Bill Gates, Regular Guy

It was entirely predictable that as soon as Matt Taibbi left Rolling Stone, the magazine’s political coverage would suffer. What wasn’t so predictable was that it would fall so far, so fast.

Exhibit A: Jeff Goodell’s disgustingly fawning interview with Bill Gates, titled, with no apparent irony, “The Richest Man in the World Explains How to Save the Planet.” Goodell lingers lovingly on what a regular lug Bill is:

Personally, Gates has very little Master of the Universe swagger and, given the scale of his wealth, his possessions are modest: three houses, one plane, no yachts. He wears loafers and khakis and V-neck sweaters. He often needs a haircut. His glasses haven’t changed much in 40 years. For fun, he attends bridge tournaments.

Aw, isn’t that just adorable? The blogger Digby had some fun exposing the lie behind the “modest possessions” nonsense. (To sum up: his mansion has 24 bathrooms, a salmon-filled stream, and a trampoline room.)

What I’d like to focus on, though, are Gates’s comments, in Rolling Stone and also at an event at the American Enterprise Institute about economic inequality. (Transcript available here, as a PDF.) In both interviews, he was asked to weigh in with his Deep Thoughts about how America should address that problem. Because who better to go to for ideas about how to alleviate economic inequality than the richest man in the world, right?

But, improbably, after decades of stagnating and declining wages for much of the population, economic inequality has lately become a hot political topic. Economic elites are responding with alarm, with the uncool billionaires shrieking that the modest political pushback they’re receiving is akin to another Kristallnacht. But the cool billionaires are handling this challenge to their power in a way that’s far craftier. Their approach is to co-opt the anti-inequality movement before it even gets off the ground. Recently at SXSW, Google billionaire Eric Schmidt treated us to his insights on the inequality fight. Now it’s Bill Gates’s turn.

In the Rolling Stone interview, Mr. Bill had some criticisms of our welfare system:

The way we help the poor out today [is also a problem]. You have Section 8 housing, food stamps, fuel programs, very complex medical programs. It’s all high-overhead, capricious, not well-designed. Its ability to distinguish between somebody who has family that could take care of them versus someone who’s really out on their own is not very good, either. It’s a totally gameable system – not everybody games it, but lots of people do.

It’s difficult to parse what he’s talking about here. Goodell didn’t follow up to ask him what he meant by “gameable,” but if he’s talking about welfare fraud, that’s something that barely exists in this country. Also? Talk about “gameable!” This is a man who owes his much of his mind-boggling fortune to his success in gaming the legal system to manipulate the government into backing down from its monopoly case against Microsoft.

Moving on, let’s jump to last week’s American Enterprise Institute interview, where Billo elaborated his views. He’s no fan of the minimum wage, that’s for sure: “I worry about what that does to job creation,” he said. The consensus among economists is that the minimum wage has little if any impact on employment, but that doesn’t phase him. The fact that the declining value of the minimum wage is a significant contributor to economic inequality, particularly for women—that doesn’t cloud his beautiful mind, either.

So what does Gates want instead? A “progressive consumption tax,” he says. Let’s stop right there. As Thomas Piketty points out in his magisterial new book on inequality, Capital in the Twenty-First Century, a progressive consumption tax has never existed. Consumption taxes that exist in the real world are your basic sales taxes (which, obviously, we already have in the U.S.) or value-added taxes (VATs), which are common in Europe. But the problem with these taxes is that they are regressive. As Piketty notes, “[s]uch taxes have always existed and are often the most hated of all, as well as the heaviest burden on the lower class.” Consumption taxes hit the poor hardest because, unlike the rich, the poor consume every last dollar. And consumption taxes would, of course, leave the one percent’s true sources of power—their vast stores of capital, and their staggering levels of compensation—virtually untouched.

So no, ‘fraid that one’s a non-starter, so far as an anti-inequality policy goes. But you have to be amazed at the man’s brass in proposing it as such.

What else has Gates got, in terms of an anti-inequality agenda? Well, like so many one-percenters, the man is obsessed with school reform. “The greatest cause of inequity, the greatest challenge to America’s continued leadership in innovation,” he says, “is the failures of the education system.” He focuses his remarks on public schools at the K-12 level, but actually, those schools are performing relatively well, and there is little evidence that the reforms he advocates—charter schools, more technology, etcetera—would alleviate inequality.

Gates is oddly silent about the two educational policies that would do the most to promote equality: enacting universal pre-K (which leads to better employment and education outcomes for poor children) and making college more affordable (research shows that low-income students with high test scores are no more likely to graduate from college than low-scoring rich kids).

I’ve often wondered why the one percenters are so hell-bent on K-12 reform when it’s our nation’s pre-K system and public colleges that could actually use some help. I have a strong suspicion that much of what warms the cockles of their philanthropic hearts about the movement to “reform” American public schools is the unparalleled opportunity it affords to administer an old-fashioned beat-down to labor, in the form of the teachers’ unions. Bill Gates may be one of the cool billionaires, but deep down, he’s a traditional values kind of guy.