Enterprise Institute. And we’re delighted to welcome all of you today to this event,

entitled “Poverty to Prosperity.” So, this is Bill Gates. (Laughter, applause.)

BILL GATES: Thank you. MR. BROOKS: With his wife, Melinda, he’s

the co-chair and co-founder of America’s largest private foundation: the Bill and Melinda

Gates Foundation. They work to reduce poverty and expand health care overseas and to improve

education here in the United States among other things. Previously, he was the chairman

and CEO of Microsoft, the world’s largest software company, which he co-founded in 1973.

Most importantly, like me, he’s a native of Seattle and somewhat of a Seahawks fan,

which is good. But that’s not what we’re here to talk

about. We’re here to talk about his incredibly important work with the foundation, the work

that he’s doing here and around the world. He shares so many of the priorities of the

American Enterprise Institute to build a better life for people here and everyplace – people

who suffer from need, people who suffer from disease, people who suffer from tyranny. What

can we do about these things? Well, he’s asking the big questions and

he’s putting his own resources behind the answers. And we’re going to hear what he

has to say about his latest work. So, welcome to AEI. It’s an honor to have

you and to be among all of our friends here. You just issued your annual letter for 2014.

I recommend that everybody read it. It’s a very interesting piece of work. It’s detailed,

and it explodes a lot of myths about poverty around the world. And you offer an incredibly

bold prediction. You say that there will be almost no poor countries remaining by the

year 2035. What do you mean by that? MR. GATES: Well, the primary measure, which

has all sorts of challenges, is GDP per person. But it’s still – we don’t have a substitute

measure. So just if you take that – World Bank classified countries with over 1,200

per person per year as moving up into a middle-income bracket, so moving from low income to middle

income. And we have today 45 countries that are still in that low-income category.

And what I’m saying is that, by 2035, there should be less than 10, and they’ll mostly

be either places like North Korea, where you have a political system that basically

creates poverty, or landlocked African countries where the geography, the disease burden, the

disparate ethnicities mean that they haven’t been able to bring together a government that

in terms of education, infrastructure, health does even the most minimum things for them.

And so we’re on this rising tide that’s not recognized. It’s overwhelming how prosperity

is spread around the world, say from 1960, where there were very few rich countries and

a gigantic number of poor countries. Now most countries are middle- income countries, and

poor countries are much smaller. Now, just saying that they’ll all move up past that

threshold doesn’t mean they won’t have poor people within the countries; it doesn’t

say their governments will be fantastic, but it will be a lot better on average than it

is today. MR. BROOKS: That’s an extraordinary thing.

We have a tendency to despair when we look around the world, and we have a tendency to

say the world’s not getting better because of the way that we see the news. But you’re

saying that’s a myth, right? MR. GATES: Yeah. I think that a deep problem

in perception is that if you want something to improve, you have a tendency to be bothered

by the status quo and to think that it’s much worse than it is. And that can be beneficial

because you don’t like, say, the level of violence in the world, the level of poverty,

the level of – number of kids dying. But if you divorce yourself from the true facts

of improvement and look at the exemplars, look at what’s worked – if you get sort

of a general despair about is the world improving, then you won’t latch on to those examples.

The Steven Pinker example, one of my favorite books of all time, is that if you ask people,

“Is this one of the most violent eras in history?,” they will say yes. Overwhelmingly,

Americans say yes. Well, it’s overwhelmingly the least violent era in history. And so what

it means is your disgust with violence actually increases, and that’s partly why we take

steps and why within our own society and the world at large it’s come down so dramatically.

MR. BROOKS: I love your optimism. And so, based on your optimism, given the fact that

the world will have only a few poor countries in the year 2035, what’s the Gates Foundation

going to be doing in 2036? (Laughter.) MR. GATES: Well, there are a lot of diseases.

Over 80 percent of the difference of why a poor child is 20 times more likely to die

than a child in a middle-income country, it’s these infectious diseases. It’s diarrhea,

pneumonia, malaria. And then there’s a few adult diseases which are way more prevalent

in poor countries – TB, HIV. And we’ve taken on as a central mission

– it’s a little bit over half of what we do – to get rid of those diseases. And

so that will remain our priority until we’re basically done with those. And those are tough

enough that I’d expect us – it will take us 30 to 40 years to really be done with those.

And then we will have a crisis because we will have the problem of success and we’ll

have to say, OK, what is the health inequity between

well-off countries and poor countries? Is it, you know, obesity, heart disease, and

what interventions? And even before 30 years are up, we’ll start to think about this.

But right now, we’re sort of maniacally focused in our health on those poor world

conditions because we see that between research and getting things like vaccines and drugs

out there, we can basically save a life for about $2,000. But everything we do should

be benchmarked – if it’s not that effective, then we shouldn’t do it. So, you know, we’re

pretty specialized in making breakthroughs in those areas.

MR. BROOKS: You’ve been involved in projects all over the place, from eradicating polio

outside the United States to improving schools in cities and even in rural areas around the

United States. What do you consider at this point, given all of the resources that you

put into these important projects, to be your most important victory or your area of greatest

success, and what did you learn from it? MR. GATES: Well, we’ve had the most success

in global health. You know, there’s over six million people alive today that wouldn’t

be alive if it wasn’t for the vaccine coverage and new vaccine delivery that we’ve funded.

And so it’s very measurable stuff. And, in fact, if you applied a very tough

lens to our work, you can almost say, OK, why are you even involved in U.S. education?

Well, we have a reason that you could say is not all that numerical, which is that the

success that I had, that Melinda had, came from the U.S. education system. It came from

the U.S. system of encouraging innovation and business and, you know, protecting the

intellectual property. And so we feel like we need to have – take

what we think is the greatest cause of inequity, the greatest challenge to America’s continued

leadership in innovation, which is the failures of the education system, that we need to be

dedicated to that even though the risk that we might not have a dramatic impact is much

higher in that work than it is in any of our health or agricultural or sanitation or financial

service work, which focuses on the poor countries. You know, we feel that it’s critical that

America get improved education, but that’s very hard work. And, over the last 20 years,

where government spending in this area and philanthropic spending, although it’s a

tiny percentage, has gone up dramatically, the proof in achievement in terms of reading

ability, math ability, dropout rates, you know, kids graduating college, there’s been

hardly any improvement at all despite massive resource increases that have gone into the

area. So it’s critical, but it’s not easy and there’s no proof that it’s necessarily

going to be dramatically better 10 or 20 years from now.

MR. BROOKS: So let me ask you about that intransigent set of problems that we have in U.S. education.

And I understand that there are certain problems that you can – you can eradicate the guinea

worm. You can’t necessarily eradicate ignorance. Here at

AEI we’re trying to improve the free enterprise system. That doesn’t mean we’ll be done

at some point. I mean, that’s just the nature of social enterprise as I understand.

Here in Washington, D.C., we talk about public education all the time. This is the capital

of the free world. We should have the best education system, and it should be an exemplar

to the whole world. I think we should – we should agree. We’re pumping more than $18,000

per kid per year in the system, and 15 percent of eighth graders read at a nationally acceptable

standard. So what do we do? MR. GATES: Well, it is phenomenal the variance

in how much is spent per student. You know, Utah’s below $6,000 per student per year.

A lot of states are in the $7,500 per student per year (range). You’ve got some that spend

more than D.C. – New Jersey would spend a fair bit more – the Northeast as a whole

is where the biggest spending takes place. And yet, there is no correlation between the

amount spent and the excellence that comes out, you know. Yes, Massachusetts is good,

but if you take the high-spending states as a whole, then you get Pennsylvania, New Jersey,

Washington, D.C., mixed into that, and it doesn’t look like there’s any correlation.

So it’s a very strange system. Washington, D.C., on a relative basis, actually

has improved a fair bit over the last three or four years – a combination of improved

personnel policies, shutting some schools, letting the charter schools take a somewhat

higher share of the cohort. It’s about the fourth largest of all the districts in the

nation, New Orleans being number one in terms of the percentage kids go to charter schools.

And the charter schools here on average are quite good. So, you know, there are some things

that have gone well, but it’s still an abysmal system.

And, you know, the fact that there isn’t more of a consensus on what should we be doing

to the personnel system and using innovation to, say, be almost as good as the countries

in Asia, it’s got to be a concern both from an equity point of view and from an overall

country competitiveness point of view. MR. BROOKS: So if spending more money is not

the answer – I mean, it would be great if it were, because as a rich country we can

do that. But there are innovation ideas about choice, charters, etc. If it’s the disruptive

innovations that are going to make it happen, how do we inject those ideas more systematically

into public bureaucracies, not just in schools, but in government in general?

MR. GATES: Well, if you look at the education system, the amount of actual research that

goes on to understand why some teachers are so extremely good, giving their kids more

than two years of math learning in a year, and why the teachers who are at the other

extreme, giving less than half a year of learning in a year – why we’re not taking those

best practices and at least trying to transfer those into the other teachers by doing observation

and feedback, you know, having the schools of education really drive for high-quality

teaching, it’s not a personnel system that right now is focused on teacher improvement.

Teachers get almost no feedback. They get almost no sense of, OK, I’m good at this

and I should share that with other people. I’m not very good at this, and therefore

I should learn from other people. It’s very different than most other so-called professions.

And, at the same time, technology is coming along in terms of taking the classroom video,

and, you know, sharing it, having people commenting on it, delivering personalized learning to

your kids so that you can assess where each of them are and tune lessons according to

what they’re having the challenge with. The opportunity is there, and that’s what

our foundation invests in. It invests in studying the very, very good teachers. We took 20,000

hours of video and looked at various measures, you know, what were they doing differently?

And we created a lot of model districts where there are so- called peer evaluators who are

in the classroom, observing, giving feedback. And, you know, it looks like the results on

that are very good. And so there are points of light that if we could get it adopted permanently

and scale it up, it would start to move the dropout rate and the math and reading achievement.

As you say, it’s tough, though, because when we invented the malaria vaccine, no school

board gets to vote to uninvent it, whereas, you know, if you make an advance on personnel

system – Senator Alexander, when he was governor of Tennessee in the 1980s did a pretty

good system where people got feedback and evaluation, and, you know, it looked like

it was starting to work pretty well. And yet, it disappeared.

MR. BROOKS: The malaria virus is not unionized. Excuse me. I’m sorry. That’s not my place.

Please. (Laughter.) MR. GATES: Yeah. OK. I certainly agree that

there are various groups that can stand for the status quo. When you want to come in and

change things, they are worried not as much for the students, but for the teachers. So

they can defend the status quo. But if it was the case in America that the

less unionized places were like Singapore and more unionized places were poor, and if

you had some direct thing, and you said, OK, well, here it is, and now we can explain it,

that would be one thing. That is not true. Our education is very poor across the entire

country, and it does not correlate to unionization. Massachusetts, pretty heavily unionized, they

do relatively better. You know, some other places not unionized, like – actually, on

an absolute scale, OK, take Arizona – it isn’t – there is no single factor you

can say that in the 50 states, when that’s been removed – financial constraints, union

constraints – that something like Asia is taking place.

MR. BROOKS: Let’s go back outside the United States just for a minute again. You wrote

in your letter that there’s a lot of misunderstanding about U.S. foreign aid. Now, if you read what

people are writing about aid, there are a lot of critics who think it’s

just hopelessly ineffective. Some think it’s actually positively destructive. What’s

the misunderstanding about foreign aid from your point of view?