If Bill Gates Says It, Must It Be So?

Forbes 3 weeks ago
Bill Gates Delivers A Speech At The Fundraising Day At The Sixth World Fund Conference In Lyon
Bill Gates speaks. (Photo by Nicolas Liponne/NurPhoto via Getty Images)

Something must happen to people when they become billionaires. They lose all humility and claim authority on anything and everything. Recently Bill Gates, of Microsoft fame and fortune, opined on the inadequacy of economists. “Too bad,” he said in an interview, “economists don’t actually understand macroeconomics.” To be sure, what he said is more or less accurate. Economists and economic thought cannot grasp all the intricacies of the macro economy, much as historians cannot grasp all the intricacies and motivations involved in past events and medical doctors admit to mysteries about human health. Most economists know this fact and readily admit it. What is irritating about Gate’s glib remark is the implication that only he and perhaps a few other special people know. If he wanted to convey otherwise, he would have explained why the field cannot do what politicians and others sometimes expect of it.

Everyone knows – or should know – that unlike mechanical engineering, economics deals with people, their perceptions and their irrationalities. What seemed to work in one way yesterday can lurch in a different direction tomorrow because, for example, the public mood is different or because popular ideas have changed or because businesses have observed yesterday’s result and repositioned themselves. No one pretends, least of all economists, that the field can predict as physics can the speed a falling rubber ball will reach between the 102nd story of the Empire State Building and the 50th. Even physics cannot predict at the subatomic level.

Economists make the effort not because they are arrogant (though some are) or because they have deluded themselves (though some have) but rather because their subject matter is so immediately important to so many people. If economics were astronomy, for instance, this state of affairs would hardly merit comment or criticism. No one, for instance, faults astronomers because they cannot fully explain the existence of black holes or even characterize them adequately. People do not readily accept the limitations of economic thought because its subject matter is jobs and income, prosperity and wealth, things that matter deeply to individuals and businesses, as well as governments. When Washington and firms try to improve the situations of citizens or workers or shareholders, they want a roadmap that tells them where to turn and where the pitfalls lie. When told that economic thought and its practitioners cannot provide such guidance, these decision makers ask for a best guess, rough guidance on at least what is not likely to happen. And because a guess made within disciplined thought, no matter how inadequate to the task, is better than simply a guess, these decision makers accept what they can get from the economists.

In his interview, Mr. Gates called on the wisdom of another billionaire, Warren Buffett. Mr. Buffett, it seems, has pointed out the existence of negative interest rates and faulted the discipline of economics because no textbook mentions the phenomenon. Somehow this is supposed to explain how the field does not understand its own subject matter. It would be strange to fill text books with anomalies, but that aside, the negative rates are neither hard to understand nor are they a particularly economic development. They occur less because of economic forces, though those forces have some role, than because institutional arrangements in day-to-day financial business – the need for collateral, for instance — force people and institutions to buy and hold such negative rate bonds though they otherwise would avoid a financial instrument that loses them money. The reader will find a more thorough discussion of negative rates here. But such explanations matter little when billionaires opine smugly on the inadequacies of others.

No doubt Bill Gates means well. Even Warren Buffett might mean well. Neither has said anything that any responsible economist will not admit, and often. These two gentlemen and others like them might have been more evenhanded if they had admitted that they have said nothing new instead of implying, as Gates has, that he has had a remarkable insight.


Source link
Read also:
Business Insider › Technology › 2 weeks ago
Bill Gates turned 64 on Monday. The author interviewed Bill Gates for Business Insider in 2016. Gates displayed vast knowledge. And he showed how to combine different themes to arrive at takeaways. This is part of what it means to be an expert...
Axios › 1 month ago
Graphic: Gates Foundation, "Examining Inequality"Bill Gates, in an interview about a Gates Foundation report on global inequality that's out Tuesday, told Axios that gender inequality cuts across every single country on earth — a shortfall that...
Business Insider › Lifestyle › 2 weeks ago
Bill Gates turned 64 on October 28, 2019. Gates' net worth is $108 billion. In July, Gates temporarily lost his ranking as the world's second-richest person to LVMH's Bernard Arnault for the first time in at least seven years, according to the...
Business Insider › Lifestyle › 6 days ago
Bill Gates had a wide-ranging discussion with The New York Times' Andrew Ross Sorkin at the DealBook Conference in New York City on November 7. When asked if he shared Jeff Bezos' interest in space, Gates told Sorkin, "[Bezos] can have it." Gates also...
CNBC › 1 week ago
Bill Gates said people should be "constantly refresh your knowledge," and that includes the people he hires at the Bill and Melinda Gates Foundation and Microsoft. People need to develop "self-confidence as a learner and willingness to keep learning...
CNBC › 1 month ago
Billionaire Microsoft co-founder Bill Gates is the world's second-wealthiest person, but the personal traits he identifies as his 'superpowers' have nothing to do with making billions. Plus, the superpowers he wishes he had.
Business Insider › Technology › 1 month ago
Microsoft cofounder and philanthropist Bill Gates thinks big tech companies shouldn't be broken up. Instead, the government should play a role in regulating them. In an interview with Bloomberg's Erik Schatzker, Gates discussed the responsibilities of...
CNBC › 1 day ago
A lot could go to Bill Gates' head given that he's the second richest person with a fortune of more than $109 billion, as well as one of the most recognized and accomplished entrepreneurs in the world. But Gates says he stays humble and grounded. Here...
Business Insider › Lifestyle › 1 month ago
In recent interviews, Microsoft co-founder Bill Gates has said the geography — where you are born — is the single biggest driver of your lot in life. Gender also plays a major role. Gates is on media tour discussing the 2019 Goalkeeper Report...
New York Post › 1 week ago
Bill Gates said Wednesday that he “made a mistake” when he decided to meet with convicted pedophile Jeffrey Epstein while seeking money for his global health campaign. Gates made the mea culpa while speaking to The New York Times Dealbook...
Sign In

Sign in to follow sources and tags you love, and get personalized stories.

Continue with Google
OR