Excerpt from Chapter 6 on Rockefeller, Gates, Philanthropy, and Taxes

The following is an excerpt from the book Just a Little Bit More: The Culture of Excess and the Fate of the Common Good, available now at http://www.blueocotillo.com.

Bill Gates, born in Seattle, is the modern-day Rockefeller: ruthless in business, rich beyond compare, and one of the greatest philanthropists the world has known. Like Rockefeller’s Standard Oil, his company also has been accused of monopolizing practices. Both Rockefeller and Gates, their genius and drive indisputable, exhibited business acumen that bested the competition again and again. The comparisons are striking; Rockefeller excelled at buying or squeezing out smaller competitors while Gates excelled at bringing smaller players along for the ride (with the gargantuan Microsoft), only to dispose of them once their particular code was incorporated into existing Microsoft codes and then tweaked (or outright purchased). Enough of a change in a computer code—too bad Gates couldn’t have advised George Harrison when the Chiffons weren’t so fine with “My Sweet Lord”—and infringement was a nonissue, especially with Microsoft lawyers so suitably financed. And as Rockefeller wasn’t a participant in the beginnings of oil refining, neither was Gates the progenitor of the operating systems (generically referred to as OS or DOS) that serve as the backbone of small computer software systems. Gates has the computer giant IBM to thank for a lot of the success that came his way. IBM, working together with Gates and Microsoft in the early 1980s on its new product—the personal computer—was still focused primarily on business computing, which it saw as its main livelihood. Deciding that personal computers were lightweight, IBM let Gates and Microsoft cofounder Paul Allen keep the rights to MS-DOS, the operating system on IBM’s new PC, the 5150. A decade later, as personal computer sales exceeded all expectations, IBM and Microsoft split ways. Microsoft’s Windows 3.0 would eclipse IBM’s OS/2; and because of Gate’s business model of incorporating and conquering,* Microsoft became one of the world’s most valuable companies and Gates the world’s richest person. Gates, a whiz at writing computer code, didn’t write MS-DOS; he bought its progenitor version from Tim Paterson, a computer genius himself, who borrowed heavily from another precursor version written by another Seattle computer whiz, Gary Kildall. Gates is brilliant, but he’s not as self-made as is typically assumed.

Gates’s father, William Gates Sr., a retired lawyer, is not someone who is taken in by the fiction of the self-made man. In the spirit of egalitarianism, he has been a tireless spokesperson for progressive taxation of the rich, those who have the incomparable ability to pay. In 2001, following George W. Bush’s inauguration, tax reform was given high priority by the new administration. The estate tax, or “death tax,” was one of their reduction targets; in the post–World War II era its highest rate was consistently held at 77 percent. During the Reagan years it was reduced to 55 percent, and the Bush administration desired to reduce it further, if not to fully repeal it. In the spring of 2001, Gates Sr., with an opinion piece in the Washington Post, became a vocal opponent of tax reductions for the rich; two years later he also coauthored the book Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes. Gates argues that the estate tax helped America maintain the egalitarian spirit that differentiated its founding from aristocratic Europe. During the height of the Gilded Age, eighteen states of the Union adopted inheritance taxes—Andrew Carnegie (not surprisingly) was one of many wealthy supporters of the new laws. Estate taxes, according to Gates, serve “as a practical, democratic restraint on massive concentrated wealth and power.” Repeal of the estate tax “would widen the growing gap in economic and political influence between the wealthy and the rest of America.” As of this writing in 2013, the United States yet employs a tax on the right to transfer property at death.

Gates Jr. has become the most generous philanthropist in the history of the world—Rockefeller and Carnegie would be impressed. Gates and investment magnate Warren Buffet joined forces to create The Giving Pledge: “an effort to invite the wealthiest individuals and families in America to commit to giving the majority of their wealth to philanthropy.” As of 2013, more than 110 individuals or families have joined the pledge to give at least 50 percent of their fortunes away. Others making the pledge include Sandy and Joan Weill, David Rockefeller, and Michael and Lori Milken. No member of the Walton family has yet to sign on.

 

* Author Harold Evans says, “Hundreds of small innovative companies have died in Microsoft’s bear hug.” Harold Evans, They Made America: From the Steam Engine to the Search Engine, Little Brown (2004), 418. Rockefeller and Sam Walton would be proud.

 

Above excerpt from Just a Little Bit More: The Culture of Excess and the Fate of the Common Good, Blue Ocotillo Publishing (2014), 130-31. All rights reserved.

 

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