On Bill Gates's calls for "system innovation"

Steven Levitt at the Freakonomics blog recently drew attention to Bill Gates's speech at Davos, and described it as "probably right" and "beautifully argued".

I disagree.

Bill Gates is essentially making this case:
As I see it, there are two great forces of human nature: self-interest, and caring for others. Capitalism harnesses self-interest in helpful and sustainable ways, but only on behalf of those who can pay. Philanthropy and government aid channel our caring for those who can't pay, but the resources run out before they meet the need. But to provide rapid improvement for the poor we need a system that draws in innovators and businesses in a far better way than we do today.
Here's my reaction:

Bill Gates’s reasoning is thoroughly and completely wrong. Not only that, but it is wrong in very dangerous ways.

If Bill Gates’s argument were true - that a system innovation is necessary to harness people’s creativity to serve the needy - then hundreds of millions of people in China would not currently be climbing the economic ladder in a capitalist environment.

The fact is, all those people are climbing the economic ladder, while billions of people in Africa are not.

In order to understand why capitalism does not appear to be improving the lives of people in Africa, Bill Gates ought to read Richard Lynn’s book “IQ and Global Inequality”.

However, I’m afraid that reading that book, and accepting it, would require him to perform a 180-degree turn on the values and principles that his work at the Bill & Melinda Gates Foundation shows he has completely embraced.

Unfortunately, such an about-face, on such an important issue, by such a prominent person, is near infeasible, which is a pity, because Bill will continue to squander billions in futile ways - and worse, he might influence millions of other people, possibly to actually come up with “system innovations” such as he described, and turn the whole world for the worse.

Naturally, I am smarter in these things than Bill Gates, but of course you already knew this ;) :P

No, seriously. I think Bill is wrong, and the reason he's wrong is, he didn't take years to contemplate and research this issue before he invested his billions.

Meanwhile, I did, and this may be partly why I don't yet have billions.

Maybe I'll have them, say, if the dollar collapses enough. :)

But for him, now, it's already too late, he's already too far in. Even if he wanted to do an about-face, it is much more difficult now, because now he has to counter the sunk cost fallacy.

Comments

verbatim said…
Naturally, I am smarter in these things than Bill Gates, but of course you already knew this ;) :P

At least you always have a last argument :P

Meanwhile, I did, and this may be partly why I don't yet have billions.

In terms of Zimbabwean dollars we all have billions. :)

In order to understand why capitalism does not appear to be improving the lives of people in Africa, Bill Gates ought to read Richard Lynn’s book “IQ and Global Inequality”.

May I ask, what does book say about IQ of people from Middle East?
denis bider said…
I don't have a copy of it handy, but from my vague recollection, 90 +- 5, I think.

Certainly in the case of the Middle East their problem is not so much lack of capability, as it is a dysfunctional culture in combination with natural resources that allow them to maintain that dysfunctional culture indefinitely.
boris_kolar said…
It's easy to criticize if you don't have to provide alternatives. So what would alternative be? No system innovation? Ignoring Africa and their problems?

So what exactly does economic growth in China prove? That communism can be successful? To me, China is much closer to communism than capitalism (IMHO limitation of liberty is the main and most disgusting trait of communism and there is plenty of that in China).

Assuming you and Richard Lynn are right, and that "idiot" best describes typical African person (a opinion I do not share, but I do recognize that significant differences in "average" intelligence may exist between races and sexes, which is largely irrelevant since there is no such thing as "average African" or "average woman"). You, denis, are a very smart man. Only perhaps 1% of Slovenian are as smart as you are. Since Africans are not nearly as smart as Slovenians, let's say only 0.1% of Africans are as smart as you. With population of 1 billion, that makes one million of Africans that are as smart (or smarter) as you. Just imagine a million of people, all of them as smart as denis, forming a company. Now that would be quite a company indeed! More than 10 times the size of Microsoft, and (unlike Microsoft) consisting of only very smart people. Certainly not worth ignoring. Or maybe not. Maybe finding and organizing smart people from Africa would cost more than potential profit.

And where is the danger of Gates's idea? Do you fear his "creative capitalism" may turn out to be a form of communism? If Bill Gates is a communist, then maybe we all are. He repeatedly said "sustainable" in that article and that certainly implies profitable.

And if the fate of nations relied solely on IQ, North Korea would be one of the richest countries. There is, however, one useful information on Wikipedia page about that book: as I suspected, wealth (and intelligence) greatly depends on temperature (perhaps hot climate is bad for brain development) and IQ differences between countries of similar genetic composition varies far more that can be explained by genetic factors alone (for example: difference between Italy and France is 4 IQ points). Which brings me to another idea: maybe different languages have different effect on brain development.

I don't see how we can end extreme poverty without system innovation. We could certainly do much better, if we understood reasons for apparently different capacities of nations to produce wealth. Genetic factors such as race are still beyond our control, so focusing on them is not a constructive idea. I believe we can do a lot better to help Africa (and I do not support giving them money unconditionally), and successful Africa means bigger world market and is therefore in best interest of every capitalist.
denis bider said…
boris: It's easy to criticize if you don't have to provide alternatives. So what would alternative be? No system innovation? Ignoring Africa and their problems?

Let me put it this way.

There are billions upon billions of suffering maggots (of some kind or another) out in the oceans, living a dreadful life, trying to eke out a living eating microorganisms while bigger fish eat them.

We ought to buy them all sofas and TV sets and medical insurance so that the poor maggots can have decent lives.

I suggest you pay first.

Bill Gates's calls for "system innovation" are nothing more than yet another (a) charity scheme - which is OK, it's voluntary, fools can contribute - or (b) tax scheme, which is not OK, because it's his cause, not mine, and I have solid arguments why his cause is ridiculous.

boris: So what exactly does economic growth in China prove? That communism can be successful? To me, China is much closer to communism than capitalism (IMHO limitation of liberty is the main and most disgusting trait of communism and there is plenty of that in China).

China practices what they call "socialism with Chinese characteristics". This is to hide the fact that they are migrating to a system like capitalism while forfeiting the idea for which they grabbed power 50 years ago. China now is significantly capitalistic. Do not confuse political rights with how the economy works.

Economic growth in China is proving that capitalism works even when it is wrapped in a straitjacket and supported by poor but somewhat adequate property rights.

boris: And where is the danger of Gates's idea? Do you fear his "creative capitalism" may turn out to be a form of communism? If Bill Gates is a communist, then maybe we all are.

He can have any kind of private ideology he likes. My problem with him is that he's making the case for schemes that may involve spending public money for dubious purposes which may be popular due to people's naivete and lack of understanding, but will not pay off.

boris: He repeatedly said "sustainable" in that article and that certainly implies profitable.

Good luck with that. The only way you're going to make a profitable investment in Africa is:

(1) You go there with an army to extract natural resources, and ignore the natives.

(2) You go there with a genetic treatment that's going to make everyone's children two standard deviations smarter.

(3) You come in with an army and impose order on the natives, like in a colonial regime.

Most everything else is a waste of effort.

There's a reason why Africa has not improved in the past 50 years, despite everyone's best intentions and best efforts.

For all I can tell, people are going to keep throwing money to get to the end of this supposed rainbow for the next several hundred years, because they just can't learn that it doesn't work.

People can help themselves, or they can't. Africans have proven that they can't. No amount of external investment is going to change that, except some far-off genetic therapy that might replace the current Africans with new ones that have potential.

I don't mind people throwing their money into the sinkhole if they're misguided enough to do that, but I'm annoyed when they try to throw everyone else's money there as well. Then it's not just personal stupidity anymore; it's real damage.

boris: Which brings me to another idea: maybe different languages have different effect on brain development.

Yes, why don't everyone who hasn't read the books, comment on them.

It's the other way around. Language complexity is determined by the IQ of the speakers. For example, a number of native languages lack words for numbers beyond two. There's just: "one", "two", "few", "many".

In some of these languages, you can say up to "7" by saying "two-two-two-one". Anything beyond 7 is unconveyable.

The same people who evolved these languages have IQs around 60.

boris: Genetic factors such as race are still beyond our control, so focusing on them is not a constructive idea.

That argument is similar to this:

Bill Gates: Solar plants occupy an awful lot of space, but we have lots of space on the Antarctic. Let us build solar plants on the Antarctic.

denis: This is stupid. The Antarctic is the worst possible place to build a solar plant. It has no light half of the year, and the other half of the year the Sun is always low, so it's very weak.

Boris: Factors such as night and day are not under our control, so focusing on them is not a constructive idea. Let us build solar plants on the Antarctic first. Maybe it will work. If it doesn't, maybe we can then try something else.

boris: I believe we can do a lot better to help Africa (and I do not support giving them money unconditionally), and successful Africa means bigger world market and is therefore in best interest of every capitalist.

I gave above three ways how to make Africa successful. Pick one.

Throwing money at them - or medical treatments, or education, or food, or whatever gimmick will next be thought of - will achieve about as much as such things have achieved in the past 50 years.
denis bider said…
BTW, I need to correct what you wrote about 0.1% of Africans being as smart as, say, members of the American Mensa.

The average IQs in sub-Saharan African countries are around 70, which means that they are about 2 standard deviations under 100, which is the American norm.

Mensa members, in turn, are 2 standard deviations above the American norm. About 1 in every 50 people qualifies to be a Mensa member.

This means that about 1 in every 50 Africans will qualify as "average or above" according to American IQ norms, and perhaps only about 1 in 2500 will qualify as American Mensa material.

Yes, you would have a pretty successful country if you could get together all of those 1 in 50 Africans and let them have their own country somewhere.

But then the remaining 49 countries would be left even weaker.
verbatim said…
wealth (and intelligence) greatly depends on temperature (perhaps hot climate is bad for brain development)

I agree with first part of the sentence. But I wouldn't say it is bad for brain development but it is bad because high temperatures cause laziness, you see you can enjoy your free time etc. Check winter in Europe. You don't have anything better to do so you work. In summer it is harder to work, you want to spend time on the sun, doing nothing etc.

Assuming you and Richard Lynn are right, and that "idiot" best describes typical African person (a opinion I do not share, but I do recognize that significant differences in "average" intelligence may exist between races and sexes, which is largely irrelevant since there is no such thing as "average African" or "average woman").

It is easier to say you don't agree with Richard Lynn if you don't have experiences with people of certain race. As Denis is living on St. Kitts I guess he has already noticed the difference in average IQ of people of similar characterics living there and let's say Slovenians.

I also wouldn't say higher average is irrelevant as average people are very important part of society because they vote. You can substitute smaller differences in IQ with working more, spending more money on education etc. and achieve economic development similar to higher IQ nations (with right steps). But if differences in IQ between two populations are large, you can't compensate that in long run. You can compensate on short run with natural resources and achieve good economic development but that won't change people abilities and make them more progressive (something like that happened in Nauru).
boris_kolar said…
If you take a closer look at statistics (which I feel was abused by Lynn to promote racism), you should note, that some African countries are doing ok (like Botswana with $16,450 GDP per capita). Nobody suggested that poor average IQ is not a roadblock to success, but it certainly does not predetermine nations to hopeless starvation. Even St. Kitts can be seen as evidence that low average IQ still allows nations to survive.

In reality, no one is "average", so you can't make usable assumptions about people based on their race. Just like you can't assume that woman you meet is stupid - often she would be, but sometimes you'll be very wrong.

Maybe I'm wrong (I haven't read that Lynn book and I don't think it's even worth downloading), but "conclusions" you were led to by these racist-funded books are contradicted by their own data.
denis bider said…
verbatim: But I wouldn't say it is bad for brain development but it is bad because high temperatures cause laziness, you see you can enjoy your free time etc. Check winter in Europe. You don't have anything better to do so you work. In summer it is harder to work, you want to spend time on the sun, doing nothing etc.

Actually, the Inuit - who live in a harsh, cold climate - also score poorly on IQ tests.

I think the relevant factor for the evolution of intelligence here is, how much you have to constantly be adapting to changes in your environment. In Africa as well as in the Arctic, the environment is more or less constant. Inhabitants can evolve features, which evolve more easily than general intelligence, and prosper in their environment well.

The ever-changing climate of Europe, however, with its warm summers and cold winters, requires its inhabitants to plan ahead. It is not possible to survive living day-to-day. In spring, you have to plan 9 months ahead to survive the next winter; you have to plan even years ahead if you want to survive drought and fallow years.

The varying European climate does require its inhabitants to plan, which steadier climates do not. Therefore, the inhabitants of steadier climates do not develop features necessary for planning. It is sufficient to have the level of intelligence which allows you to live day-to-day.


verbatim: As Denis is living on St. Kitts I guess he has already noticed the difference in average IQ of people of similar characterics living there and let's say Slovenians.

Let me put it this way.

I would never go so far as to insult the people of a nation who have provided us with refuge from oppressive taxation in Europe and elsewhere. This country has offered us refuge from popular oppression at a time when almost no other country would, and for this we are very grateful.

That being said - yes, we have had our share of experiences, here and elsewhere in the Caribbean, that you wouldn't expect to have in Europe. And yes, these experiences tend to be compatible with Lynn's data.


boris_kolar: Nobody suggested that poor average IQ is not a roadblock to success, but it certainly does not predetermine nations to hopeless starvation.

Let me paraphrase this.

"Nobody suggested that lack of opposable thumbs is not a roadblock to success, but it certainly does not predetermine populations without opposable thumbs to a state of no technological progress."

"Nobody suggested that the lack of vocal chords is not a roadblock to success, but it certainly does not predetermine populations without vocal chords to a state of no technological progress."

Yet, look at existing populations of creatures that (1) lack opposable thumbs, and (2) lack vocal chords, and tell me where you see an example of such a population that has shown technological progress.

The only way low IQ doesn't predetermine populations is if a sufficient number of people with high IQ come along, and help the population.

This help needs to be persistent: things will fall apart as soon as the high-IQ organizers leave.

I have nothing against people who want to go into low-IQ populations and help them out, as long as they do it based on their own free will.

I have a lot against people who want to force others to provide help for low-IQ populations, because they feel that for some reason it is the duty of every creature in the universe to help poor creature X - but, for some reason, not countless billions of other creatures Y and Z which are in no better positions.


boris_kolar: In reality, no one is "average", so you can't make usable assumptions about people based on their race. Just like you can't assume that woman you meet is stupid - often she would be, but sometimes you'll be very wrong.

Obviously, statistical facts about populations cannot be applied to specific individual members of that population. They will, however, hold true for a random sample, and this is an important predictor of the success of the population as a whole. But not, obviously, a predictor of the success of each individual member.


boris_kolar: Maybe I'm wrong (I haven't read that Lynn book and I don't think it's even worth downloading), but "conclusions" you were led to by these racist-funded books are contradicted by their own data.

You are not merely "wrong" - you have no clue about what you are speaking.

I think you don't even understand the message I am trying to convey - or the message Lynn is trying to convey - as you seem to be inferring things that have nothing to do with this message.

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