If the question is "did he break laws to make his money" then of course the answer is yes. If you think Gates generated more than $1.5 million in value every hour he worked, well, I can't stop you. All I can do is point out that the rates that most people get are not as generous and, while high performers should be extremely well compensated, the structural elements that make careers like Gates' possible are bad for the rest of us.
When Bill Gates stopped active work at Microsoft in 2008, if he had redistributed his shares equally to all 91,000 employees, every one of them would be a millionaire today. I encourage you to think about what 'earning' something means and why you defending this particular system for distributing rewards for productive work.
Let's say there was an individual who founded a company, owned 100% of the equity, and designed a brand new product. The product solved an unmet need for consumers, sold at high profit margins, and was massively successful. Our inventor was well ahead of his time, and the next-fastest similar invention would've been invented 30 years later, during which time $500 billion of consumer value had been created. Would you admit in this case that the founder earned a substantial fraction of the $500 billion?
To what degree is Bill Gates' wealth similar to this test case versus network-effect-capture, first-mover-advantage wealth? How do you quantify the value of Microsoft's software quality earning it's substantial market share, versus Microsoft getting there first and squatting on the network effect?
It's interesting to me that you bring up the profit that Microsoft made because I have not. There are things to talk about vis-a-vie Microsoft-the-company and why they were so profitable, but I was only talking about a particular Microsoft employee.
> Would you admit in this case that the founder earned a substantial fraction of the $500 billion?
Oh, would I admit it - huh? I do want to say that your account of this company is at odds with the history of Microsoft, which was famously profitable for ruthless business practices more than innovation.
This founder sounds like they have done well. Certainly, they should be the highest paid person at the company. However, consider how disconnected their actions are from their financial reward. Someone could run a nonprofit just as well, generate $500bn in benefit, and get just their salary. The fact that this person can capture as much value as they can has very little to do with the merit of their work.
What I am saying is that Gates did very well at his job, but the reason he was rewarded so highly for that high performance has more to do with choice and imbalanced value-capture than merit. Every Microsoft employee, down to the janitors, has an equal (if proportional) claim on the basis of "this company is successful so they should get value." If Gates deserves his money because the company was doing well and he contributed x% to the company, the same is true for everyone.
I am not arguing here that Microsoft should have had less total compensation to award to employees, I am arguing that Gates has captured too much of its total compensation. I think we, as members of the tech industry, have very immediate incentives (as well as well-founded philosophical ones) to point out this inefficient distribution and advocate for a better one.
You conflated some of my claims about the hypothetical company with claims about Microsoft in particular. I think that the root of it gets down to disagreement in values about how capitalism rewards innovators though, so it's unlikely we'll resolve any of that disagreement today. I might as well say my piece.
>However, consider how disconnected their actions are from their financial reward...
Operating at a high executive level in a corporation is necessarily abstract and disconnected. Bill Gates's most tangible actions were early on, starting the company and taking the risk and creating the first bits of the software. It's turned out that many software products have high margins once established, and high network effects as well. By the time somebody is focusing their attention on the biggest winners among the highest margin, most scalable industries, at the peak of their career success, they can forget the other less-successful founders whose products help people everyday and are awarded in more reasonable proportion. It's tough to know how many of these other founders would have even started a worthwhile business without the potential reward of wild amounts of wealth.
FWIW, I would appreciate it if co-ops were more common as a corporate structure. I've got no beef with that existing, and it is indeed possible for it to exist within the U.S. legal system. I figure that it all comes down to incentives. And as far as Bill's wealth goes he's doing a pretty good job of giving it to people in greater need of it than the average software developer.
Yah, I was a bit cheeky, but I think we're understanding each other!
I guess I want to say that I don't think our two views obviously contradict each other. I think you and I agree on how responsible Gates was for Microsoft's success. I agree with your entire 2nd paragraph.
To me, the part of your account that I am drawn to is how much of Gates' most influential actions were well before he could fully assess his financial rewards. It simply seems true that Gates did not need the full weight of his fortune to motivate him because it did not exist for the period that was most important in generating it.
I do not have much of an answer to any of this - as I've said I think it's fine that Gates be absurdly rich - but I think it's important to point out these obvious misallocations where someone is eventually paid world-changing amounts of money for work they completed years ago when they could only be relatively sure they were going to be paid life-changing amounts of money. I think it is literally and figuratively in all our interests to see if we can imagine a system that distributes rewards more widely.
> And as far as Bill's wealth goes he's doing a pretty good job of giving it to people in greater need of it than the average software developer.
I think there's are certain inevitable problems when you ask one person to allocate this much money that will crop up no matter how good that person is. I guess I would just say, while I think Gates has done very well, I am not sure at all that the net positive change in the world is better when Gates has ~$100bn v.s. him having...$10bn and 5-10,000 MS employees share the other $90bn. A lot of those people are smart and I bet they could come up with ideas Gates has missed!
It worked out for the better in the end, considering Gates has pledged to give 99% of his wealth to charity. To redistribute that wealth to among Microsoft employees would essentially be taking money from the poorest 10% of people and giving it to the richest 10%.
Like everyone, I agree that Gates' pledge to donate his money is a goodness.
I also think you have stopped being critical too soon. It's very optimistic of you to imagine that the Gates foundation is 100% efficient at delivering money to poor people. They actually ban giving money directly[1]. I don't mean to say they are doing badly exactly - just to point out that the fact that all of that money runs through a single set of philosophical principles has impacts on how it is used and distributed.
I suspect that distributing the money to Microsoft employees would noticeably drop the total dollar amount devoted to charity, and exponentially increase the number of charitable experiments the money funds. I believe that's a good trade off - reasonable people can disagree.
100% efficiency is obviously an impossibly high bar for anyone.
> I suspect that distributing the money to Microsoft employees would noticeably drop the total dollar amount devoted to charity, and exponentially increase the number of charitable experiments the money funds. I believe that's a good trade off - reasonable people can disagree.
I pretty disagree strongly with that sentiment. Had the money been distributed to employees, a negligible amount would have gone to charity. It's a stark difference.
I (obviously) don't have exact stats for how charitable Microsoft employees would be if they had more money, but I remember the median annual donation amount for someone earning $60k-$80k in 2010 was $107. Roughly 0.15% of their income. The rate wasn't that different for higher income brackets either.
Dividing Gates' wealth (including his non-Microsoft shares, since he diversified) among 91,000 employees would give them each about $1.1 million. It wouldn't have been a lump sum payment realistically. It would have been given as stock options that grew to that value over these people's careers. That's not a huge pay boost for a Microsoft employee (one site lists the average compensation at Microsoft as $121k/year, or about $3M over 25 years).
Unless Microsoft employees are very unlike other people, we're talking about going from 99% of the money being donated to less than 1%.
As an aside, I believe Microsoft employees do own a larger share of Microsoft than Gates does, even if we converted all of Gates wealth back to Microsoft shares.
When Bill Gates stopped active work at Microsoft in 2008, if he had redistributed his shares equally to all 91,000 employees, every one of them would be a millionaire today. I encourage you to think about what 'earning' something means and why you defending this particular system for distributing rewards for productive work.