The Billionaire’s Dilemma

Bill Gates is increasingly giving interviews about his expertise in infectious diseases he and his foundation have been fighting against for years. According to Forbes, Gates’ wealth hovers right around the $100 billion mark. And according to the Gates Foundation, Bill and Melinda Gates have provided some $50 billion thus far through their foundation to global efforts combating disease, hunger and poverty. And yet, even with this incredible generosity and educated awareness of the consequences of a pandemic, the foundation had not achieved its goals of sparing the world, or their home country for that matter, from the devastating impacts of these great challenges. Similar to the federal and state governments, the effort also did not appear to even meet the basic needs for a pandemic response. Even with technological advances in machine learning and artificial intelligence, predicting which virus transforms into a pandemic sounds particularly formidable, however no matter what type of virus, there appears to be a standard need for personal protective equipment such as N95 masks, face shields, gowns, and swabs, which were not readily available in the U.S. supply chain. And despite technological breakthroughs over the last century we find ourselves using the same blunt instrument of physical distancing that was used over 100 years ago to combat the Spanish Influenza pandemic. Protocols may shift and require greater degrees of isolation and quarantine depending on the lethality of the disease, but those on the front lines were inadequately prepared for this particular version, which some can argue, even as bad as this disease is, is not the worst disease humanity could face. Those who have suffered through multiple Ebola outbreaks might argue that particular disease is a step up from COVID-19 and yet some of those same front-line workers continue to struggle in acquiring basic needs as they go into battle time after time against that disease as well. Now, our country is turning to Etsy, Pinterest, 3D printers and the newly unemployed for PPE. The $50 billion-dollar effort from Bill Gates, as generous as it is, has so far failed in having basic supplies at the ready and provide initial protection for this fight.

After spending 24 years in the military and retiring three years ago, it’s hard not to reflect and draw parallels, as many others have, between fighting this virus and fighting other enemies of free will. Our American way of life has been the stated basis for sending America’s sons and daughters into harm’s way and to the front lines. After the draft ended in 1973, the United States began studying what incentives would attract and recruit an all-volunteer force and made similar attempts to predict what equipment our military needed to combat those who threaten our way of life. Much of that analysis and resultant spending is based on the prediction and probability of which threats may materialize and what materiel solutions gives our all-volunteer force the best chance to succeed in a fight. Military historians may remember though, in 2004, when responding to questions from front line troops headed into Iraq why they didn’t have the equipment they needed for the fight they were up against, Donald Rumsfeld famously stated, “You go to war with the army you have, not the army you might want or wish to have at a later time.”  As could be expected, the response landed with a thud to those facing a fight without the basic gear they believed was needed to successfully execute the mission and to stay alive. Trying to quell the murmurs in the audience, Lieutenant General R. Steven Whitcomb, the commander of Army forces in the Persian Gulf stated, "It's not a matter of money or desire, it's a matter of the logistics of being able to produce it." Those that were there that day might not be faulted for believing at the time that we have the most powerful military in the world and confounded as to why we couldn’t produce basic supplies like armor for themselves and their vehicles. Congress has attempted to reform the way the military procures equipment through more than two dozen legislative actions in the last three decades. They’ve done so in an attempt to better anticipate what is needed for potential conflict and to increase efficiencies and overall buying power, hopefully buying power for the right equipment. It could be argued, however, that it took years for a trillion-dollar military built to fight a Cold War to successfully counter $500 improvised explosive devices routinely employed in the Middle East. The latest National Defense Authorization Act provided the military over $750 billion dollars, in one year alone, to protect our way of life. The billions the Department of Defense spent last year were not enough to prevent the economic and physical consequences of this pandemic nor provided for the basic supplies needed at the outset of this particular fight. 

As an owner of three businesses, I question the value of what each one of those businesses provides in comparison to supporting direct efforts to combat this pandemic and whether or not the services and products will or should remain relevant in the coming months and years. My wife and I own one of the businesses together and a popular topic for that business pre-pandemic was how much money we needed in the coffers to consider the venture a success. Was it breaking even, but doing what we were passionate about? Was it reaching $1 million, $10 million, $100 million? What would we do with all that money anyway when we reached whatever goal we set? Would we buy three or four houses in various luxurious locations, maybe six or seven rare sports cars, the same number of expensive watches even though I can only wear one at a time, maybe a 20,000 square foot house for just the two of us and a helicopter that shuttles us to our private yacht. As a business owner I am an unabashed capitalist. I believe in the system, but I also recognize just like from my experience in defense acquisitions, there is always room for improvement to gain efficiencies and combat frivolous spending. The uber-rich have always given us capitalists incentives to work hard for those things we want. However, we see someone like David Geffen appear tone deaf during a pandemic by wanting to show us on Instagram an incredible sunset in the Grenadines from the deck of his $590 million yacht as part of his sacrifice to combat the disease while millions wait in line for their unemployment check. If this sounds like a white-collar suit coming into a combat zone to tell you to fight with what you’ve got - I’ll be safe here in the rear, then I might agree with some of the underlying reasons why fault lines have been forming and dividing this country for some time. But what happens to the yachts and the extreme riches when no one is working or buying your product or service? Isn’t the billionaire’s dilemma to take advantage of another’s ability to put in hard work, have others contribute to your wealth through their purchase and use of your products and services and possess a willingness to allow that wealth to accumulate while not allowing that ambition to appear to be the primary motivation?   

Socially responsible investing, impact investing and community investing are all terms that have been around for a long time. The idea is to invest in those companies for not only a financial return but also something that brings about greater social good from that investment. TOMS Shoes is widely recognized as a company founded with a social responsibility program that is part of its culture and with a mission to provide shoes for children in need. I am not going to discuss here the merits or challenges of globalization’s impacts on wages, production and trade. I will only say that in a search for efficiencies in lowering the cost of production by outsourcing labor and raw materials our U.S. based companies may lose sight of corporate responsibility to the communities that not only support their product or service, but who could also benefit from the good a company can do with its resources and profits. It also appears not many were willing to hold the line here in the U.S. in making sure our supply chain for basic equipment was adequate. There are certainly many U.S. companies that support important efforts, who are extremely generous, and who give back to their communities. Unfortunately, these efforts were not enough for our communities to have the basic supplies needed to be ready for this fight.  

Maybe there is a way for companies to maximize efficiencies, revenues and social good simultaneously. Of course, one of the main reasons we expect companies to maximize profit and limit loss is to meet Wall Street expectations, again a topic of a different discussion. Maybe there is a strategy similar to the one automakers employ who build a generic and a luxury version of the same car, like the Toyota and Lexus model, and gain efficiencies and greater returns simultaneously. Maybe a company can produce two versions of the same thing and meet the demands of Wall Street while being socially responsible. Maybe they can be the best at the one thing they do and pay the CEO $5 million instead of $6 million or maybe $6 million once the largest companies and their local communities agree the community has adequate basic needs and supplies to maintain economic and personal safety and not just cut their wages after the country has been shut down. If we allow the state and federal governments to continue pointing fingers at one another and think that government alone will supply all that is needed, well just look back at the example of when the military entered into Iraq and when we entered into this pandemic. The societal fault lines can be repaired by business and I believe business alone. The incentives are different. The federal government can continue printing money until its useless and dies. See Germany's economy and currency between World War I and II. Businesses behave differently. Even those who have access to cheap capital. Recall in the last week how Potbelly, Ruth's Chris, Shake Shack and others had their hand slapped by the public when it was found in the government cookie jar. Companies can't print their own money legally. They need access to capital, resources and a business plan that doesn't lose money. The challenge is, even for an unabashed capitalist like myself, it’s hard to swallow that corporate responsibility to our communities has been considered while CEOs moved from earning 30 times the average worker’s salary in the 1970s to 271 times the average worker today while basic supplies remain elusive. Something will give in this maximum flexing of resource muscles. If companies can’t provide resources to help people meet basic needs and the government can’t either, I’m afraid there will be no winners in future fights for freedom. We all lose and it starts over.  

Billions to trillions of dollars provided by individuals, corporations and the government have not given us the basic needs to step up and fight enemies of free will. Defense first, hunker down in your foxhole and wait for the enemy to come to you. It’s an approach, but should we employ this approach every time in the future that our freedom is threatened – shut down the country, add 25 million to the unemployment lines, and hunker down while suffering loss of life? What might give us a better chance to be ready for any threat to our freedom and gain ground with proactive measures rather than losing so much blood and treasure through reactive ones? Just like the hard lessons learned on the battlefield there will be lessons from this that people will swear never to repeat. People will hold the government accountable with their votes. They will hold businesses accountable with their money or lack thereof. And they will hold themselves accountable for their freedom.     

Tom Cooke

Tom attained the rank of Lieutenant Colonel in the U.S. Air Force and saw first-hand the challenges of having the right equipment, for the right need at the right time. Opinions expressed here are solely his own and not those of any other organization.