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Feb-06-2013 19:30printcomments

The Bill Gates Fantasy

Does Bill Gates deserve his fortune? Do the Walton offspring deserve to be billionaires? Do the children living in poverty in the ghetto deserve to grow up poor?


William Henry "Bill" Gates III
With all his billions, you'd think he could afford a decent haircut.

(CALGARY, Alberta) - There are two main ways to become really rich. The first involves luck—e.g. win a big lottery. The second involves being born on third base (and growing up believing you hit a triple)…hmmm…also luck. Is this a contradiction? Let us explore further.

The richest person in the world today, outside of middle-eastern autocrats, is William Henry "Bill" Gates III, with a net worth in the ethereal neighborhood of $66,000,000,000 ($66 billion). If he were to spend $1 million a day, it would take him 180 years to spend it all. (Actually, this would only be the case if he kept the money underneath an oversized mattress so that it did not continue to increase through interest or stock growth as he was spending it.)

Question: Did Bill Gates actually earn any of this fortune or was it just luck on his part? Let us find out.

From the colonial era forward all successful American businessmen came from privileged backgrounds. There was one exceptional period, the 1850s. As sociologist C. Wright Mills observed: "The best time during the history of the United States for the poor boy ambitious for high business success to have been born was around the year 1835."

Historians have compiled a list of the 75 richest individuals in history, going all the way back to Cleopatra. One incredible fact about the list is that fourteen of those (20%) were Americans, born within nine years of each other in the mid-nineteenth century.

  • George Pullman, 1831
  • James G. Fair, 1831
  • Philip Danforth Armour, 1832
  • Peter Arrell Brown Widener, 1834
  • Fredrick Weyerhaeuser, 1834
  • Marshall Field, 1834
  • Hetty Green, 1834
  • Andrew Carnegie, 1835
  • Jay Gould, 1836
  • J. P. Morgan, 1837
  • John D. Rockefeller, 1839
  • Oliver H. Payne, 1839
  • George F. Baker, 1840
  • Henry H. Rogers, 1840

This anomalous event occurred because in the last third of the 19th century, American society had began a major transformation. Railroads were being built, oil was being discovered and mining expanded apace; Wall Street was emerging and industrial manufacturing began in earnest. All the rules from the old economy were being broken and remade. The list above is of men (except Green) who were in their twenties and thirties when the Civil War ended. Born a decade before or after 1835, and they were too young or too old (mentally) to take advantage of the economically unique, expanding opportunities.

If we jump ahead to the last quarter of the twentieth century, we find the same process occurring again.

January 1975 is recognized as the beginning of the microcomputer revolution: The Altair 8800 was offered to hobbyists and a few, like Bill Gates and Paul Allen (co-founders of Microsoft) jumped on it like a lion encountering a wandering stray antelope.

It was, like the 1850s—a matter of being psychologically ready or not. As long-time senior Microsoft executive Nathan Myhrvold said

"If you’re too old in 1975 then you’d already have a job at IBM out of college, and once people started at IBM, they had a real hard time making the transition to the new world. You had this multibillion dollar business making mainframes, and if you were part of that, you’d think, Why screw around with these little pathetic computers? That was the computer industry to those people, and it had nothing to do with this new revolution. They were blinded by that being the only vision of computing. They made a nice living. It’s just that there was no opportunity to become a zillionaire and make an impact on the world."

Anyone more than a few years out of college by 1975 was already part of the old paradigm. An equivalent computer-people date of birth list:

  • Steve Jobs 1955
  • Eric Schmidt 1955
  • Bill Joy 1954
  • Scott McNealy 1954
  • Vinod Khosla 1955
  • Andy Bechtolsheim 1955
  • Bill Gates 1955
  • Paul Allen 1953
  • Steve Balmer 1956

So, the first part of fortune-making is luck—when and where you were born.

Returning to Bill Gates: what were his third base credentials?

First, and perhaps most important, he was born into a wealthy family. (There are poor-boys who do well, but they are exceptionally rare in real life.)

What did BG III actually do? Did he invent a computer or operating system? No, he did not. No one gainsays him being a genius and working incredibly hard. But…

Bill’s fortune is based on a third-base deal he was able to make. IBM was looking for an operating system for its PCs and called on Gates. Don Estridge, the project manager, said he was nervous is presenting an untried person and company to the IBM management committee but at the meeting, John Opel the IBM chairman asked: “That wouldn’t be Mary Gates boy, Bill, would it?” Opel was on the national board of the United Way where he served with Bill’s mother and knew her socially, as well. So, Bill was in a the highest level.

Bill didn't have an operating system and didn't have the programming skills to produce one, so he bought a program from a Seattle programmer, Tim Paterson, for $75,000. He offered it to IBM and stipulated that IBM would pay Microsoft a royalty for every one installed on an IBM PC. So, how does Bill deserve his fortune?

Before Gates entered the picture, IBM was negotiating with Gary Kildall who actually did invent an operating system: Control Program for Microcomputers or CP/M. Paterson’s DOS was an inferior knock-off of CP/M. Kildall, for example, had already developed the capacity for multitasking, which Microsoft wouldn't be able to do for another ten years.

I began working with computers in the early 1980s and my Apple IIe clone had CP/M installed. When I switched to an IBM clone a few years later, it had DOS installed and I could immediately compare the two. By undercutting his “friend” Gary Kildall, Gates did the whole personal computer industry a disservice. I noticed it in detail over the next decade as I saw software application after software application bite the dust as it was overwhelmed by inferior Microsoft products that had monstrous marketing clout behind them.

The best database program in the late 1980s was called Paradox. Then MS came out with a program called Access which was far inferior. Access, as it exists today, is still not as good as Paradox was ten years ago when MS put Paradox out of business.

So, who actually deserves the MS fortune? Gary Kildall could have been treated better, but even he could not take the crown. We have to allow that computers were the end product of the minds and efforts of tens of thousands of others over the last two centuries or so.

Jacquard loom

In the early 1800s Joseph Marie Jacquard invented a unique loom for weaving silk. His loom allowed the weaving function to be done without manual intervention. It involved a series of punched cards that were inserted in the loom where metal rods attached to individual threads would strike them. If the rod encountered a solid card it would do nothing. The actions of the loom depended on the placement of holes in the punched cards.

Charles Babbage

A half century or so later, Charles Babbage addressed the calculating problems faced by mathematicians and astronomers. The creation of mathematical tables and the calculation of the locations of planets, etc., involved tedious efforts of hundreds of clerks who were, interestingly enough, called computers.

Babbage designed a machine that would use punched cards to control metal rods that activated cogwheels to carry out calculations. He designed, but was unable to build a machine that was actually operational. A working model was not built until 2004 when scientists, faithful to his plan, built a five-ton machine of 8,000 parts—and it worked. Babbage is now considered to be the “father” of the modern computer.

Hermann Hollerith

Hollerith used the punch card technology to create a machine that actually did something useful. It was used in the 1890 American census allowing the counting process to be automated, carrying out tasks that had previously taken hundreds of clerks, two years to accomplish. Hollerith commercialized his machines and in 1911 merged with three other companies to form IBM.

IBM grew rapidly from federal government contracts. One bonanza was the Social Security act of 1935. Suddenly the government needed to automate the employment records of the entire country. IBM received an order for five hundred machines shortly after.

By the late 1940s two engineers from the University of Pennsylvania, J. Presper Eckert and John Mauchly, with U.S. government funding, developed an all electronic computer. The invention of the transistor soon after, allowed computers to become smaller and more powerful.

By 1955, the year BG was born, the computer revolution was well under way with 15,000 or more enthusiasts/hobbyists working to develop and widen the use of these computers. The computer wave was propelled by these professionals and hobbyists.

The question, again

The computer sitting on your desk (and everything that evolved from it) is the end product of at least two centuries of people making contributions. Isaac Newton famously said that if he could see so far, it was because he had stood on the shoulders of giants. So it is with all the computer innovators of the past few decades. No person stands alone.

We are now prepared to answer the question: Does Bill Gates deserve his ethereal fortune? The answer is an unequivocal no!. And it goes beyond Gates. What fortune is actually deserved when we can point to a long list of people who came along before one lucky opportunist was able to grab the brass ring.

I had a lengthy email conversation with a Texan named Don a few years ago. I sent him an article which he immediately dismissed as a typical liberal "blame article". He wrote:

Well, I will say anyone born poor, who stays poor, is lazy or stupid. If they're stupid, well then they are doomed. If they are lazy then there's hope. My grandmother was born in a farm house with dirt floors in western Arkansas. She left home at fourteen heading for the 'big city' of Tulsa, Oklahoma. She never looked back. Everything she ever attained she did on her own and she left poor behind. She even paid off her house. My aunt and uncle paid off their house. This bs about being poor is just that, bs. In this country there is no excuse for staying poor unless you fit that one single category. STUPID, it's incurable and those are the few who need to be taken care of.

In my email I had wondered about the fairness of some Americans having to join the military and risk their lives to have any potential to advance their life chances while the well off did not.

As for the battlefield class, that's a lottery. Those who go in do it to get a 'free' education but roll the dice that they might get shot at. They fit in the category of those who are willing to help themselves and that's fine. Class warfare is for the liberal set. I don't give a damn how much some rich person is worth. I can, if I try hard enough attain similar status. The accumulation of wealth is not big on my radar screen. Like most people I'm content with comfortable. The rich get richer and the poor get poorer is total bullshit. This is not a zero sum economy. Also the poor in the country have satellite dishes on the roofs of their houses with a car and a pickup in the driveway. That ain't poor. People need to shut up and quit being lazy.”

I emailed back and asked if he thought his grandmother would have been able to do those things if she had been black. No reply.

Conclusion

It works both ways. Just as the rich are rich because of luck, so the poor are poor because of bad luck. The savage, dog-eat-dog attitude that underlies American society (which is the primary resistance to universal health care) comes directly from the Social Darwinism that the rich of the nineteenth century used to dupe ordinary people into quietly accepting their place in the scheme of society.

Before you want to write a comment about how you’re well off or comfortable because of your own herculean efforts answer these questions for yourself:

How much of your “success” depended on where and when you were born? On who your parents were? Or the neighborhood in which you grew up? The school(s) you attended? The people you fortuitously met along the way?

Look at the key turning points in your life and become aware of them being turning points because of so many other factors that were not, and never could be, under your control. If you have done well in life, it’s mostly about luck. You are not the author of your own fortune, just as the poor are not the authors of their own misfortune.

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Daniel Johnson is a born and raised Calgarian. He is currently working on a book The Occupy Wall Street User Manual which is scheduled for publication in spring 2013 by Polymath Press In 1990 he published his first (and so far, only) book: Practical History: A guide to Will and Ariel Durant’s “The Story of Civilization” (Polymath Press, Calgary) Newly appointed as the Deputy Executive Editor in August 2011, he has been writing exclusively for Salem-News.com since March 2009 and, as of summer 2012, has published more than 210 stories. View articles written by Daniel Johnson




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Anonymous February 9, 2013 10:15 am (Pacific time)

Americans who built this country...

You'e commenting on the wrong story... 


ok February 7, 2013 10:23 pm (Pacific time)

Good to be an american.


Anonymous February 7, 2013 4:07 pm (Pacific time)

Expresso, and excellent brew I might add. I retired at 40 DJ, quite some time ago. I offered my children a smooth ride in life, they preferred to make their own way. Maybe my wife and I did the right things as parents, maybe we got lucky, maybe both, and/or other fortunate interventions happened. What you may define as a serf, I believe that we have different interpretation. If liking a life that has many modern things that makes our lives more enjoyable, well that's my choice, and I know what life's like living on the edge, even in deadly circumstances. Have you experienced an environment where people are doing their best to dispatch you? When you survive that situation, you really don't sweat the small stuff, unless it's the wife giving you her task list. America still provides plenty of opportunity for upward mobility, especially compared to most of the rest of the world. The illegal invasion has driven down wages, and once again our congress is ignoring our unskilled citizens. This will become a very bad situation in the not too distant future. I expect martial law will becoming for many of our large inner cities before too long. We are not going to resembele anything like the pre-industrial revolution, but our population will be considerably smaller, because we are not like the real serfs in places like China and India, or Calgary. Our population will not cower to the tiny minority of government thugs, we will remove them from power.

The U.S. is the least upwardly mobile of all the OECD nations. 


Anonymous February 7, 2013 11:23 am (Pacific time)

DJ are you essentially angling for a re-distribution of wealth and all other assets? What top amount of income/wealth do you think would be enough? How many black millionaires (even billionaires) are in America compared to the rest of the world? A per capita count would prove interesting. As far as Gates, how many millions of jobs around the world has his companies created? The average computer user at home, the student, small business owner, seem to be doing just fine with available software/hardware. One of my children received an Engineering degree from Oregon tate University in Software. He had been rebuilding hardware and writing code starting when he was around 10. He creates a lot of wealth for his employer, and does get numerous bonus rewards for his accomplishments. He is aware that for more reward he will need to go out on his own, and that presents the need to take "risk." He is married with several children. That is what most all business owners have done, take risk. Most lose, and very few make it. Such is life. Without risk takers we might as well go back to serfdom, and once again live those lives Thomas Hobbes characterized. Understanding History is a tough nut to crack for some. Nepotism is never going to leave human culture, regardless of what one's socio-economic level is.

You've already devolved to serfdom: Wake up and smell the coffee! 


dolng well February 6, 2013 10:48 pm (Pacific time)

So try tracking average lifespan increases and couple with quality of life improvements with mortality increases. Unhappy people always see the gloom and doom in their environment. Forward thinkers seek solutions and then even the untalented get pulled up. They of course still blame others for their misery, never taking personal responsibility.

So, you're "doing well". Have  you considered the role of luck in your prosperity? What "personal responsibility" can you claim? Were you able to pick your parents and the time and location of your birth? That would only be a start to "personal responsibility."

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