I have written several articles on postings related to Big Tech, Social Media and Corporations. A list of links have been provided at bottom of this article for your convenience. This article will, however address different aspects on these Industries.
A tale of two titans: Gates and John D. Rockefeller
Bill Gates may say he has nothing in common with John D. Rockefeller, but the author of a new biography begs to differ.
Bill Gates may say he has nothing in common with John D. Rockefeller, but the author of a new biography begs to differ.
“As businessmen, both are very focused, very intense and very driven men, and with the same missionary faith in themselves, in their companies and in the future of their industries,” said Ron Chernow, author of “Titan, The Life of John D. Rockefeller, Sr.”
|Rockefeller’s net worth was equal to 2.5 percent of the gross national product of the United States, vs one-half of 1 percent of the gross national product for Bill Gates.|
Gates, in an interview last week, said he’d read the biography and saw no similarities between himself and Rockefeller.
Never mind that Gates is the richest man in the world, as Rockefeller was in his day. But there are still other parallels, Chernow said.
For instance, both men had blind spots revealed when their companies were slapped with antitrust suits.
“Rockefeller and … Standard Oil were really blindsided by the power of the press at the turn of the century. There were suddenly talented journalists like Ida Tarbell who were able to take much more complex issues than journalists had dealt with in the past and could really slice open a corporation like Standard Oil to expose its inner-workings.”
Similarly, “Gates in a way was blindsided by the power of politics,” Chernow noted. “By his own admission, he says that his rivals at Netscape and Sun Microsystems were working much harder to lobby Washington, and he didn’t realize how much time and how much of his life would be consumed by politics.
“Both Rockefeller and Gates got very interested in public relations the year that the federal government had filed the antitrust suit,” Chernow added.
Another thing in common is a ferocious desire to win.
“To be a monopolist does not mean you’re fat, mean and complacent,” said Chernow. “John D. Rockefeller did not take his monopoly for granted. He was constantly working to improve his refineries, his pipelines and his tankcars and everything else; and in the same way I’ve read about Bill Gates, there is this stress he puts on perpetual innovations, and if anything, he seems to be running scared all the time.”
The differences between the two men are as significant as their similarities, however.
Rockefeller was a devout Baptist, whereas Chernow cited a Gates comment that he doesn’t go to church on Sundays because it represents an inefficient use of his time. Gates is also far better known than Rockefeller was.
Secret and reserved
“Rockefeller was a very secret and reserved man during his active career, as opposed to when he was an old man handing out dimes,” Chernow said. “When he was actually running Standard Oil, he almost never gave interviews … he was a great sphinx.”
Chernow noted that Standard Oil didn’t employ a single public relations person during Rockefeller’s tenure, while “Gates has had 30 people working on his public image.”
“Bill Gates’ image is ubiquitous. We see him everywhere, we feel as if we know him. And particularly during the last year or so as he’s had antitrust problems, he’s tried to be more of a regular guy,” Chernow said.
While many within the computer industry harbor strong dislike for Gates, he is popular with the public at large. In contrast, Rockefeller in the early 20th century personified the evils of big business.
Indeed, Gates’ power pales in comparison to that wielded by Rockefeller’s Standard Oil before it was split up in 1911. For much of its history, Standard Oil benefited from little regulation and some of the most voraciously corrupt elected officials in American history.
Standard Oil dwarfed competitors
“It’s hard to communicate to people just how large the Standard Oil trust was,” Chernow said. “Standard Oil was 20 times bigger than its nearest competitor.”
It was also one of the two largest companies in America. When it was broken up, among the 34 companies spun off were what we know today as Exxon, Mobil, Amoco, Chevron, Arco, Conoco, BP America and Cheesebrough-Ponds.
“At least four of those companies still are dominant in the oil industry and still among the largest 100 companies in the world,” Chernow said. “Rockefeller really owned the whole industry lock, stock and barrel.
“I guess the situation would be equivalent if Microsoft was a personal computer manufacturer and not only controlled the operating system, but controlled all of the applications and the microprocessors and all of the collateral equipment and owned all of the retail outlets at the same time.”
Rockefeller’s dominance may show why his fortune in fact was larger than Gates’, though not in pure numbers.
“Rockefeller’s net worth was equal to 2.5 percent of the gross national product of the United States, versus one-half of 1 percent of the gross national product for Bill Gates,” said Chernow.
“So while Gates was richer than Rockefeller if you translate 1913 dollars into 1998 dollars, if we ask which man loomed largest in the economy of his day, John D. Rockefeller was infinitely richer,” Chernow said.
Gates: postponed philanthropy
While Gates says he intends to give away the bulk of his fortune, much as Rockefeller did, Gates is going about this much differently than Rockefeller.
Chernow noted that when Rockefeller was in his 40s, as Gates is now, he was helping to create what became Spelman College. In his 50s, he founded the University of Chicago, and in his 60s he built what we now know as Rockefeller University.
“I think that there’s one kind of warning or perhaps inspiration for Gates [in Rockefeller’s philanthropy],” Chernow said. “Rockefeller was a devout Baptist who tithed from the time he was a teen-ager. He was not someone who postponed his philanthropy until his later years.
Rockefeller felt he’d benefited from years of giving experience. While Gates has given away many millions of dollars, he is primarily focused on his business interests now, and not on philanthropy.
“Gates has said he’ll wait another 10 to 12 years to give away his fortune, because he’s still consumed with business. I think that’s a mistake. It takes many years before one’s judgment ripens to the point where you can give away money wisely,” Chernow said.
Times are different
Of course, times are different now. Rockefeller, Carnegie and the other great philanthropists of the late 19th and early 20th centuries operated in a different era, with different values.
“The ruthless people we know as robber barons were actually giving away much more money at a much earlier point in their careers than the high-tech and biotech and Wall Street billionaires who are so revered today and are seldom described as ruthless,” Chernow noted. “It’s a paradox.”
The Similarities Between the Actions of John D. Rockefeller and Bill Gates in the U.S.
Is Bill Gates the John D. Rockefeller Sr. of our times?
Twelve years ago, in a cover story for Philanthropy, I explored the issue of whether or not Bill Gates and John D. Rockefeller Sr. were similar types of donors.
I concluded that, at least as regards their giving for medical research and public heath, that there were some similarities. Both men dominated their industries. Both were attacked by the Justice Department as wicked monopolists, although in both cases market forces were undermining the monopoly even as the lawsuit was taking place. (Rockefeller never invested in Texas oil, ensuring that the Pews and Mellons would become formidable competitors. Microsoft’s dominance in software and browsers has been steadily undermined by Mozilla and cloud computing, pushing the firm to become more of a hardware manufacturer of game consoles and mobile phones.)
Moreover, the reasons why Bill Gates and John D. Rockefeller chose medical research as their primary focus of their charity are quite different. The primary impetus for Rockefeller’s medical giving was Frederick T. Gates, Rockefeller’s principal philanthropic advisor, while Bill Gates decided to fight malaria (and later, polio) out of personal conviction. John D. Rockefeller was a very disinterested donor, whereas Gates is famous for consuming complicated medical texts in order to ask the doctors and scientists he employs highly complex questions.
I bring up the connections between Bill Gates and John D. Rockefeller because it came up in a very lengthy and interesting profile of Gates published in the November 2 Financial Times.
People who love reading about Gates’s wonkery will find plenty to enjoy here, including the claim by Gates program officer Raja Rao that Gates is known to “sit in a room for 11 hours nonstop just talking about technology, eating snacks and drinking Diet Coke.” But the important parts of the article are about Gates’s philanthropic vision.
Waters interviewed Peter Diamandis, who is famous for using his wealth to fund prizes designed to solve social problems. Waters says that “according to Diamandis, the Gates Foundation, with its focus on alleviating the suffering of the poorest, smacks of the 20th-century philanthropy of the robber barons, who built and then milked monopolies before spending their last years doling out cash to worthy causes. The latest wave of techno-visionaries, he says, is focused instead on creating whole new industries capable of changing the world.”
I’ve seen sensible statements from Diamandis in the past, so I’d love to know what he actually said rather than what Waters says he said. I can’t, for example, imagine Diamandis calling Carnegie and Rockefeller “robber barons” (don’t get me started, but neither Carnegie nor Rockefeller “robbed” anyone).
In any case, here is Gates’s reply: “Industries are only valuable to the extent they meet human needs. There’s not some—at least in my psyche—this notion of, oh, we need new industries. We need children not to die, we need people to have an opportunity to have a good education.”
That’s a little inarticulate, but on point. The primary task of philanthropy is to answer this question: “How do I help the poor improve their lives without having poor people becoming dependent on my aid?” Every great philanthropist comes up with a different answer to this question. Andrew Carnegie’s was to fund libraries so that poor people could learn the skills they needed to climb the social ladder. Bill Gates’s is to fight the diseases that primarily affect the poor. Both methods are equally valid.
Moreover, it’s clear that, while Gates has to spend some of his time persuading Third World politicians to allow Gates-funded doctors to vaccinate the poor, most of Gates’s funding goes to supporting scientific research. Gates isn’t funding conferences where the great and the good travel in business class and stay in first-class hotels to attend endless seminars about how vaccination is a good idea, but it’s far more than the private sector can handle, so we all have to lobby to increase the World Health Organization’s budget because the need is just so immense. He’s funding scientific research. That, to my mind, is a good thing.
However, Peter Diamandis’s philanthropy is also significant. It’s likely that some of Diamandis’s prizes won’t result in anything useful. But some will. Supporting prizes is a worthy goal of philanthropy.
Both Bill Gates and Peter Diamandis deserve credit for being hands-on donors passionately committed to the causes they fund. They’re far better role models than perpetual foundations created by long-dead founders whose program officers were graduated from the same schools, acquired the same credentials, and as a result eagerly embrace the mind-numbing groupthink that remains philanthropy’s greatest problem.
Bill Gates’s vaccine research is an admirable use of philanthropic dollars. I hope he succeeds in finding a vaccine for malaria and in eradicating polio.
Bill Gates — Another Rockefeller or Another Ford?
Federal Judge Thomas Penfield Jackson has ordered Microsoft broken in two, and the appeal has gone to the Supreme Court. Why is Microsoft in so much trouble? Because for two centuries Americans have hated political and economic bullies. “Free competition” has always been our rallying cry and the Sherman Antitrust Act has been the law of the land since it passed 110 years ago this month.
That “charter of freedom” was designed to protect the core American value of free enterprise. A century later, Bill Gates is trying to redefine free enterprise by shifting attention from producers’ rights to consumers’ rights. The public seems willing to go along with him, but will the courts?
Microsoft beat out such rivals as WordStar, Word Perfect, and 1-2-3 because its software worked better. The legal issue now is whether it illegally tried to destroy the Netscape browser. Yet beneath this case simmers the issue of consumers versus producers.
The “trusts” were large conglomerates that suddenly emerged in the 1880s and 1890s to monopolize entire industries. The country was filled with thousands of small, locally-owned factories; the trusts tried to buy them out. Those factories have all rusted away, or have been converted into boutique malls, but a century ago they were as vibrant as software startups today. Their owners worried, could they thrive alongside the trusts? Would their entrepreneurship survive in the face of ruthless competition?
Free competition meant the opportunity for all Americans to build their own businesses without being forced to sell out. As Ohio Senator John Sherman put it, “If we will not endure a king as a political power we should not endure a king over the production, transportation, and sale of any of the necessaries of life.” The Sherman Act gave the government the authority to ask courts to break up monopolies.
Corporate consolidation roared along in the 1890s and 1900s. As a result the Progressive Era put antitrust high on its agenda. President Theodore Roosevelt approved of “good” trusts–which built the world’s greatest economy–and sued 40 “bad” ones that preyed on smaller fry. The most notorious was the Standard Oil Company. John D. Rockefeller had used his financial power to destroy and buy out his competitors and made secret rebate deals with railroads to build his monopoly in the oil business.
Rockefeller was the richest man in the world. Under attack he hired the first public relations agents, and donated huge sums to churches, universities and rural African-American schools. His PR campaign failed as newspapers and clergymen denounced the gifts of “tainted wealth.”
In 1911 the government won in the Supreme Court. Rockefeller’s monopoly was broken into 38 entirely independent companies, including Standard Oil companies of New Jersey (later known as Exxon), of Indiana (Amoco), of New York (Mobil), and of California (Chevron). Eventually they began to compete against one another.
After 1911 the nation’s mood changed; America accepted bigness. Henry Ford was as much a monopolist as Rockefeller, but he built millions of cheap cars that put America on wheels, and at the same time lowered prices, raised wages and promoted efficiency. Ford became the greatest hero of the day because he empowered the consumer. The government never tried to break up his company; talk of trust-busting faded away.
In the Great Depression the threat to free enterprise seemed to come from too much “cutthroat” competition, which drove down prices and slashed profits for entrepreneurs. One law in 1936 sought to protect local retailers against competition from the new, more efficient chain stores, by making it illegal to discount prices. By the 1980s America was confident that a fully competitive marketplace produced fair returns to everyone, entrepreneurs and consumers alike. Yet some argued that monopoly was bad not because it hurt entrepreneurs but because it hurt consumers in terms of higher prices, poorer service, less innovation and restricted choice.
In 1982 the Reagan administration used the Sherman Act to break up the AT&T monopoly into one long-distance company and seven regional “Baby Bells.” The pace of business takeovers speeded up in the 1990s, but whenever one large corporation sought to acquire another it first had to obtain the government’s approval. The success of the AT&T breakup emboldened President Bill Clinton to move against Microsoft. In 1995 Clinton’s Justice Department refused to allow Microsoft to buy out Quicken, which would have given it a monopoly of the home financial software market. Quicken survives today and is one of the few software products Microsoft has been unable to buy out, elbow out, or out-perform.
In 1999 Clinton’s Justice Department sued Microsoft and demonstrated it had illegally strong-armed PC companies in order to squelch the competitive threat posed by Netscape. Gates–the new Rockefeller–responded with a blitz of publicity and a massive dose of philanthropy.
Gates wants to redefine free enterprise to give Microsoft much more freedom in its business decisions, as long as it benefits consumers. He believes that Windows is always best for the consumer, and that splitting Microsoft would diminish efficiency and slow down the torrid pace of software innovation.
Is Gates more like Ford or Rockefeller? In Silicon Valley Gates is feared and hated by entrepreneurs who know he can destroy their business with the click of a mouse. But consumers love Windows as much as they loved their Model T’s. Gates has lost the first round. Next year the Supreme Court will either repeat the busting up of Standard Oil, or the toleration of Ford.
The Ghost of John D. Rockefeller
At the Senate Judiciary Committee hearing on competitiveness in the computer industry last March, Microsoft chairman Bill Gates was compared to the infamous “robber baron” John D. Rockefeller and his company likened to the Standard Oil Company of the late nineteenth century. Federal Trade Commission chairman Robert Pitofsky made a similar analogy in a Washington Post op-ed, where he self-servingly argued for more money for antitrust investigations. Gates’s competitors, too, are working diligently to implant the Rockefeller analogy in the public consciousness.
Even the Wall Street Journal has joined in this attack; reporter Alan Murray claimed in a page-one article that Gates supposedly enjoys “monopoly power” that “even John D. Rockefeller could envy.”
Microsoft’s critics are right. There are many similarities between Bill Gates’s company and the old Standard Oil organization.
Like Gates, Rockefeller was the victim of a political assault for the “sin” of rapid innovation, a vast expansion of output, and rapidly declining prices just the opposite of what the antitrust laws ostensibly police. As with Microsoft, the political attack on Standard Oil was launched by less-efficient rivals who wanted to achieve through the political process what they failed to achieve in the marketplace.
There is indeed a lesson to be learned from Rockefeller’s antitrust ordeal, but it is not the one Microsoft’s critics have in mind.
Rockefeller’s Economic Legacy
The firm of Rockefeller, Andrews, and Flagler was formed in 1865 and was a marvel of efficiency because of Rockefeller’s penny-pinching ways and the managerial genius of his brother William. Even Rockefeller’s harshest critic, the muckraking journalist Ida Tarbell (whose brother’s firm the Pure Oil Company was driven from the market by the more efficient Standard Oil), described the company as “a marvelous example of economy.”
The efficiencies of economies of scale and vertical integration caused the prices of refined petroleum to fall from over 30 cents a gallon in 1869 to 10 cents by 1874 and to 5.9 cents by 1897. During the same period, Rockefeller reduced his average costs from 3 cents to 0.29 cents per gallon.
The production of refined petroleum increased rapidly throughout this period of increasing dominance by Standard Oil as well, as increased competition was provided by Associated Oil and Gas, Texaco, the Gulf Company, and 147 independent refineries that had sprung into existence by 1911 the year in which the government forced the breakup of Standard Oil.
Contrary to popular mythology, Standard Oil’s market share declined from 88 percent in 1890 to 64 percent by 1911. Because of intense competition the company’s oil production as a percentage of total market supply had declined to a mere 11 percent in 1911, down from 3 percent in 1898.
Moreover, Standard Oil’s decades-long price-cutting was not “predatory pricing” the theoretical practice of pricing below average cost to drive competitors from the market and establish a monopoly. Any business person would be a fool to intentionally lose money by pricing below average cost for decades. As economist John McGee concluded in his classic analysis of the Standard Oil case, “whatever else has been said about it, the old Standard organization was seldom criticized for making less money when it could readily have made more” through other means.
Indeed, Standard Oil never came close to cornering the market; by the time the antitrust case against it was filed in 1906, it had hundreds of competitors. Nevertheless, Standard Oil was convicted of violating the antitrust laws in 1911 and partially dissolved, despite the fact that the courts conducted no economic analysis of its conduct and performance. That is, they completely ignored the effects the company had on prices, output, and innovation in th petroleum industry, just as Microsoft’s critics tend to ignore that there are tens of thousands of software development firms in the world and that during the period of Microsoft’s rise to dominance the cost of computing has fallen spectacularly while product quality has soared.
Standard Oil was convicted because of a general anti-business animus stoked by socialist intellectuals and journalists such as Henry Demarest Lloyd and Ida Tarbell and urged on by the company’s higher-cost and higher-priced rivals. As a result the most efficient industrial organization of the time was crippled, weakening competition and pushing prices up.
The Protectionist Roots of Antitrust
From the very beginning, the antitrust laws have been a protectionist vehicle. While in theory they guard consumers against monopoly, in reality they politically protect uncompetitive (but well-connected) businesses. In a 1985 International Review of Law and Economics article, I showed that in the ten years before the 1890 Sherman Anti-Trust Act, the industries accused of being “monopolized” by trusts were all dropping their prices faster than the general price level was falling at that time and were expanding output faster than GNP was growing some as much as ten times faster. The late-nineteenth-century trusts were the most innovative and fastest-growing industries of their time, which is why they were unfairly targeted by antitrust laws.
Indeed, Congress at the time recognized the great advantages of the trusts for consumers. Congressman William Mason stated during the U.S. House of Representatives debate over the Sherman Act that the “trusts have made products cheaper, have reduced prices; but if the price of oil, for instance, were reduced to one cent a barrel, it would not right the wrong done to the people of this country by the trusts’ which have destroyed legitimate competition and driven honest men from legitimate business enterprises.” Senator George F. Edmunds added that “Although for the time being the sugar trust has perhaps reduced the price of sugar, and the oil trust certainly has reduced the price of oil immensely, that does not alter the wrong of the principle of any trust.”
Thus, members of Congress acknowledged that the trusts had caused lower prices to the great benefit of consumers, but objected that higher-priced businesses many of which were political supporters had lost market share or had been driven out of business.
The Sherman Act was a protectionist scheme in more ways than one. The real source of monopoly power in the late nineteenth century was government intervention. In October 1890, just three months after the Sherman Act was passed, Congress passed the McKinley tariff the largest tariff increase in history up to that point. The bill was sponsored by none other than Senator John Sherman himself. Sherman, as a leader of the Republican Party, had championed protectionism and high tariffs since the Civil War. In the Senate debate over his antitrust bill he attacked the trusts because they supposedly “subverted the tariff system; they undermined the policy of government to protect . . . American industries by levying duties on imported goods.” That is, the price-cutting by the trusts undermined the manufacturing cartel that was created and sustained by the Republicans’ high-tariff policies.
The Sherman Act was a political fig leaf designed to deflect attention away from the real source of monopoly power the tariff and the true price-fixing conspirators Congress and protectionist manufacturers. The New York Times saw through this charade when it editorialized on October 1, 1890, that the “so-called Anti-Trust law was passed to deceive the people and to clear the way for the enactment of this . . . law relating to the tariff. It was projected in order that the party organs might say to the opponents of tariff extortion and protected combinations, Behold! We have attacked the Trusts. The Republican Party is the enemy of all such rings.”
Economists were almost unanimously opposed to the Sherman Act because they viewed competition as Austrian school economists view it as a dynamic, rivalrous process of discovery. According to historian Sanford D. Gordon, who surveyed all professional journals in the social sciences and all books written by economists regarding the late-nineteenth-century trusts, “a big majority of the economists conceded that the combination movement was to be expected, that high fixed costs made large scale enterprises economical, that competition under these new circumstances frequently resulted in cutthroat competition, that agreements among producers was a natural consequence, and the stability of prices usually brought more benefit than harm to society. They seemed to reject the idea that competition was declining, or showed no fear of decline.”
The Myth That Antitrust “Saved” Capitalism
A popular argument made at the time was that antitrust was necessary to stave off something even worse the more extreme forms of regulation or outright socialism. Antitrust was adopted, but Americans were subjected to the more extreme forms of regulation and socialism anyway. As Milton and Rose Friedman pointed out in Free to Choose, by the 1970s the entire Socialist Party Platform of 1920 had been adopted in the United States. Socialism, F.A. Hayek pointed out in The Road to Serfdom, no longer meant nationalization of industry and central planning, but rather the institutions of the welfare and regulatory state. Antitrust did nothing to stop the spread of socialism in America.
Quite the contrary; the adoption of antitrust helped speed up the adoption of socialism. By weakening the competitive process, it has led to slower productivity growth and diminished prosperity. Government always reacts to slower economic growth, unemployment, and economic crises by adopting even greater economic interventions. The late-nineteenth-century proponents of antitrust had it all backwards. This is why it is so disingenuous, to say the least, of contemporary proponents of antitrust, such as the Wall Street Journal’s Murray, to repeat this same discredited argument, urging Bill Gates to “place trust in trustbusters,” or else “he may eventually find the Justice Department and Congress considering more-radical remedies.”
The Real Robber Barons
John D. Rockefeller, like Bill Gates, achieved his economic success by offering the best products for the lowest prices on the free market. The real “robber barons” of the late nineteenth and the late twentieth centuries are the business people who, having failed to achieve competitive success in the marketplace turned to government and asked it to enact laws and regulations granting them special privileges and harming their competitors. A century ago, such immoral special pleaders included Leland Stanford, who became wealthy by using his political connections to obtain a government-created monopoly franchise in the California railroad industry; Thomas Durant and Grenville Dodge, who pocketed millions in government subsidies to build the Union Pacific railroad; Henry Villard, who “rushed into the wilderness to collect his government subsidies” to build the Northern Pacific railroad; and steel industry magnate Charles Schwab, who championed the disastrous 1930 Smoot-Hawley tariff. Their modern-day counterparts would include many of Bill Gates’s competitors, such as the chief executive officers of Netscape, Sun Microsystems, Novell, and other companies that have lobbied the federal government to use the antitrust laws to diminish or destroy the competitive efficiency of their most effective rival, Microsoft.
For over 100 years antitrust regulation has allowed politicians to deceitfully pose as “populists” while stifling competition with politically motivated attacks on the most innovative and progressive companies. These attacks have been supported for over a century by socialist intellectuals and journalists who have taught many Americans to hate capitalism, to envy successful people, and to support government policies that undermine or destroy them both Being the most successful businessman in the world, Bill Gates was an inevitable target of the anti-capitalistic crusaders. It’s time we recognized antitrust for the protectionist racket that it is and repealed the antitrust laws.
zdnet.com, “A tale of two titans: Gates and John D. Rockefeller: Bill Gates may say he has nothing in common with John D. Rockefeller, but the author of a new biography begs to differ.” By Michael Fitzgerald; kibin.com, “The Similarities Between the Actions of John D. Rockefeller and Bill Gates in the U.S.” ; philanthropydaily.com, “Is Bill Gates the John D. Rockefeller Sr. of our times?” By Martin Morse Wooster; origins.osu.edu, “Bill Gates — Another Rockefeller or Another Ford?” By Richard Jensen; independent.org, ” The Ghost of John D. Rockefeller.” By Thomas J. Dilorenzo; gatesfoundation.org, “Bill & Melinda Gates, Rockefeller Foundations Form Alliance to Help Spur ‘Green Revolution’ in Africa.”;
Bill & Melinda Gates, Rockefeller Foundations Form Alliance to Help Spur “Green Revolution” in Africa
The Bill & Melinda Gates Foundation and the Rockefeller Foundation announced today that they will form an alliance to contribute to a “Green Revolution” in Africa that will dramatically increase the productivity of small farms, moving tens of millions of people out of extreme poverty and significantly reducing hunger.
This joint effort builds on the work of the Rockefeller Foundation between the 1940s and 1960s to launch what is known as the “Green Revolution,” an effort that pioneered the historic transformation of farming methods in Latin America and South and Southeast Asia, helping to double food production and stave off widespread famine. Among the pioneers in this effort was plant pathologist Norman Borlaug, a Rockefeller Foundation scientist for 39 years, who was awarded the Nobel Peace Prize in 1970 for his work developing improved crop varieties and farm management practices and promoting their widespread use around the world.
“The original Green Revolution was a huge success in many parts of the world,” said Judith Rodin, president of the Rockefeller Foundation. “Unfortunately, in Africa, while there are many positive efforts, momentum is going the other way. Over the past 15 years, the number of Africans living on less than a dollar a day has increased by 50 percent. Working with the Bill & Melinda Gates Foundation and with African leaders, farmers and scientists, we’re committed to launching an African Green Revolution that will help tens of millions of people who are living on the brink of starvation in sub-Saharan Africa.”
Over the long term, the partnership, called Alliance for a Green Revolution in Africa (AGRA), intends to improve agricultural development in Africa by addressing both farming and relevant economic issues, including soil fertility and irrigation, farmer management practices, and farmer access to markets and financing. Almost three-quarters of Africa’s land area is being farmed without improved inputs such as fertilizer and advanced seeds.
“No major region around the world has been able to make sustained economic gains without first making significant improvements in agricultural productivity,” said Bill Gates, co-chair of the Gates Foundation. “In Africa today, the great majority of poor people, many of them women with young children, depend on agriculture for food and income and remain impoverished and even go hungry. Yet, Melinda and I also have seen reason for hope – African plant scientists developing higher-yielding crops, African entrepreneurs starting seed companies to reach small farmers, and agrodealers reaching more and more small farmers with improved farm inputs and farm management practices. These strategies have the potential to transform the lives and health of millions of families. Working together with African leaders and the Rockefeller Foundation, we are embarking on a long-term effort focused on agricultural productivity, which will build on and extend this important work.”
The Alliance for a Green Revolution in Africa’s first investment of $150 million ($100 million from the Gates Foundation and $50 million from the Rockefeller Foundation) will support the Program for Africa’s Seed Systems (PASS). PASS will mount an across-the-board effort to improve the availability and variety of seeds that can produce higher yields in the often harsh conditions of sub-Saharan Africa. Specifically, PASS will help:
- DEVELOP IMPROVED VARIETIES OF AFRICAN CROPS
African agricultural environments are highly diverse with significant differences in local pests, diseases, rainfall patterns, soil properties and the desired attributes demanded by local small farm communities. PASS will fund around 40 national breeding programs a year that will use local participatory crop breeding to address these barriers and provide more robust, higher-yielding crops for small farmers. PASS will invest $43 million with a five-year goal of developing 100 new and improved crop varieties suitable for the ecologically varied agricultural environments in Africa.
- TRAIN NEW GENERATION OF AFRICAN CROP SCIENTISTS
Accelerating a new Green Revolution for Africa is a multi-layered challenge. While it starts with improved crop varieties at the most fundamental level, it also requires the development of new generations of trained African agricultural scientists. That is why PASS will invest $20 million to provide graduate level training in African universities for the next generation of African crop breeders and agricultural scientists upon which the seed system depends for growth and productivity.
- ENSURE IMPROVED SEEDS REACH SMALLHOLDER FARMERS
Africa has the lowest levels of improved seed utilization of any region in the world, mostly because such seeds are not physically or financially available to the majority of farmers. The poor state of rural transportation infrastructure, a lack of effective points of seed delivery to small farmers, and inadequate access to financial services all contribute to low utilization and inadequate agricultural productivity. PASS will invest $24 million to ensure that improved crop varieties are produced and distributed through private and public channels (including seed companies, public community seed systems and public extension) so farmers can adopt these varieties.
- DEVELOP A NETWORK OF AFRICAN AGRO-DEALERS
Another challenge particular to Africa is the lack of a robust market for bringing new products to farmers. PASS hopes to address this by providing training, capital and credit to establish at least 10,000 small agro-dealers who can serve as conduits of seeds, fertilizers, chemicals and knowledge to smallholder farmers, and in doing so help increase their productivity and incomes. This will be a $37 million investment.
- MONITOR, EVALUATE AND MANAGE
A new organization, based in Nairobi, Kenya will be created to ensure learning takes place and projects are well managed. The organization will conduct monitoring and evaluation of PASS projects, oversee sub-granting and implementation of all PASS activities and carry out financial management activities. A total of $26 million will be allocated for these activities.
The Rockefeller Foundation has already spent more than $600 million (in current dollars) on Green Revolution work around the world, including nearly $150 million during the last seven years in Africa.
“For decades, the Rockefeller Foundation has played a crucial role in creating and sustaining highly successful programs that have reduced poverty by improving agricultural research and productivity,” said Melinda Gates. “Together, we share a vision for creating lasting change that will help millions of the most vulnerable people in Africa lift themselves out of extreme poverty. We’re honored to be working with the Rockefeller team to achieve that vision.”
In June, the Bill & Melinda Gates Foundation announced that its programmatic work would be organized around three core areas: Global Development, Global Health, and the United States. Global Development focuses on reducing poverty and hunger and expanding access to information in the developing world, and will make investments in the areas of Agricultural Development, Financial Services for the Poor and Global Libraries.
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