If you don’t want to create jobs or intellectual property, then there is a tendency to develop open source. It is not something you do as a day job. If you want to give it away, you work on it at night.
Does Gates have a reasonable point? No. He’s retelling the parable of the broken windows (how appropos!), also known as the broken window fallacy.
In a nutshell, the fallacy says that breaking windows is good for the economy, as it creates the need for replacements, and thus “creates jobs.” This is of course nuts. At the end of the replacement process, we’re worse off by having consumed whatever resources it takes to produce a window and we can’t use those resources for whatever we would’ve used them for had the window remained intact. Presumably spending resources on windows isn’t our first choice, so we’re also worse off by whatever the “utility” difference between our first choice and windows.
Bill Gates is essentially making the same fallacious argument — if we didn’t have open source software we’d be better off, because we’d have to pay Microsoft to develop equivalents, and they’d hire people. That’s no different from saying we’d be better off with broken windows, because someone would get work creating replacements. If Gates’ fallacious argument is true, let’s destroy open source, and why not all software written in the past ten years. That’ll create a lot of jobs for programmers, right? (Actually, no it won’t.) Windows 3.1 wasn’t that bad. Let’s do it for the jobs!
One reason people sometimes buy the broken window fallacy is that they confuse the purpose of economic activity, which is to fulfill needs, i.e., to create wealth, not to create work. Software is wealth, and open source software is wealth available to anyone, to use, build upon, and learn from. If open source does put some Microsofties out of work, fine, we’d be better off with them doing something else anyway.