Drawing by Nathaniel St. Clair
Billionaire philanthropists Bill and Melinda Gates, appearing recently on The Late Show with Stephen Colbert, said a number of things that made Colbert’s liberal audience squeal with delight.
When told that the very existence of billionaires was a signal that capitalism doesn’t work for the many, and that Alexandria Ocasio-Cortez had mused that America could do without billionaires, the Gates laughed politely and talked vaguely and approvingly of raising taxes on the ultra-wealthy. To those who are given much, much is expected, Melinda Gates said.
Then, after those platitudes were exhausted and the TV audience had slipped into a warm coma of semi-consciousness, the Gates’ let show their true colors and uttered a good old-fashioned Trumpism.
Melinda Gates started by criticizing European countries that have higher tax rates than the U.S., and claimed such rates stifle innovation. “In fact there have been many times when you’re in France and they’ll say, ‘Gosh, we wish we could have a Bill Gates, we wish we could have such a vibrant tech sector,’” Gates said. “But the taxes have been done there in such a way that it doesn’t actually stimulate good growth. So we believe in a good tax system that should tax the wealthy more than low-income people for sure.”
Colbert let that criticism slide. The host probably has no idea what Europe’s economic growth is like or whether France’s tech sector is sluggish or booming, or whether France has a “Bill Gates.” Just as he is doubtless unaware that France has been called “the Next Silicon Valley.”
A bit of research shows that (surprise) Melinda Gates doesn’t know what she is talking about. Apparently Ms. Gates had one conversation with one critical right-wing Frenchman and decided France’s tech sector sucks due to high taxes on billionaires.
So what are the facts?
According to CNN Business, economic growth in the 19 countries that use the euro currency was 2.5% in 2017. Growth in the 28-member European Union also reached 2.5% last year. That clip put Europe ahead of the 2.3% expansionposted by the U.S. in 2017.
Okay, but what about France’s tech sector. It’s a disaster, right? Actually France (and Europe’s) tech sector is booming. European technology industries grew at 5.0 % in 2017, according to economists. And France is poised to knock off Britain as Europe’s tech giant, thanks to Brexit.
The Gates’ also balked at a 70 percent income tax rate for billionaires, which they said would be ineffective since most of a billionaire’s income comes from sources other than income. Colbert might have reminded the Gates that the U.S. did have a top marginal income tax rate on millionaires of at least 90 percent during the economic boom years of the 1950s, a period when, despite having a Republican in the White House. And that was an era when wealth was more equitably distributed in America, unlike today when the top one-tenth of 1 percent now owns almost as much wealth as the bottom 90 percent.
The Gates were basically echoing old conservative talking points: that the social democracies of Europe are toxic to innovation. This is of course ignorant American chauvinism talking and has no basis in fact. One has only to consider the European pharmaceutical sector. American conservatives warn that Medicare for All or any kind of drug price controls will stifle pharmaceutical innovation in the US. The social democracies of Europe, however, have universal health care and price controls and that has scarcely harmed their pharma sector. Indeed, the German pharmaceuticals market is set to rise from $67.9 billion (€52.9 billion) in 2016 to around $86.3 billion (€67.2 billion) in 2021, representing a compound annual growth rate of 4.9%, according to the research and consulting firm GlobalData. In democratic socialist Sweden a pharmaceutical giant like Astra AB can innovate and grow and merge with Zeneca Group of Britain (which has among the lowest drug prices in the developed world) to become one of the world’s largest and wealthiest pharmaceutical companies.
I would be curious to know how high tax rates would have dissuaded a young Billy Gates from designing innovative software. Gates was a nerdy prep school boy in his early teens when he wrote his first software program. And, by the way, there is a French Bill Gates. His name is Alexandre Mars. Mars is a wealthy tech entrepreneur and a philanthropist. Look him up.