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Jason Pontin, the editor in chief of Technology Review, spoke to the cofounder and chairman of Microsoft and the Bill and Melinda Gates Foundation at his offices in Kirkland, Washington, in July of 2010. This is the full transcript of their conversation. A version edited for brevity and focus on the subject of energy can be read here.

TR: Explain the moral imperative behind “The Pledge” [in which Gates and Warren Buffett have asked America’s 400 wealthiest individuals to pledge half their wealth to charity]. What will it achieve that conventional philanthropic giving cannot, besides raising a greater supply of money? Or is that the whole point?

Gates: Well, I think the idea is pretty simple, and I wouldn’t use the term “moral imperative.” It’s absolutely the case that the U.S. is the most generous country in terms of philanthropic giving. If you look at the large estates in the country, about 15 percent of the value goes to charitable causes, and there are more billionaires today, with more wealth on average, than ever before. And a lot of them may not know how much fun it is to get involved in giving, or know that it’s kind of like starting a new career. And so we decided to create this group who had in common a pledge to give–not to all take one approach or pool money, but merely to find people who had things in common. How long should a foundation last, how do you staff, how do you involve your family? Different things will fit for different people. We did these dinners with some wealthy people, some of whom have done a lot of philanthropy, some of whom have done less. Another key factor is that the earlier in life you think about this stuff, the more opportunity there is for you to take your talent and get involved, or have associates that you know are talented through their work with you get involved. You’re not going to do your best thinking about this if you wait until you’re 92 years old and probably quite influenced by a small group who may have different thoughts. Starting earlier, giving earlier–that works. Those are the themes, and as this year goes on, hopefully we’ll get more people to sign up, and we’ll share that at various milestones. But so far we’ve had lot of good acceptances.

How many people have committed to making major–

We’re not saying that. There will come a milestone, and we’ll give people an update. We’re going to have some more dinners, because that format worked very well. It’s a very low-key thing–people who come to dinner don’t necessarily decide to sign up, and we’re not going to pressure them. But it’s going pretty well. If it works reasonably well here in the U.S., a separate but similar thing will be done in China, and a separate but similar thing will be done in India. I’ll pick people I know there. They’ll get out in front and drive it.

Giving in China isn’t particularly well established, is it?

Well, India’s further along. China is just asking itself, “When you have billionaires, what are they expected to do?” In India, a lot of the tech billionaires are incredibly generous and are giving away the vast majority of what they’ve done. … But we’re very excited about what we learned at those dinners. We are smarter because of them.

The Gates Foundation has invested in solutions to big problems like infectious diseases in poor countries. Providing clean energy for the nine billion people the planet will hold in 2050 is a problem that’s equally civilizational in scale. What can philanthropy contribute to energy research?

Well, basically not much. The energy market is an absolutely gigantic market, and the price of energy is a key determinant in improving lifestyles, whether for the rich, the middle-income, or the poorest. It seems slightly more intense for the poor: things like fertilizer and transport, or health care, are very expensive for them. You know, things like basic lighting are very expensive. But it’s a big enough market that if you come up with cheap ways of making electricity, then that should be done with typical big-firm risk taking, small-firm risk taking. On the other hand, the way capitalism works is that it systematically underfunds innovation, because the innovators can’t reap the full benefits. But there’s actually a net benefit to society being more R&D-oriented. And that’s why in health research, governments do fund R&D.

You are a member of the American Energy Innovation Council, the AEIC, which calls for a national energy policy that would increase U.S. investment in energy research every year from $5 billion to $16 billion.

Right.

I was stunned that the U.S. government invests so little.

Yeah, particularly when you look at the DOE budget, and it looks so big–but the biggest part of that by far is dealing with the legacy of nuclear weapons production at various sites around the country. I was stunned myself. You know, the National Institutes of Health invest a bit more than $30 billion.

The Gates Foundation is in that health area, and when we pick a disease to work on, we pick a disease where for some reason the market is not working. Like malaria: rich people don’t need a malaria vaccine. They are rarely in malarial areas, and when they are, they can take prophylactic drugs and not worry about it. And yet for the people who live there, over a million a year, mostly kids in Africa, die. When we did our first $50 million grant for malaria, about a decade ago, we more than doubled the amount of money going into malaria research at the time. It’s a horrific disease, but there’s not a market reward for coming up with a malaria vaccine.

So you made a market.

Yes, you can create a market where there’s no natural market. The biggest project, the one that’s furthest along, is where GlaxoSmithKline is doing a vaccine called RTS,S, which is now in phase 3 [trials]. It’s not a perfect vaccine. It reduces mortality a bit more than 50 percent. And then we’re funding a lot of other things that aren’t as far along that–either by themselves or in combination–would get us a perfect vaccine. There are some very novel ideas in the early stages.

But to go back to your question, the reason we’re involved is because there’s not a market. And so our investment is mind-blowing compared to anything else. And you do have that in diseases of the poor world. You know, in the rich world, the percentage of people with AIDS is fairly small, and so the cost of treating people with drugs for a lifetime is affordable. It’s not perfect for those people, it’s not perfect financially, but the difficulties of coming up with a vaccine are such that there’s not a market incentive for it. So an AIDS vaccine is another one that is being funded by a combination of government budgets and philanthropy. The two biggest funders by far are our foundation and the U.S., the part of the NIH involved.

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