The New Prophets of Capital (11 page)

The Gates Foundation wants to lead the way in creating this better system by using its power to convert economic need into economic demand. To facilitate this transformation, the foundation spends billions of dollars annually in four program areas: Global Health, Global Development, US Programs, and Global Policy and Advocacy. Within these areas it has twenty-seven specific projects nested within a huge international network linking state actors, business, NGOs, and other foundations. The foundation's projects on vaccines and education demonstrate how creative capitalism works.

Vaccines

The Gates have gone in big on vaccines—so big that people avoid Bill at cocktail parties, afraid he'll drag them into a macabre conversation about tuberculosis.
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In many low-income countries diseases such as malaria, rotavirus, and pneumonia remain killers. In the United States, these diseases are a spectre of times past: Swamp drainage, pesticide spraying, and massive sanitation infrastructure projects to supply clean water and safely dispose of waste have essentially eliminated these diseases from wealthy countries.

The foundation is pursuing a faster, potentially easier, route to eradicating disease in poor countries. The Gateses argue that with advances in biotech and logistics we can develop vaccines for these diseases instead of getting tripped up on the bigger hurdles of providing clean water, sanitation infrastructure, and nutritious food. But the pharmaceuticals industry, concentrated in wealthy countries, has not developed such vaccines and is not particularly interested in doing so. As Bill Gates has wryly noted, they are more interested in cures for baldness than in cures for malaria. Why? Melinda Gates argues that there is simply no “rich world market” for products like diarrhea or pneumonia vaccines. Their solution is to use the Gates Foundation to create such a market in poor countries:

[If] we could stimulate the pharmaceutical companies through public private partnerships to … create vaccines. If we could guarantee them a market of millions of children getting this vaccine and then being paid for it in the developing world. If we could commit to a market and we knew that the demand would be there, we could incent them with the right research dollars to actually create those vaccines.
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So how does this initiative work? First the foundation funds the research to develop the vaccines. It channels money into organizations like PATH, a Seattle-based group that runs the Malaria Vaccine Initiative and other groups like OneWorld Health, which works on antiparasite drugs. The foundation then tries to change the economic signals that guide market formation in developing countries. It does this by leveraging its money to put pressure on governments to buy vaccines for poor people, thus guaranteeing the market. Their deep pockets grease the wheels and convince governments and businesses to play along. (Even before Buffet's donation, the foundation had a bigger health budget than the World Health Organization.) The foundation also relies on other, smaller foundations like the Rockefeller Foundation and the David and Lucile Packard Foundation for institutional and logistical support. To date, the Gates Foundation has successfully brought both malaria and pneumonia vaccines to market. Through its Global Alliance for Vaccines and Immunization (GAVI), it has also vaccinated millions of children in the developing world against polio and other diseases.

Global health activism has a steep learning curve, but the Gateses are happy with the progress they have achieved. Global child mortality rates, despite the lost decade of the 1980s, have slowly, but steadily, declined since the 1970s. However, during the past two decades the declines have been much steeper. Total deaths of children under five dropped from 12.6 million in 1990 to 6.6 million in 2012. The annual rate of reduction between 2005 and 2012 was three times faster than between 1990 and 1995. The Gateses credit the foundation's efforts for the sharpening decline.

Education

The issue of education, while perhaps not as dire as childhood death from disease, is as close to the heart of the Gateses as any. Neither Bill nor Melinda Gates went to public school, but they argue passionately that the American school system is broken. Bill says that when he looked at the statistics for high school and college completion for US students he was “pretty stunned at how bad things are.”
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According to the National Center for Education Statistics, in the 2010/11 school year only 79 percent of high school students graduated on time. Minority, low-income, English-as-a-second-language speakers, and students with disabilities fell well below this national average. Over the past thirty years, a growing divide has emerged between those with a high school and those with a college degree. The earnings gap between high school and college graduates has doubled, while those without a high school degree can expect to earn a median annual income of $23,000 for their entire adult lives.
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The Gateses are not alone in decrying the failings of US public education. Thomas Friedman asserts that our public education system is “now outmoded for a flat world” and that “our love of television and video and online games” has made us complacent to the fact that other countries (China and India) are “racing us to the top”—and that we're losing.
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A 2012 special taskforce, convened by the Council on Foreign Relations to assess the state of US primary and secondary education and its impact on national security, argued that “human capital will determine power in the current century, and the failure to produce that capital will undermine America's security … Large, undereducated swaths of the population damage the ability of the United States to physically defend itself, protect its secure information, conduct diplomacy, and grow its economy.”
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Thus, it's not surprising that a quarter of all foundation money gets channeled into education reform. Hedge fund do-gooders started Democrats for Education Reform, and the Business Roundtable has its own Education Working Group. Billionaires like the Waltons, the Broads, and the Fishers have spent hundreds of millions on education reform, and the Gateses are at the center of it all. They argue that we need to completely re-envision public education if we are to prepare children for a high-tech future.

There are varying opinions on how to do it. Some, like the Waltons and the Broads, want school vouchers (government-issued certificates of funding that enable parents to send their children to private schools instead of public ones) and complete privatization. The Gateses think that vouchers have “some very positive characteristics” and praise the efficiency of parochial schools, but they think the public is too invested in public education and thus resistant to these kinds of sweeping change.
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Instead, the Gates Foundation is pursuing incremental change through the increased application of market mechanisms to public schooling.

The idea is that by applying a market logic to the public school system, educational entrepreneurs will want to get involved, creative people will get interested in education, and the resulting competition will force all schools to do a better job. As one reformer put it, by treating schools the same way we treat companies we can create a system where “every public school will have a performance contract where [the] people running it will have the freedom … to manage it well, hire and fire based on performance, [and] design their schools in a way that is successful … If they're not successful, they should be closed.”
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The Race to the Top (RTTT) contest—President Obama's multibillion-dollar initiative to replace Bush's No Child Left Behind program—is a central part of this marketization strategy. The contest is designed to spur innovation, “scale-up entrepreneurial activity” and “encourage the creation of new markets for both for-profit and nonprofit investors” by forcing states to compete for education funding. Joane Weiss, former director of RTTT, says:

The development of common standards and shared assessment radically alters the market for innovation in curriculum development, professional development, and formative assessments. Previously, these markets operated on a state-by-state basis, and often on a district-by-district basis. But the adoption of common standards and shared assessments means that education entrepreneurs will enjoy national markets where the best products can be taken to scale.
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The best way to “scale-up” reforms and educational products is contested and prone to dead ends. The Gates Foundation initially focused on reducing class size. In the early 2000s it spent billions opening 2,600 small high schools in forty-five states, but the project did not improve test scores, so it was abandoned and many of the new schools were closed down.

Undeterred by this experience, the Gateses changed horses and are now focused on teachers. The foundation argues that some teachers are very effective at raising test scores, and that these “top quartile” teachers are the key to improving student performance, especially for disadvantaged students. The Gateses believe that emphasizing poverty as a barrier to educational attainment is empirically wrong and excuses bad teaching. One in four US children might live in poverty, but as Bill Gates told the National Urban League in 2011: “We know that you can have a good school in a poor neighborhood, so let's end the myth that we have to solve poverty before we improve education. I say it's more the other way around: improving education is the best way to solve poverty.” As a bonus, if we keep only the good (top quartile) teachers, Bill thinks that “the entire difference between us and Asia would go away. Within four years we would be blowing everyone in the world away.”
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Powerful education reformers like Michelle Rhee, Joel Klein, Wendy Kopp, and Arne Duncan agree.

But according to the education reformers, there's a problem. Teachers are getting in the way of improving teaching. Anti-free-market mechanisms such as seniority, salary rewards for advanced degrees, and tenure are preventing real education reform. To weaken these barriers the foundation has funded new organizations like Teach Plus, started in 2009, and Educators 4 Excellence, founded by Teach for America alums Evan Stone and Sydney Morris in 2010. These groups bring young teachers to Washington to lobby against tenure and seniority rights. The foundation funded the development of Common Core State Standards (adopted by most states in 2010), a set of national standards that states must adopt and meet if they want Race to the Top funding. In conjunction with this initiative, the foundation is spending hundreds of millions of dollars on developing systems to measure teacher effectiveness. One of its projects videotapes the lessons of elementary school teachers. Over 13,000 lessons have been taped so far, enabling administrators and reformers to gauge what “effective” and “ineffective” teachers are doing in the classroom so they can replicate and scale-up effective teaching methods and weed out ineffective teachers.
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The Gateses certainly have the ear of power. Their vaccine initiatives are changing global health systems, and their US education projects are shaping federal education policy. But there are two central problems with the Gates model. First, it assumes that the key to solving thorny social problems is to deepen the reach of capitalist markets, despite the inequalities generated and reinforced by these markets. Second, the foundation's model to solve society's problems is profoundly undemocratic.

Using the Market to Do Good?

Capitalism and markets are not synonymous. When Bill and Melinda Gates talk about the power of markets, they mean profit-driven capitalist markets. As historian Fernand Braudel has shown, after the fifteenth-century capitalists slowly began to take over markets, altering the way they worked, and turning trade and production into activities geared toward the realization of profits rather than the satisfaction of human needs and desires.

Capitalist markets are not all bad. They can be liberating in many ways. Critical theorist Nancy Fraser argues they have enabled many women to gain the means to challenge and escape the repressive private sphere.
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Capitalist markets spur technological and logistical innovation, and, of course, they generate unprecedented wealth.

The power of capitalist markets to do these things has encouraged a belief that all problems could be better solved by using a market logic. But what is market logic? In a capitalist market, the things we use and make are defined as commodities that are bought and sold on the market for a profit. In an optimal scenario, things that are of high quality and are efficiently produced are sold for a good price in the market and the capitalist makes a profit. The capitalist is happy with his profits, so he has an incentive to make more good things and to improve efficiency so he can make even more profits. Other capitalists want in on the game, so they compete to efficiently produce better or different things. We measure how well capitalists play the game by how much profit they make, and the unexamined assumption is that competition is the best way to allocate resources.

In this ideal scenario, everyone benefits when capitalists compete with each other to create the best things efficiently. In their competition to make profits capitalists constantly think up innovations that improve our lives. So the more things that get pulled into the market system and turned into commodities the better for everyone, because once a thing has the potential to generate a profit, incentives emerge for innovators to make that thing better and better.

Despite the purported benefits of transforming things into commodities, humans often resist this process. Episodes like the Diggers fighting against the enclosure of common land in Britain during the mid seventeenth century demonstrate how fraught the historical process of commodification has been. The Diggers were communities of farmers who believed that the earth represents a “common treasury” for all to share. They protested the loss of communal farming rights by building homes and planting food crops on common and waste lands across the English countryside. Wealthy landowners disapproved and called in the local gentry to burn down the Diggers' homes and destroy their crops.