>> from our studios in new york, this is "charlie rose." as >> we can't think of these as one block of developing countries.

china, mexico, brazil. aredeveloped countries doing even better. huge progress on health and incomes. it is a myth that we haven't made progress. >> bill gates is here. he founded a great technology company. he married a great woman. he built a great foundation. that ought to be enough for one lifetime. he and melinda do something remarkable. they save lives. their goal is to reduce the number of children in the world who die before they are five years old. he is worried because he fears myths about the poor and foreign -- mpght and paid progress. that is the subject of his 2014 annual lab and -- that is the subject of his 2014 annual letter. >> great to be here.

>> to give said marketable things. it is like a conversation to the people that you want to reach. measure, the world is better than it has ever been. people live longer, healthier, and also nations are now or self-sufficient. talk about where you think we are, and where we are not. then get to the myths. >> several hundred years ago, everybody was poor. about 30% of kids died he for birthday.h then a miracle happened. europe, eventually united states, after the war in japan, we had this rich world. most of the world was poor. we thought of the west, the soviet bloc, and this third block with these poor countries. i knew i was supposed to finish

my food or it would be unjust because some kid in china didn't have enough food. something like that. wasou look at income, it the rich and the poor countries. over the last 60 years, those countries by and large, most of them, have moved on. most people live and middle income countries. countries that no longer receive aid. they used to get aid. now, they still have poor people in their country. they use their own taxation and resources. they get new technologies on the rest of the world. we can focus our aid on the remaining poor countries. my view is that we are close to finish this job of getting every country to that level. in 20 years, it will be less than 10. the world is wonderful.

>> less than 10? >> that will be in that category. korea.ked africa, north i am amazed at how this good news about the progress in the longevity, runs against common wisdom. it holds people back. it gives the negative view of all the sin -- of all the investments we've made. that is debilitating. people have a hard time explaining why melinda and i are spending money the way we are, when they see they think poor countries are destined, and we haven't made much progress. >> you worry because people do not believe that there has been change, and that there can be

even more remarkable change. where does that resistance come from? why are these myths about the poor will always be poor, foreign aid, and about the fact thesef we do a lot of things with development will come over population. where is the myth coming from? >> i believe these myths before i got involved. ton somebody wants to appeal you to help out the poor, they show you the worst conditions. when somebody wants to be cynical about poor countries, they show you the top conditions. whose job is to say things are improved. bad things are headlines. tornadoes. earth quakes. this gradual day by day decrease in deaths, increase in literacy, increasing gdp, there is no moment for that is some big

announcement. that is why took the contrast of going to mexico city in 1987, a poorng well, this is country. people are caring jugs of water around. it is mostlyisit, middle income middle-class. now taking they are care of themselves. they are improving education. improving taxation. it creeps up on you. unless you work in the fields, you are just seeing those headlines and the bad news that may think we haven't made this progress. >> if people believe that progress is being made, and can be made, they are willing to support. >> absolutely. a look at what happened in mexico, what happened in vietnam. how do you get education right?

how'd do you get infrastructure? how do you get farmers to have triple the productivity? they make sure the expertise and the resources get there. all these countries get out of this poverty trap. you can't afford the schools, kids have bad nutrition that even if you are able to educate them they are not like to learn and contribute. untypical, long you're going to stay there -- until people come a long you're going to stay there. without that knowledge it feels like tennis rather than a handout. >> there is this notion as you point out, one billion people still on the planet that are in extreme poverty. one billion of 7 billion. you point out your concern is primarily with the bottom 2 billion people. that is where you want to focus your attention. at the same time, as i have togested, we have -- i want

connect the 2 -- everyone is talking about income inequality. the pope is talking about it. the president is talking about a. most -- davos, that is going to be a subject. 75% or 85% of the richest people have as much money as the bottom 50% of the global population. those for people here that say that is the extreme example of income inequality in the world. numbers, which i'm sure there is some construct that they feel that is correct, if that makes you feel the poor aren't improving their livelihoods, that is another example of misleading people. what really counts, your children survive. have nutrition. you are literate. yet economic freedom.

he eventually you can have a refrigerator, a tv, a mobile phone. amongst those 85, they count me as number one. my money is here for the poorest. it is to buy vaccines. say that you have gone to medical school and you were 100 thousand dollars in debt. you look like somebody with a of negativeet worth one hundred thousand dollars. you are about to become a doctor. you are not starving. the number of people starving on the planet is less than at any time in history. it is the kind of statistic that might make you glum. it might make you think, redistribution, growing the wealth is not the answer. purely redistribution. that is what this is all about. different countries can have taxation policies. are in iran -- warren and i

on the side of taxing the rich would not be that harmful. move not what is going to the world forward. better education. if i did take away all that wealth and give it to the poor, or improve the education system, the education which would be a hundred times more powerful. then you are developing people's capabilities. they pick professions and do things. i am not disagreeing with the figure. to see not lead people what has gone well. and encourage them to do more of it. >> the point you make is that if you look at all of these countries where there has been an emerging middle class, what emergence in the middle class means is you get a better education, better health, and therefore you are able to do more in terms of contributing to an economy that will let people

into the middle class. >> right. >> let's talk about foreign aid. some believe it doesn't work. many believe that there is corruption, and many who believe there is a better way to do it. you say? >> foreign aid has a significant responsibility for improving health, and culture. those are necessary elements for a country to advance its economy. what we have done with vaccines, reducing measles, getting polio eradication -- that is why kids can develop physically and mentally, and have countries that go on to look like we want. like these middle income countries. attacking foreign aid in the past, when it was cold war, when people weren't good at measuring these things, i will not stick up for all of the eight dollars that have been spent.

have freedom of how we spend our money. the idea that with our analytic ability, we happen to be suckered into some dead-end program, i am saying i don't think so. here is why. budget fort out the foreign aid is remarkably a small percentage of the budget of most countries. norway having the largest aid budget is only three percent. >> that is right. they are exemplary. they do the most. we are less than one percent. amazingly, when you get pushback on foreign aid, it is because people think that it is 10 or 20%. if we were sending that much overseas, even i would say it is more effective. we have a lot of problems. the balance, i wish it was two percent. good number the would be two percent. >> it would be fantastic.

>> 41% is health? >> yes. -- ave a high percentage >> you do not see this in terms of the numbers. to talk to you over the experience that you have had, and the places that you have been, from india to africa, to places in which you've seen things firsthand, it becomes more than numbers. it becomes more than five percent. it becomes a dollar makes a difference. lives have equal value. the mantra of your foundation. >> if you go and actually meet a dying, ande child is you realize a vaccine that could have been given to that child would have saved their life, or malaria drugs, you can't have that experience and not really get dedicated to this cause. tanzania with our oldest daughter right now.

there helps to understand. it is going to be hard. how do you get key vaccines? how do you get the farmer education? it is not easy. you can hardly come back to the wonderful country we live in. why are they, for lack of a , having such money difficulty? even with their efforts, if that kid doesn't get the nutrition, i don't care how hard they try at school, they are not going to learn. >> development does not mean overpopulation. she wrote this. make her point. >> this is a myth that i believed so much, the early days nothe foundation we were

sure to get involved in health. the foundation was quite small compared to how we grew it later. we were hesitating. it was wonderful. we met the people involved in the contraception availability were. about how as you import -- improved health, women voluntarily choose to have fewer children. the only places in the world who are bad help and high population growth -- >> there are many women in some areas who because there are so much childhood death, they have a lot more children than they might otherwise have if they knew about contraception or good health practices. >> right. have atparents want to least two children survive, and a 90% chance, they are going to

have to have quite a few kids to get that very high probability. kids are beinge healthy, there is a bit of a lag to get in there population before the birth weight drops. that bulge is the demographic dividend. the percentage of your population earning an income is high. that is the time when a country is lifted up into this middle income status. it is quite beneficial. now we know that the world is going to peak and population. we have had the most number. we are past peak baby. we have the most number of under five-year-olds the world is ever going to have. all the increase is taking that age pyramid and filling out the higher age groups. >> tell me about james in his

book and how it introduced -- influenced you. >> it was a mind blowing thing to learn that the mindset in ancient days was about decay. the garden of eden, everything was perfect and pristine. then we started sending. things were falling apart. the idea of new knowledge, new invention was foreign. ae medical knowledge came thousand years before. when they started in painting and medicine, to find out that those old things they hadn't him up with -- come up with these techniques. they hadn't seen, had map things out. there was this sense of we can discover new things. curiosity,mankind's that forward-looking, that helped fuel this sense of ok,

let's do science. >> is that the reason the east -- that you signal up these benchmarks? all8 years we can eradicate you know? >> this negative mindset or people don't see the progress actually is almost like olden days. the american public when asked about their kids teachers, it shows they are more aware of the problems then the good things that are happening. about that.cern certainly in terms of their generosity. also in terms of long-term investment. >> why don't you put some funds in terms of public understanding into these issues? you write the letter and capture my attention and other people. >> i don't know. crack some of can

this. i hope people like good news. good news is not as easy to spread as bad news. whiches you the basis on you should make the decisions. >> talk about choices people make. is it peter singer who makes the point about maybe we should spend less money in building the new wing of the museum and spend more money in terms of global health. --hilosophy i suspect you blindness.hosen this cultural thing, it is hard to compare. he creates a construct where he talks about how people want to avoid blindness and how strong the instinct is. therefore it is able to create a framework where he tries to have

a value system about these things. it comes up the way that i happen to be spending my money. i don't want to a bridge in any ability tonthropist spend things. if they have the confidence that spent, we canell show the networks, it will gain share versus other things. the fear of corruption, not knowing if somebody is really meant for these things, that holds back personal philanthropy . you look at these goals that you have, and beyond having a broad sense that it is possible, what is it necessary to make it possible, other than a mindset, metrics accountability, a sense of what works, and feeling that rather than what doesn't work. tell me how you get there. >> you have to find new science.

you have to fund a military at vaccine. -- and malaria vaccine. a central mexico almost shut down because he did not have enough funding. is supposed to fund those crops that help poor people grow more? it is not clear. the rich countries could end up missing that as an opportunities. science and innovation is a starting point. delivery systems, where you are building up the local capacity, that is very difficult. >> what is the balance between the two? in terms of developing new vaccines, or developing cooling systems to give vaccines already around to those people who need them? >> the biggest part in that being the delivering. the science piece was so underfunded that we spent 40% of tooloney on that new

discovery peace. 60% in delivery. toprimarily being able develop a cooling system to get vaccines. >> to buy the vaccines themselves. then, to pay the primary health- care worker who goes out and does the delivering, or in the case of aids, inventing a new vaccine versus actually buying the aids drugs that work, and getting them out there. delivery.mbers are in if you don't fund the upstream invention, you're missing -- you will never get rid of malaria. >> does it have to be a constant ongoing effort to go upstream? now we can simply focus on downstream? >> we decided our foundation will end 20 years after me.

is 30 orhopefully that 50 years from now. i think the problems of global health can largely be solved during that timeframe. >> where we on polio? that has been a particular. you were getting money from other people now who are coming to say i support this. make it happen. slim.or bloomberg, carlos a lot of people have joined. they have not only given money. they have lent their voice, talk to other people. 2013 was a good year in some ways. it is the third year. they have had no cases. that was very impressive. we have two new outbreaks in syria and somalia. we generally expected about one a year. that was a bit disappointing.

, the bigng challenge challenge is nigeria and pakistan. nigeria has happens many cases. thingsrushing to get right in nigeria to get it done before the unrest around the 2015 election causes a distraction from the help activity. we are close on that one. in pakistan, even the last few days, there have been tragic killings. >> what are they about? >> the polio program has been demonized as a plot of westerners to do something bad. sterilize women. it has a badugh intent. truth is on our side. we are just trying to help those kids not get paralyzed. we have to have voices that are trusted. muslim leaders, other countries

they look to. .e have the vaccines we got islamic development, a lot of middle east leaders came in to give to the campaign. it is not just a campaign from the west. that lack of trust in the north of pakistan is a real obstacle. we need a breakthrough there. the present of pakistan committed to help on that. the red cross. a lot of people. we have not made that bridge. 's news shows we are not there. i hope for it. all the have to do is have them know it is true. ♪

>> are you spending more time lobbying foreign leaders, going to washington than you have in the past? -- the recentbody

budget agreement, we suggested the u.s. go up to $200 million a year on polio. we said over $300 million. amazingly, in a bipartisan way, that extra $50 million was included. it looks like the financial piece will not limit us from having a success. >> how does the foundation work with the government in terms of pilot programs and being able to prove that something is worth doing and worth moving up to scale? >> the u.s. government is the biggest foreign aid dollar -- donor. aids, malaria. areas, in theent pet far program it was great under bush, it continued to be funded even in tough budget

times. the u.s. is taken the lead on it. we can do measurement and give them a bit of advice. we did them -- we did some cutting age -- it turns out to cut disease transition for over half. that is a good partnership. the u.s. is been an amazing on aids in them military. >> what about africa? >> it has come down very not as much as we have wanted to see. it is 20% off the peak rate. we still need to get the drugs out and get the appearance up. we need more tools. the science is showing us pathways to get those better tools. the next thing will be exciting.

we are going to have to keep funding that treatment for a long time. >> in terms of africa, to look 10 ofe last five years, 7- the fastest-growing economies are in africa. what does that pretend? >> if they didn't grow for a long time, even as the longevity went up, literacy went up, --a book talked about the gdp wasn't moving yet lives were improving. now that is changing. ,ven countries like ethiopia which was very poor, have increased. policies have helped quite a bit. african republic, --when you have a conflict in those

landlocked nations in africa, is going toc, that take time. those are very tough places. most of the coastal places are seeing growth. ghana.a, nigeria, botswana? >> they are very impressive. they have managed their farming in diamond wealth well. they in south africa are the two wealthiest. except for a few special programs. they are self-sufficient now. >> lemay bring you back to the united states. are you optimistic about change in our -- in education? >> im. the distance between the asian countries and the u.s. continues to grow. evaluate theirey

teachers, train their teachers, and some cultural intensity around education means that when it comes to being good at math or science or reading and writing, the distance is really opened up. the administration has pushed for helping teachers get feedback. , observations, student surveys, learning measurements. things that can help save the teachers that are doing well, let's look at best practices and spread those around. but it is slow. state-by-state, you get reversals. here in new york city, the charter movement may continue to get john support. -- strong support. concerning things have been said.

>> talk about technology for me. many people think the technology is the answer for everything. you have been out front in saying that no it is not. especially in those areas where you are concerned with global health grade explained that. -- health. explain that to me. >> it is equal to an education. as because we have amazing kids, makeo motivate it fun, to figure what they are confused about, the teachers at the center. we are going to help the teacher with this personalized learning technology. but the personnel system that improves that teacher and helps asm be good is as important that primary health care worker who has to show up and be trained, make sure. amazingly we keep coming back to

yes, magic tools are part of the arsenal. the basic design of the personnel system, measurement, if you don't get that right, which in play since -- which in places like northern nigeria it is not working, anything else you do is it one have much impact. both ofe same lesson in our key domains. >> when you call on a government, do they say thank you, come today? are they anxious to hear from you? because you are talking about programs that will affect their own citizens in terms of health and programs that are opportunities to lift them into the middle class. >> i have been impressed with the government leaders willing to sit down and hear about other countries that are doing better than they are doing.

being able to get their year, and give health and culture more priority than they received otherwise, that is beneficial. ethiopia is a case where the previous leader didn't trust the donors for some reason. in a meeting with melinda, he said come in and help us redesign how agriculture gets done. he hired one of the top people from the foundation. he created the agricultural transformation agency. we gave him resources to go do that. that started five years ago. the payoff is incredible. the new prime minister carried that in a great way. if they feel like you are going to be with them for the long run, that you're not trying to get a photo walk -- photo op, then you can get them to pay

attention. i am very happy with the reception we get. even on polio, where i'm calling up and saying we have to do more. happens, they take the call. >> do you get any pushback? you want to show that you can do things about polio. these affected diseases can be conquered. at the same time, we need a lot of other dollars to be spent on a range of diseases that are having a terrible effect on so many lives. dominatesous disease in their health picture. as they get richer, and they get obesity. >> not hear as much? , it ishe rich countries hard to see cancer, narrow

logical. you have a few countries like india where they have both at the same time. they have enough middle-class people that they are starting to see diabetes go up. a rate that is higher than you would expect. they have huge infectious diseases. they are the one where they have a. mexico city. they have moved out of infectious diseases. thathey have obesity level rivals our own. >> it is interesting when you talk about the necessity of bringing out of poverty into the into the middle class. it brings a set of problems. healthy shoes are one. >> i wouldn't say the development is the only problem. i would put at the top of the list. equity of everybody being in middle income countries prayed we better take on these health

every bitf affluence in parallel. . there is enough resources you can put on a carbon tax, fun the r&d. they don't have to be ofpetitions where you pick those three things, we can only do one or two. >> we watched extreme examples of pollution in china. what is your take on china in its ability to deal with those issues? that have to do with its own industrialization? >> you can take the u.s. at the level of wealth that china is that today and say what a horrible polluted place it was. it was terrible. we didn't even know the mistakes we were making. china has the benefit of seeing certain chemicals we put out there for a problem. they have a lot of work to do. >> you took a longer time, don't

expect us to move as fast as you expect us to. >> this pollution issue has both the government, which in terms of executing on it is very capable, and the people quite focused on it. cleaning up the: missions, cleaning up the car missions. they are on track now. it will be impressive how quickly they can move because they have seen solutions in other rich countries. >> heavy meta-new leadership of china? >> yes. he and his wife, we interacted quite a bit. she is very impressive. i got to know her because she works on the three diseases we work on. tuberculosis,iv,

and anti-tobacco. smoking levels in china are high. those are the three diseases that are not given their wealth. they are not doing this well. they have in their sights. >> had you see the ability to turn around their economy? >> i have a positive view of that. >> of their ability to turn the ship around? >> they are doing a good job of it. as you are making that change, you have a credit situation where credit has been in the wrong place. you control interest rates. issue have a technocratic about how you manage an economy, talking to their government leaders, they have looked at

countries in the past. informed andl- looking at the numbers that they will do the best. every country has gone from the iods, they have had blitz and growth. we certainly had many ourselves that we went through. -- is there demand thumbs down, it is not a disaster. >> what you think of the speech on the balance between security and privacy? strike ak you can balance between those things. >> did he find a balance? ,> i do wish people would say would remind us that when it comes to stopping terrorists from having access to nuclear materials, biological weapons of

terrorism, we are all have an interest in some cases in the government catching those activities before they go too far. privacy is absolutely important. but, who is -- do we have a balance? chance of severe appropriate also an role. that doesn't fit nicely in the u.s. versus non-us framework. >> have you changed your opinion that were snowed in? he seems to have been a shift in terms of snowden. >> i have had a negative view of what he did. i can't see that positively. -- it is a want the government to house the metadata.

he is looking for recommendations. where should it go? where should all that we have? >> i'm not an expert on this. i don't think there is any intrinsic reason why you couldn't set up a government agency where you did trust them to use it the right way. where the records were there. has somevery solution challenges. he ruled out the government holding it. have been my choice. the idea that when you know somebody is a bad actor, and you can see what they have done for the last 90 days, who they have called, did activity they have valuable., that is so yacht to be able to prevent. >> you don't seem to be concerned about whether they have been invading the privacy. query to gett go

this information. if you get a court order. that is one of the changes. you don't cbs concerned. >> all the metadata search require the court order. the fact that the metadata search, i'm fine with that. that is a nice threshold. at the end of the day, we should be able to have privacy and still count on our government to be out there looking for bad actors. >> do think we have found the balance? >> i think technology will continually challenge us. you see different policy takes. take cameras in the city. london has cameras. , andtrust to use those crime has dropped because of

that. it will be interesting to see if they -- if united notice is feels the same thing about that. were invaluable in figuring out what happens and catching those people. it is all about, do you trust they will be used properly. can we set up government structures that we will trust? i think we ought to be will to do it. it is not my area of full-time work. >> i want to go to some other things. the health care debacle. if the president called and people, not necessarily you, but people you respect, and said help us to sign the system and a better way, would they have been better off and been able to do

that? or did he have that and screwed it up in another way? >> the sign-up problems aren't fortunate. it is easy to second-guess how that could have been done better. i do not think it is a fundamental issue. a person who is retired from microsoft got called in to make sure they do get their act together. the key issue there is it attractive giving the way the prices are rigged against the young. when you sell to the young, it makes a lot of money. when he sold to the healthy you make a lot of money. when he sell to the old, you lose money. that --w will balance happen? that will be fixed. thing.s a bat in this

otherwise, eventually have to price higher because of the mix and more people drop off. it can fail to work. if all the prices have been market-driven, then you are not subject to back -- subject to that. they decided it would be too high. i do not know if they did that right. , that is keyerson to the design. you have to get healthy people signing up. there is another measurement. how many people are signing up the didn't have insurance. when will that happen? the cost and benefit of the thing is proportional to that. , iple that like obamacare guess maybe they feel that is good. i do think one way or another, getting coverage is a good thing.

i think there is going to be some fine tuning. why should it be in an atmosphere of recrimination that may make the seeking out, the right trade-offs, could you even amended bill if it was needed to amend the bill? it has so many experimental elements that the idea that you would get it right from the beginning is unlikely. >> if you could define what the debate ought to be in this our progressvance into the future, for the country, tell me what that debate ought to be. >> we need to look at government as it is all bad or it is all good. we need people with deep expertise. i'm immersed in that. i can tell you about how i would tune various things. overall, i like the u.s. health spending.

i can go to the people and tell them what i know. we need that for agricultural spending. deep expertise. ideally, not just outside experts. staff in congress, elected representatives. we need foreign-policy experts. not who were just in their corners. that givenittle bit a certain budget, if you want to help the poor, should you have an income policy or rants, medicine, fuel, food, all very special policies that you have to apply through a bureaucracy. i would love somebody who was neutral in the sense of not saying it should be 10 times bigger. take a spending on the poor and the look at it. it's related over many years.

it has so much complexity. the kind of tuning programs and is itscussion of what they don't like, how do you get people to state a position really on a specific spending? really getting into the discussion. i worry that because it has become so complex, and because you are sort of fighting in your , this politically intelligence of ok, isn't written well, that can go down at a time when complexity demands that we have more understanding. we are in the lead. other rich countries are spending what we have. they are waiting on us. >> executives are admired if they plan well for succession.

it doesn't seem like there has been smart telling for succession at microsoft. are veryompanies challenging to run. the rules of what works in one era will change. companythink of a tech that had some textbook case of succession going on. i apologize. [laughter] >> i was trying to think of hewlett-packard. [laughter] we have seen a lot of people come in at number two and then they seem to fall by the wayside. >> founders do well because of you nevermenon that hear their name. the darwinian selection that happens before someone becomes known, because the company fails

or gets bought, those people look like they know what they are doing. the failure rate is extreme. once you pick a successor, you would like to have a higher success rate than the founders. lauren -- warren has consulted at the board on that topic. what is good. >> does microsoft need a young bill gates? think about it. success was a team of people. to sort of mythically say i alone did something and now that is missing, that oversimplifies the past. it is a dangerous model for the future. it needs a mix of people that have wonderful people there. takeew leader is going to

a new direction. that can be something that draws on the technical strength of the people or themselves. there are multiple models that you can go down. or she has to he be grounded in technology? lovee or he has to technology and either be good at orchestrating a deep technical thing or bring some of that themselves. >> finally the seattle seahawks, will you come to the game? >> i'm excited. the whole town has gone crazy. it will be a special event. >> paul allen is impressed. >> he should be. i was with him in detroit when pittsburgh beat us. he was excited to be there. this time he hopes for even more. >> thank you for coming. great to see their -- great to see. see you next time.

>> this is "taking stock" for wednesday, january 22, 2014. we will look at different forms of currency. ebay and paypal, under the spotlight as billionaire investor carl icon says to split them up. he proposes that paypal get a different management compensation structure. we bring you details. plus, bitcoin comes to las vegas. and you will meet the gentleman who turns fake snow into hollywood gold. find out how it is all done. but first, headl