Truck and Barter: Bill Gates' "Virtuous Cycle"

October 02, 2004

Bill Gates' "Virtuous Cycle"

By Kevin

I like Bill Gates language on international trade and development:

"China and India are the big change agents for the years ahead," Gates told students at the University of California Berkeley. "We have to go into the risky new areas. That's what's going to allow the United States to stay at the forefront..."

"It's a little scary to me that people are thinking of this as a zero sum game," Gates said, referring to criticism of outsourcing and growing overseas tech markets.

"We're at the start of a process where the whole world is getting into this virtuous cycle," Gates said.

Whoever wrote that Reuters summary picked out excellent quotes. This "virtuous cycle" language is not unique to Gates, of course; but it occurs again and again in Gates' speeches, regardless of topic.

In a White House speech on 4/5/2000, Gates said:

[If] you had to pick who's the big winner in all of this, you'd definitely have to pick consumers. Technology is putting them in the driver's seat. Think about what electronic commerce does if you're trying to buy a product. It lets you go out to the Internet and look at products and services of every kind. Whether you want to look by price, by reputation, you'll be able to find products that never would have been available through traditional distribution channels -- products that are unique to your particular interests. And so it's the consumers who are in charge as price transparency climbs.

Now, that makes businesses innovate in a way that really wasn't necessary before, whether that's innovation in quality, customer service, or simply the price of the product. And it's that virtuous cycle that's allowed capitalism to work better in this era than ever before.

Just a decade ago, people wondered: Would the PC revolution eliminate jobs? Would it make jobs in some ways worse? Today, we know that certainly, on balance, technological advancement has led to lower unemployment that they've gone hand in hand. And so this technology revolution has been one of the greatest job creation engines ever.

In November 2001, Gates uses it in supporting open-source software:

But back to this week's visions. Diplomatically, Bill says free software has a role: "We certainly accept free software as part of the software ecosystem. In fact, there's a very virtuous cycle where people do free things, some people find that adequate, sometimes companies will take that work and turn it into commercial products, those companies will hire people, pay taxes. And so you see the free software and the commercial software existing together."

It comes up when talking to Bill Moyers in May 2003 about international health and poverty issues :

Absolutely. And that is the most amazing fact that should be widely known. You know essentially Malthus was wrong. If you raised wealth and you improve health, particularly if you educate women, then this virtuous cycle kicks in and a society not only becomes self-sustaining, but it can move up to a fully developed status.

The virtuous cycle shows up when Microsoft reps discuss university-industry relations, and so on and so forth.

No snappy conclusion... I'm just noting how one man's mind works.

Posted at October 2, 2004 11:17 AM

Comments

You just got to the real heart of the outsourcing, protectionism debate.

Those in favor of protectionsim and that oppose
outsourcing look at the world as a zero sum game.

Those in favor of free open trade look at the world as a positive sum game.

Comment by spencer at October 3, 2004 09:52 AM | Permalink

Sorry guys but, I'm too preoccupied with the vicious cycle of buggy patches to fix buggy patches that fix buggy products from the house that Gates built.

Comment by Brian at October 3, 2004 11:48 PM | Permalink

""It's a little scary to me that people are thinking of this as a zero sum game," Gates said, referring to criticism of outsourcing and growing overseas tech markets.

"We're at the start of a process where the whole world is getting into this virtuous cycle," Gates said. "

Easy to say when you've got $50 billion in your wallet. He's quite safely insulated from however it ends up.

A little harder to swallow when you're one of the many on the razor's edge of bankruptcy.

Comment by Jon H at October 6, 2004 07:38 PM | Permalink