In Spain last week Bill Gates pointed at some “rigidities” that were stopping the Spanish economy function in a normal way, and the Microsoft founder found it downright eerie that wages weren’t falling at a time when the country is blighted by such a high unemployment rate. Because he also said he was not an expert on Spain, he has to be given the benefit of the doubt; let’s say he doesn’t know that in real terms wages in Spain have fallen since the advent of the euro and that’s why the generalized pay freeze for those in work is an even bigger sacrifice on the part of labor than it might seem. A recent survey said that Spanish salaries had risen by 14 percent during the first decade of the single currency, while the cost of living had risen by around 50 percent.
Gates was in Spain to ask Prime Minister Mariano Rajoy to hold back his austerity ax when it comes to the international aid heading in the belated 2012 budget, so it would also make sense that he was voicing the ultimate aim of the government’s new labor reform: to cut wages. And it hardly comes as a surprise that the world’s second-richest businessman should stay true to the neoliberal world view.
And then something surprising happened...
On a more global level, Gates talked about unemployment as a “structural” problem: “There are plenty of jobs to do, in teaching, science, tourism and looking after the old. There is no shortage of work but it is a question of structuring it right.” So, on the one hand, the billionaire philanthropist believes in the capitalist cure-alls of fitter, leaner markets, including the labor market, and letting money do its thing without being held back by the kind of “rigidities” he sees in Spanish regulation; on the other, he seems to be suggesting that the economy needs to be restructured to better meet society’s needs, and not those of the market. And, yes, I think he is saying that these are not one and the same thing.
Let’s take teaching, for example. Private education has never covered any country’s entire demand. Only when the state, sometimes together with some other non-profit institution, such as the Church, takes charge do all children get a chance. In fact, in education as in health the private sphere can operate as a magnet, luring away professionals from the lower-paid state sector, which becomes an under-appreciated, residual safety net for the poor. Then there are the complications caused by globalization. A doctor trained in sub-Saharan Africa can earn many times more in Europe or North America, even if he performs a task other than curing the sick.
Gates said Spain needed to expose its labor costs to global competition in order to attract inward investment. By the same token, poor countries face the challenge of keeping their workers content on comparatively small salaries. How, in a genuinely open market, is a developing country to be able to pay professionals a competitive rate? Indeed, one of the criticisms of the international aid model where funds from Western countries are funnelled into the Third World so that Western professionals can provide much-needed services is that it shunts local initiatives into the sidings of economic irrelevance. Local governments cannot compete with the pay and prestige offered by international NGOs.
Having said that, The Gates Foundation’s bid to provide a malaria vaccine and protection against diseases such as polio and measles is entirely laudable and should be seen as the only decent response to the dramatic disparity between the world’s poorest people and the rest. Going back to the private sector, the big pharmaceutical companies spend far more on developing new cosmetic drugs for the world’s wealthy than they do on medicines to treat tropical killers such as malaria, river blindness and Chagas disease. In Madrid, the Microsoft founder was at pains to stress that aid money has a much greater impact in poor countries than in “middle-income” nations which have the resources to pull the entire population out of poverty but which, for whatever reason, are failing to do so.
Perhaps what Gates sees is a dual system, whereby those countries which have a minimal level of stability and social welfare should compete in a free market, while those areas where basic human needs are unattended must receive funds creamed off from the earnings generated by efficient capitalist enterprise.
Next time Bill Gates is in Spain I hope he is asked to join up the dots in his vision. In the meantime, let’s hope he serves as a philanthropic inspiration for the rest of the world’s mega-rich.
Photograph: Gorka Lejarcegi