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  • ARTHUR BROOKS: Good afternoon ladies and gentlemen. I’m Arthur Brooks, president of the American

  • Enterprise Institute. And were delighted to welcome all of you today to this event,

  • entitledPoverty to Prosperity.” So, this is Bill Gates. (Laughter, applause.)

  • BILL GATES: Thank you. MR. BROOKS: With his wife, Melinda, he’s

  • the co-chair and co-founder of America’s largest private foundation: the Bill and Melinda

  • Gates Foundation. They work to reduce poverty and expand health care overseas and to improve

  • education here in the United States among other things. Previously, he was the chairman

  • and CEO of Microsoft, the world’s largest software company, which he co-founded in 1973.

  • Most importantly, like me, he’s a native of Seattle and somewhat of a Seahawks fan,

  • which is good. But that’s not what were here to talk

  • about. Were here to talk about his incredibly important work with the foundation, the work

  • that he’s doing here and around the world. He shares so many of the priorities of the

  • American Enterprise Institute to build a better life for people here and everyplacepeople

  • who suffer from need, people who suffer from disease, people who suffer from tyranny. What

  • can we do about these things? Well, he’s asking the big questions and

  • he’s putting his own resources behind the answers. And were going to hear what he

  • has to say about his latest work. So, welcome to AEI. It’s an honor to have

  • you and to be among all of our friends here. You just issued your annual letter for 2014.

  • I recommend that everybody read it. It’s a very interesting piece of work. It’s detailed,

  • and it explodes a lot of myths about poverty around the world. And you offer an incredibly

  • bold prediction. You say that there will be almost no poor countries remaining by the

  • year 2035. What do you mean by that? MR. GATES: Well, the primary measure, which

  • has all sorts of challenges, is GDP per person. But it’s stillwe don’t have a substitute

  • measure. So just if you take thatWorld Bank classified countries with over 1,200

  • per person per year as moving up into a middle-income bracket, so moving from low income to middle

  • income. And we have today 45 countries that are still in that low-income category.

  • And what I’m saying is that, by 2035, there should be less than 10, and theyll mostly

  • be either places like North Korea, where you have a political system that basically

  • creates poverty, or landlocked African countries where the geography, the disease burden, the

  • disparate ethnicities mean that they haven’t been able to bring together a government that

  • in terms of education, infrastructure, health does even the most minimum things for them.

  • And so were on this rising tide that’s not recognized. It’s overwhelming how prosperity

  • is spread around the world, say from 1960, where there were very few rich countries and

  • a gigantic number of poor countries. Now most countries are middle- income countries, and

  • poor countries are much smaller. Now, just saying that theyll all move up past that

  • threshold doesn’t mean they won’t have poor people within the countries; it doesn’t

  • say their governments will be fantastic, but it will be a lot better on average than it

  • is today. MR. BROOKS: That’s an extraordinary thing.

  • We have a tendency to despair when we look around the world, and we have a tendency to

  • say the world’s not getting better because of the way that we see the news. But youre

  • saying that’s a myth, right? MR. GATES: Yeah. I think that a deep problem

  • in perception is that if you want something to improve, you have a tendency to be bothered

  • by the status quo and to think that it’s much worse than it is. And that can be beneficial

  • because you don’t like, say, the level of violence in the world, the level of poverty,

  • the level ofnumber of kids dying. But if you divorce yourself from the true facts

  • of improvement and look at the exemplars, look at what’s workedif you get sort

  • of a general despair about is the world improving, then you won’t latch on to those examples.

  • The Steven Pinker example, one of my favorite books of all time, is that if you ask people,

  • Is this one of the most violent eras in history?,” they will say yes. Overwhelmingly,

  • Americans say yes. Well, it’s overwhelmingly the least violent era in history. And so what

  • it means is your disgust with violence actually increases, and that’s partly why we take

  • steps and why within our own society and the world at large it’s come down so dramatically.

  • MR. BROOKS: I love your optimism. And so, based on your optimism, given the fact that

  • the world will have only a few poor countries in the year 2035, what’s the Gates Foundation

  • going to be doing in 2036? (Laughter.) MR. GATES: Well, there are a lot of diseases.

  • Over 80 percent of the difference of why a poor child is 20 times more likely to die

  • than a child in a middle-income country, it’s these infectious diseases. It’s diarrhea,

  • pneumonia, malaria. And then there’s a few adult diseases which are way more prevalent

  • in poor countriesTB, HIV. And weve taken on as a central mission

  • it’s a little bit over half of what we doto get rid of those diseases. And

  • so that will remain our priority until were basically done with those. And those are tough

  • enough that I’d expect usit will take us 30 to 40 years to really be done with those.

  • And then we will have a crisis because we will have the problem of success and well

  • have to say, OK, what is the health inequity between

  • well-off countries and poor countries? Is it, you know, obesity, heart disease, and

  • what interventions? And even before 30 years are up, well start to think about this.

  • But right now, were sort of maniacally focused in our health on those poor world

  • conditions because we see that between research and getting things like vaccines and drugs

  • out there, we can basically save a life for about $2,000. But everything we do should

  • be benchmarkedif it’s not that effective, then we shouldn’t do it. So, you know, were

  • pretty specialized in making breakthroughs in those areas.

  • MR. BROOKS: Youve been involved in projects all over the place, from eradicating polio

  • outside the United States to improving schools in cities and even in rural areas around the

  • United States. What do you consider at this point, given all of the resources that you

  • put into these important projects, to be your most important victory or your area of greatest

  • success, and what did you learn from it? MR. GATES: Well, weve had the most success

  • in global health. You know, there’s over six million people alive today that wouldn’t

  • be alive if it wasn’t for the vaccine coverage and new vaccine delivery that weve funded.

  • And so it’s very measurable stuff. And, in fact, if you applied a very tough

  • lens to our work, you can almost say, OK, why are you even involved in U.S. education?

  • Well, we have a reason that you could say is not all that numerical, which is that the

  • success that I had, that Melinda had, came from the U.S. education system. It came from

  • the U.S. system of encouraging innovation and business and, you know, protecting the

  • intellectual property. And so we feel like we need to havetake

  • what we think is the greatest cause of inequity, the greatest challenge to America’s continued

  • leadership in innovation, which is the failures of the education system, that we need to be

  • dedicated to that even though the risk that we might not have a dramatic impact is much

  • higher in that work than it is in any of our health or agricultural or sanitation or financial

  • service work, which focuses on the poor countries. You know, we feel that it’s critical that

  • America get improved education, but that’s very hard work. And, over the last 20 years,

  • where government spending in this area and philanthropic spending, although it’s a

  • tiny percentage, has gone up dramatically, the proof in achievement in terms of reading

  • ability, math ability, dropout rates, you know, kids graduating college, there’s been

  • hardly any improvement at all despite massive resource increases that have gone into the

  • area. So it’s critical, but it’s not easy and there’s no proof that it’s necessarily

  • going to be dramatically better 10 or 20 years from now.

  • MR. BROOKS: So let me ask you about that intransigent set of problems that we have in U.S. education.

  • And I understand that there are certain problems that you canyou can eradicate the guinea

  • worm. You can’t necessarily eradicate ignorance. Here at

  • AEI were trying to improve the free enterprise system. That doesn’t mean well be done

  • at some point. I mean, that’s just the nature of social enterprise as I understand.

  • Here in Washington, D.C., we talk about public education all the time. This is the capital

  • of the free world. We should have the best education system, and it should be an exemplar

  • to the whole world. I think we shouldwe should agree. Were pumping more than $18,000

  • per kid per year in the system, and 15 percent of eighth graders read at a nationally acceptable

  • standard. So what do we do? MR. GATES: Well, it is phenomenal the variance

  • in how much is spent per student. You know, Utah’s below $6,000 per student per year.

  • A lot of states are in the $7,500 per student per year (range). Youve got some that spend

  • more than D.C. – New Jersey would spend a fair bit morethe Northeast as a whole

  • is where the biggest spending takes place. And yet, there is no correlation between the

  • amount spent and the excellence that comes out, you know. Yes, Massachusetts is good,

  • but if you take the high-spending states as a whole, then you get Pennsylvania, New Jersey,

  • Washington, D.C., mixed into that, and it doesn’t look like there’s any correlation.

  • So it’s a very strange system. Washington, D.C., on a relative basis, actually

  • has improved a fair bit over the last three or four years – a combination of improved

  • personnel policies, shutting some schools, letting the charter schools take a somewhat

  • higher share of the cohort. It’s about the fourth largest of all the districts in the

  • nation, New Orleans being number one in terms of the percentage kids go to charter schools.

  • And the charter schools here on average are quite good. So, you know, there are some things

  • that have gone well, but it’s still an abysmal system.

  • And, you know, the fact that there isn’t more of a consensus on what should we be doing

  • to the personnel system and using innovation to, say, be almost as good as the countries

  • in Asia, it’s got to be a concern both from an equity point of view and from an overall

  • country competitiveness point of view. MR. BROOKS: So if spending more money is not

  • the answer – I mean, it would be great if it were, because as a rich country we can

  • do that. But there are innovation ideas about choice, charters, etc. If it’s the disruptive

  • innovations that are going to make it happen, how do we inject those ideas more systematically

  • into public bureaucracies, not just in schools, but in government in general?

  • MR. GATES: Well, if you look at the education system, the amount of actual research that

  • goes on to understand why some teachers are so extremely good, giving their kids more

  • than two years of math learning in a year, and why the teachers who are at the other

  • extreme, giving less than half a year of learning in a yearwhy were not taking those

  • best practices and at least trying to transfer those into the other teachers by doing observation

  • and feedback, you know, having the schools of education really drive for high-quality

  • teaching, it’s not a personnel system that right now is focused on teacher improvement.

  • Teachers get almost no feedback. They get almost no sense of, OK, I’m good at this

  • and I should share that with other people. I’m not very good at this, and therefore

  • I should learn from other people. It’s very different than most other so-called professions.

  • And, at the same time, technology is coming along in terms of taking the classroom video,

  • and, you know, sharing it, having people commenting on it, delivering personalized learning to

  • your kids so that you can assess where each of them are and tune lessons according to

  • what theyre having the challenge with. The opportunity is there, and that’s what

  • our foundation invests in. It invests in studying the very, very good teachers. We took 20,000

  • hours of video and looked at various measures, you know, what were they doing differently?

  • And we created a lot of model districts where there are so- called peer evaluators who are

  • in the classroom, observing, giving feedback. And, you know, it looks like the results on

  • that are very good. And so there are points of light that if we could get it adopted permanently

  • and scale it up, it would start to move the dropout rate and the math and reading achievement.

  • As you say, it’s tough, though, because when we invented the malaria vaccine, no school

  • board gets to vote to uninvent it, whereas, you know, if you make an advance on personnel

  • systemSenator Alexander, when he was governor of Tennessee in the 1980s did a pretty

  • good system where people got feedback and evaluation, and, you know, it looked like

  • it was starting to work pretty well. And yet, it disappeared.

  • MR. BROOKS: The malaria virus is not unionized. Excuse me. I’m sorry. That’s not my place.

  • Please. (Laughter.) MR. GATES: Yeah. OK. I certainly agree that

  • there are various groups that can stand for the status quo. When you want to come in and

  • change things, they are worried not as much for the students, but for the teachers. So

  • they can defend the status quo. But if it was the case in America that the

  • less unionized places were like Singapore and more unionized places were poor, and if

  • you had some direct thing, and you said, OK, well, here it is, and now we can explain it,

  • that would be one thing. That is not true. Our education is very poor across the entire

  • country, and it does not correlate to unionization. Massachusetts, pretty heavily unionized, they

  • do relatively better. You know, some other places not unionized, likeactually, on

  • an absolute scale, OK, take Arizonait isn’t – there is no single factor you

  • can say that in the 50 states, when that’s been removedfinancial constraints, union

  • constraintsthat something like Asia is taking place.

  • MR. BROOKS: Let’s go back outside the United States just for a minute again. You wrote

  • in your letter that there’s a lot of misunderstanding about U.S. foreign aid. Now, if you read what

  • people are writing about aid, there are a lot of critics who think it’s

  • just hopelessly ineffective. Some think it’s actually positively destructive. What’s

  • the misunderstanding about foreign aid from your point of view?

  • MR. GATES: Well, whenever we give foreign aid, you have to, for any particular grant,

  • say what your goal is for that grant. If you goal is famine relief, then you should measure

  • the grant by whether people have been starved to death. You shouldn’t go in and say, OK,

  • did the GDP go up? If youre trying to have a political friend

  • like, you know, you want Egypt to sign a treaty and be a friend and that is your goal, then

  • you justand youre not measuring the dollars according to human developmentthen

  • don’t come back later and say, oh, their GDP didn’t go up or you didn’t achieve

  • human development. So a lot of foreign aid, things are labeled

  • foreign aid, to take an extreme case like sending money to Mobutu when he was the dictator

  • of Zaire, it was labeled foreign aid but it was just kind of a joke that, you know, people

  • act like, well, yeah, that’s going to help the people in that country. Well, ha, ha,

  • ha. Now, because you don’t have that cold- war imperative, a lot of the aid is actually

  • trying to uplift their health or agriculture, you know, get these countries to self-sufficiency.

  • And so the aid community does a lot more measurement. Weve learned. We have a lot more rich countries.

  • Korea was a huge recipient. Now it’s turned around and is a very significant donor. So

  • you have more rich countries giving to far less poor countriesChina, Brazil, Mexico,

  • Thailand, they were aid recipients in varying degrees. Now theyre no longer aid recipients.

  • India, the aid it needs is very targeted. A very small part of it is GDP. Within 10,

  • 15 years, they won’t need to be an aid recipient. So this is a field that makes advances.

  • And when you label it aid, it seems mysterious. When it comes to inventing the seeds of the

  • green revolution that avoided famine in Asia or the smallpox eradication that was a U.S.-led

  • effort, that a disease that was killing two million people a year hasn’t killed a single

  • person since 1979, when you look at that, you say, well, was that worth it? Well, I

  • guess it was worth it. There are so-called global public goods creating seeds, medicines

  • or – (inaudible) – vaccines for these infectious diseases that the normal market

  • mechanism does not work; that is, it’s not rational for a profit-seeking company to do

  • a malaria vaccine because there iseven though it kills a million children a year,

  • the parents of those children don’t have enough money to justify the research. And

  • so it’s a market failure. Now, markets are extremely good. They work

  • you know, theyre the best mechanism we have. The more you can use them, whenever

  • you can use them, that isyou know, that’s one of the key mechanisms along with science

  • and government that have led us to be so much better off than we arethan we were hundreds

  • of years ago. But for the diseases that we work on, there is nothe R&D would not

  • show up except for government aid and philanthropy. MR. BROOKS: Well, so your philanthropy is

  • working alongside government aid to be sure. And you show that in your letter and weve

  • known that for a long time. But there are a lot of people who believe very strongly

  • that the presence of philanthropy like yours is evidence that the government simply isn’t

  • doing enough to help people. And I’m going to quote Ralph Nader, who

  • once said thatthat’s not a laugh line, you people. There’s a rowdy crowd here.

  • Ralph Nader once said, “A society that has more justice is a society that needs less

  • charity.” What do you say to that? MR. GATES: You don’t want to depend on charity

  • for justice. Charity is small. I mean, the private sector’s like 90 percent, and government’s

  • like 9 percent, and philanthropy is less than 1 percent. There are things in terms of trying

  • out social programs in innovative ways that government isjust because of the way

  • the job incentives worktheyre not going to try out new designs like philanthropy

  • can and theyre not going to have volunteer hours coming in to leverage the resources

  • like philanthropy can. So philanthropy plays a unique role. It is