of us could end up rich. Or we're told that the wealthy benefit us in other ways: "we're lucky to have a job because if we didn't have the rich who would hire us?' Or "the rich do so many good works.'

In reality, these justifications are a smokescreen to keep us from asking, who created the wealth anyway? Why should the resources and decisions in the society be controlled by a small elite?

A simple plan
Just for starters, let's cut down the wealth of the bigwigs down to size. Does anyone need income of more than a million a year? No? The Labor Party has suggested that we simply tax every dollar over a million. That's right, just take any money anyone makes over a million dollars and put it in the public till. After all, that's where the wealth came from, right? The public. Then we'd have some cash to pay for education, health care, childcare, housing, environmental restoration, public transportation, parks, museums, etc., at the discretion of the public.

"The economic anarchy of capitalist society as it exists today is, in my opinion, the real source of evil ...

"Private capital tends to be concentrated in a few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of smaller ones. The result of these developments is an oligarchy of private capital, the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights...

"The profit motive, in conjunction with competition among capitalists, is responsible for an instability in the accumulation and utilization of capital which leads to a huge waste of labor, and to that crippling of the social consciousness of individuals. ...

"The crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as preparation for his future career.

"I am convinced there is only one way to eliminate these great evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented towards social goals. In such an economy, the means of production are owned by society itself and are utilized in a planned fashion. A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman and child. The education of the individual, in addition to promoting his own innate abilities, would attempt to develop in him a sense of responsibility for his fellow men, in place of the glorification of power and success in our present society.

--Albert Einstein, in the Monthly Review's first issue, 1949.

Thanks to the zine Leftward Ho! and Jean Pestieau for this excerpting. Leftward Ho!, 532 LaGuardia Place $295, New York, NY 10012. $6.36 for 12 issues, checks to Rob Wallace. Or you can send stamps.