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Gene Epstein Responds to Bill Gates

I like Gene Epstein’s letter to The Atlantic (shared here with Gene’s kind permission):

In the interview with Bill Gates (“We Need an Energy Miracle,” Nov. 1), the philanthropist compares government with the private sector on the question of which is more inept. According to Gates: “Yes, the government will be somewhat inept–but the private sector is in general inept. How many companies do venture capitalists invest in that go poorly? By far most of them.”

It might have occurred to Gates that the VC’s end up investing in so many ventures that go poorly because the poor performance gets quickly exposed by the private sector’s harsh system of profit-and-loss. With no comparable way to expose its own ineptitude, government is free to keep throwing good money after bad on failed ventures, thus leaving Gates the impression that it is only “somewhat inept.”

Gene Epstein
Economics Books Editor

Gates is a good businessman; he’s a poor economist.  And he clearly either has not read or hasn’t absorbed the work of Julian Simon or of Matt Ridley.