"Creative Capitalism": The Blog

A speech that Bill Gates gave at Davos (and which Steve Levitt likes) is now being debated in an ongoing blog by an amazing cast of characters — including, to name a few, Lawrence Summers, Richard Posner, Michael Kinsley, Steven Landsburg, Michael Kremer, and Ed Glaeser. They are engaged in a lively discussion about whether corporate capitalism can be reinvented and reoriented with a combination of incentives and recognition to make progress on under-addressed social problems.

This is not a love fest for Gates and the potential millions that his foundation could bestow on academics, but a free-wheeling debate on whether our current corporate model is broken.

I’m impressed because it’s hard to disagree with potential funders.

Years ago when I was teaching at another university, I was invited to a special seminar presented by a multi-millionaire heir. The heir argued that the natural rate of interest was 5 percent because the natural life of a generation was 20 years and 5 percent is the reciprocal of 20. I’m pretty sure that this is nonsense on stilts. The audience (which included more than one Nobel prize winner) faced a real dilemma. Do you tell someone who could give you millions that he or she has a foolish idea?

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  1. AaronS says:

    Is there any greater gift to a wise man than the TRUTH? As Proverbs tell us, “Rebuke a wise man and he will be wiser still….”

    To accept funds from an unwise man is surely a treacherous thing–not only in terms of having your funding pulled at the most inopportune time, but in the measures it takes on our very soul and self-respect–to hold our tongues from the truth just to get someone’s money.

    Is that really any different than a pretty little gold-digger latching on to a “sugar daddy,” never telling him that she really doesn’t find him attractive, romantic, or interesting, for that might mean the end of the ride?

    Yes, we should tell the truth. Certainly tell it tactfully and discreety (no need to embarrass people or talk down to them), but tell the truth.

    Further, if these wealthy people do not know the truth, then they will very likely spend their resources in a way that is not as beneficial as it could be. For instance, if someone thinks that sore throats are the most pressing medical issue in our lifetimes, you can be sure that it will receive more funding and attention than cancer, heart disease, and so forth. Not good.

    Let it be our job to EDUCATE those who have the great resource of wealth so that we may help them do the great and lasting good with their wealth.

    To sum it up, NO, do not tell someone they have a FOOLISH idea. That is neither tactful nor discreet. Rather, educate them to the truth, for they will then come to realize how lacking their original idea was.

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  2. Brian says:

    The fact that this question is even asked (regarding academic integrity) supports my long held belief that contemporary Acadamia is really just a multi-billion dollar business designed to grow the universities by acquiring funding by whatever means necessary. The classic purpose of Acadamia is to research and pronounce Truth. But now it seems truth gets in the way of growing the business that acadamia has now become.

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  3. frankenduf says:

    AaronS has it about right- except for the sugar daddy critique- I would presume to say that the trade of power for sex is at the origins of human trade, far predating money exchange- yeah, the rich guy could spend his money in a far more socially useful manner, but the ‘truth’ of the matter is that these exchanges are an integral part of the social hierarchy (i’m still looking for a sugar mommy…)

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  4. Alex says:

    I think that the question is focused too narrowly. “Do you tell someone who could give you millions that he or she has a foolish idea?”

    Do you tell anyone who can do some thing good or bad for you that s/he has a foolish idea? More succinctly, “do you tell anyone who has some power over you that s/he has a foolish idea?”

    You boss? You’re boss’s boss? Your spouse?

    It depends on some obvious factors:

    1) How are they likely to take the information? Openly and graciously? Bitterly? Personally? That has got to be the main issue, and it varies. It depends on their character, your ability to beak the news gently and the degree of their foolishness. And the nature of your relationship.

    2) How much potential power over you do they have? That’s something like the potential impact. Millions of dollars is big. Getting fired is big. Giving away all of your possessions is big.

    3) How likely is a negative reaction from them to lead to the negative impact.

    I’ve been fired for gently implying that a boss’s approach was not optimal. I’ve been amply rewarded for correcting another boss quite directly. And I’ve had bosses whom I never corrected, but did not let their foolishness change what I was doing.

    Anyone who thinks that academics are immune from these pressures is entirely unfair. And anyone who thinks that there’s a hard and fast rule is being far too simplistic.

    As for your particular example and the first commenter’s response, well, it’s not that simple. The fact that you may be faced with someone who is in need of education does not neccesarily mean that you are able to educate them. In some situations, or in response to some people, a person might dig in, or somehow use the attempt as evidence that you are wrong about other even more important things.

    Moreover, there can be a signficant social cost. If the crazy old man who thinks that the earth is flat is on his deathbed and is willing to leave his billion dollars to a college scholarship fund for me to administer, what is to be gained by “educating” him? What is risked by even trying?

    So, that suggests a fourth issue to keep in mind.

    4) How much damage might their foolish idea do to you, and how much damage might it do to others?

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  5. Chris S. says:

    I agree with Alex. AaronS response is far to idealistic, while Brian paints with the broadest brush of cynicism.

    One cannot educate a man if he does not want to learn (not revelaed in Ian’s brief anecdote).

    I think a central question to Ian’s query is “What is the purpose in telling him his idea is foolish?”

    This touches on Alex’s point 4 in that his foolish idea may or may not be relevant to some future unknown funding. Without money on the table, it is unlikely that anything will be gained by revealing the foolishness. Other than winning an argument with a fool…but then who is more foolish?

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  6. doug says:

    It appears Detroit is being steered by the market to build high-mileage, environment friendly automobiles in spite of the fact that the SUV, on a per unit basis is a better profit maker.

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  7. jon says:

    Evidence that the American business model is broken can be given in the names of two banks; IndyMac and Bear Sterns. These banks paid their executives millions (not unusual by any means) and now they are being bailed out by Americans tax dollars. These tax dollars could go to better uses like infrastructure repair, paying off debt, helping people with foreclosures, etc…

    As far as academians go, I am still wondering why I know so few who get involved with their business counterparts. This kind of networking helps their students (jobs) and the university (donations). The business people will have entry jobs filled quickly, and an idea of what research is being done that can help their business.

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  8. kabonfootprint says:

    i think that was a good info…

    i like it

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