Bill Gates Gates Is Dependent On Government

A blog about business and economics.
Sept. 19 2012 9:35 AM

Bill Gates Is Dependent On Government, The Most Valuable "Programs" Aren't Welfare

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WASHINGTON, DC - JULY 23: Bill Gates, Co-Chair, Bill & Melinda Gates Foundation, makes a few remarks at the Friends of the Global Fight - Global Fund Dinner at the Reserve Officers Association on July 23, 2012 in Washington, DC.

Photo by Paul Morigi/Getty Images

Brad Plumer has a neat post on "who receives government benefits in six charts." But it's very focused on traditional government spending programs. You might get SNAP or your grandma might get Medicare. Many of the most valuable government programs aren't like that.

Consider Bill Gates, still the richest man in the world. Why is he so rich? Well he's rich because thanks to strong network effects it's extremely difficult to undercut Microsoft Windows and Microsoft Office on price even if you can produce a roughly-as-good product. Consequently, both Windows and Office are sold for high prices even though the marginal cost of distributing an extra copy of them is nearly zero. This has created a long string of huge monopoly profits for Microsoft and turned it into a ridiculously successful company even if it seems to be slowly losing relevance as more activity shifts into the mobile space. But naturally the question arises of why people don't just copy these applications and share them around for free? The reason is that the government has a program, known as copyright, whose purpose is to throw people in jail in order to protect the incomes of people like Bill Gates—or, to a lesser extent, yours truly—who produce eligible products.

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Copyright's been with us for a 2-3 hundred years but its term and scope is always changing. The trend in recent decades has been to make copyright terms longer and longer and to double-down on the scope of the copyright program to do more to defend the incomes of copyright holders. It's not a small fact about the world that the most successful businessman of our time built his fortune exclusively around the use of this program. The number three richest man in America, Larry Ellison, is also a computer software guy whose fortune is built on copyright.

At some point the line between who is and isn't benefitting from a government program gets fuzzy. But I do think it's important to recall that these other kinds of benefits exist. They say that it's more valuable to teach a man to fish than to give him a fish. By the same token, a SSI check is meager in value compared to a statute guaranteeing pricing power for your company. In terms of American food and nutrition policy sugar import quotas are a much more lucrative program for the handful of landowners who benefit from them than are food stamps for the people who get them.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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