Do Monopolies contribute more to the world economy than a healthy, competitive market?

Cord Blomquist, sometimes e_f Commenter, asks a question over at TLF:

While I agree that Bill Gates ought to be admired for his monumental charitable efforts, can’t we also admire him for being an entrepreneur and creating countless billions in wealth?

He answers his own question thus:

After all, Gates didn’t just create wealth for himself or Microsoft, he’s also made the world a whole lot richer. Like it or not, it was Windows that provided the platform for much of the information revolution, which subsequently created a worldwide economic boom. We shouldn’t relegate this accomplishment to a mere footnote in Mr. Gates’ biography and it’s certainly worth considering the moral implications of that sort of wealth creation.

Note how Cord includes an assumption in his question, i.e., that Bill Gates has created countless billions in wealth. I am not prepared to stipulate agreement with this assumption, so I’ll restate Cord’s question, without the assumption below.

But, leaving aside Cord’s presentation of his argument, let’s look at the substance of what he is saying. The trouble I have with this thinking is that it shows almost zero faith in outcomes provided by authentic market structures and forces, so my response post over at TLF is:

This is a silly argument, for a variety of reasons that should be apparent to anyone with a slight faith in market based outcomes. I’ll just give the single largest example here, and follow up in few days with a post on this misinformation.
Had Microsoft or Windows never existed, another company would have stepped in to fill the market demand for a PC Operating System. So to make the argument that Bill Gates is personally responsible for the wealth creation of the PC revolution doesn’t hold water unless you demonstrate that there was something unique that Bill Gates brought to the table. So, when I bought a PC in 1991 for a construction site office (it was rare at that time, believe it or not) it came preloaded not with windows but PC GEOS, a non-MS product that MS used it’s anti-competitive practices to crush. If a true competitive market for PC Operating System had been part of the regulatory policy at the time (i.e., had MS been quickly enjoined from using it’s anti-competitive practices to first crush PC GEOS and then BEOS) it’s quite probable that we would have had better OS’s faster, due to competitive market forces. Instead, we had MS enrichment, not wealth creation.

Of course there are plenty of other reasons why Cord’s line of reasoning doesn’t make much sense, and he really steps into when he starts comparing Bill Gates to Mother Theresa:

In a Christopher Hitchens-like move, Pinker also speaks about Mother Teresa:

Mother Teresa extolled the virtue of suffering and ran her well-financed missions accordingly: sick patrons were offered plenty of prayer but harsh conditions, few analgesics and primitive medical care.

He goes on to note that:

These examples show that our heads can be turned by an aura of sanctity, distracting us from a more objective reckoning of the actions that make people suffer or flourish.

By that standard, even if Gates spent his fortune solely on mega-yachts and sports franchises he’d still beat Mother Teresa hands down. If we’re talking human flourishing, how can you beat creating an operating system that runs on 90+ percent of PCs has likely contributed trillions to global GDP over the last quarter century? Only super heroes to humanity like Norman Borlaug, also mentioned by Pinker and winner of CEI’s Julian Simon Award, can rise above Gates.

Love him or hate him, it’s hard to deny that Bill Gates has done a lot of good for the world, both as a philanthropist and as a CEO.

First, I believe Cord is wrong, in that Bill Gates charitable efforts will be a much more positive and lasting legacy then his entrepreneurial efforts. I am not going to comment in detail here on his charitable efforts, which I think are outstanding, and also quite wise. But, it is interesting to note though that the Gates Foundation has occasionally seemed to side with with Free Culture and open knowledge efforts, in particular with reference to some stands it has taken on Pharma patents. Also, although Cord seemed to conflate Microsoft and Bill Gates in his post, I am not going to analyze that particular unstated assumption in his argument at this time, other than to note it.

But I would restate his question thus: did Microsoft contribute to the overall world economy, by it’s Windows monopoly?

It cannot seriously be doubted that the windows monopoly did in fact enrich Microsoft and the economy of Redmond, Washington substantially. But that just shows that the MS monopoly did centralize and concentrate wealth, not create it. But, putting aside localized beneficiaries, it can’t be doubted that a competitive market provides benefits to the larger economy, that would not accrue to an economy dominated by monopoly structures.

But don’t take my word for it–there’s the website (“Monopoly corrupts–Absolute Monopoly corrupts absolutely”) staffed by economists David K. Levine, Justin Levine, Andrea Moro, Michael Perelman, Sheldon Richman, Stephen Spear, William Stepp, Bill Stepp, John Bennett and Michele Boldrin to tell you all about why Microsoft monopoly is bad for the economy and innovation in particular.

Do Monopolies contribute more to the world economy than a healthy, competitive market?

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