More Thoughts on Bill Gates (via Milton Friedman)

Recently, in an internal company blog, I responded to a question regarding what role a company’s profit plays in its pursuit of corporate social responsibility. The question centered around information gleaned from an article in The Economist.

Consistent with other things I have blogged about in the past, here was my response:

Let me start with a thought experiment.

After decades of successfully building businesses, Bill Gates is a billionaire many times over. Now he wants to use large portions of his wealth to the betterment of Africa. How does he best serve this goal?

One, he can give away his money through various charities, or two, he can do what he does best, build more wealth by creating more businesses.

Think of how many thousands and thousands (and thousands) of people who have successful careers directly tied into the technology businesses Bill Gates has created. He is directly -- and indirectly -- responsible for putting food on the tables of virtually every IT person on this planet, (not to mention multi-millions of others who happen to use a PC in their daily work life). Therefore, is he being “responsible” by giving his wealth away? Or would Africa (and the rest of the world) be better off if he just continued to do what he is great at, creating more technology and building more businesses? I would argue the latter.

Considering the question of what defines socially responsibility is the proverbial equivalent of the “give a man a fish” versus “teach a man to fish” question. Both are good, but one is better.

Wealth is not static. Wealth grows exponentially. Wealth is the building block that creates more wealth. And while “giving” may instinctively seem more altruistic, I would argue, “building” is the much more effective (and responsible) method for Bill Gates to successfully meet his goals. Bill Gates should do what Bill Gates does best. No matter how much money Bill Gates “gives” away, his work in the business world will forever remain his greatest contribution to humanity. And while being socially responsible may include both “giving” and “building”, the “act” should not be confused with the “results”. The latter (building) will almost always give better results. It perpetuates more building.

Making a profit is at the core of being socially responsible. Anything hindering that goal is counter productive to helping others. And taking it to the individual level, all responsibility begins with personal responsibility. When the flight attendant explains the safety procedures before your next flight, she will tell you that: “in case of emergency, put your air mask on first before helping others.” So it is in life. Take care of yourself first. This is what makes you able to help others.

(This goes beyond “financial” profit, by-the-way. For instance, this explains why something like work/life balance is so important. It is not only in the employee’s best interest, it is in the longterm best interest of the employer as well. After all, someone who takes care of himself is in a much better position to help others than someone who burns out.)

Perpetuating and maintaining profitability is the single most important factor allowing a business and/or a person to take on social responsibility in the first place. In fact, that is why [our company’s] value number eight: Earn a Reasonable Profit, is the most important value.

Without it, the other seven would not exist.