Dropping out of college didn't stop Bill Gates from making tons of money, but it kept him from classes where he might have learned about the beauty of spontaneous market processes.

Never mind. I forgot that he attended Harvard. He might not have learned about markets after all.

Gates spoke at Harvard recently, urging graduating students to take on the "world's deepest inequities [including] world hunger ... the scarcity of clean water ... children who die from diseases we can cure". All of us want those problems solved, and through their charitable foundation, Gates and his wife, Melinda, have certainly put their money where their mouths are. But Gates seems unaware that these problems can't be eliminated in the simplistic way he advocates.

He told the grads, "The market did not reward saving the lives of these children [in poor countries], and governments did not subsidize it. So the children died because their mothers and their fathers had no power in the market and no voice in the system."

What is Gates talking about?

Can he name one poor country that permits the free market to operate? The problem is not that the market doesn't make it profitable to save lives -- it most certainly does. The problem is that Third World countries have overbearing, corrupt governments that are obstacles to private property and freedom. That's why the children's parents have no voice or power.

Poor people in the West and in East Asia lifted themselves out of poverty by relying largely on the unplanned market process. That process -- countless individuals pursuing their own interests by trading with one another -- is, as Nobel Prize-winning economist F.A. Hayek put it, a "discovery procedure." Through the price system and free competition, it clarifies tradeoffs of scarce resources, generates the lowest-cost solutions, and provides feedback about success and failure through profit and loss.

This spontaneous order is far better at "saving the lives of these children." Continued...