There are times when Bill Gates really shows why he is nowhere near as good at predicting trends that are developing around him. Today is one of them, since apparently he thinks that China is becoming more and more liberal every year toward its citizens. Voice of reason and insight in the wilderness, or the voice of a man who thought that private online service networks were the thing of the future, not the Internet? You decide:

(CBS/AP) The specter of state censorship and proliferation of software piracy is no reason for technology companies not to do business in China, Bill Gates said Friday.

As technology develops and Chinese innovations multiply, those problems will gradually dissipate, the Microsoft Corp. chairman and co-founder said.

"I think (the Internet) is contributing to Chinese political engagement ... access to the outside world is preventing more censorship," Gates said, referring to China's restrictions on politically sensitive internet Web sites.

Bill Gates is a very smart businessman when it comes to running his company with someone else's vision, but this is a man who is in the throes of passionate love with cheap foreign labor. However, he cannot spot a trend that is developing until it is practically on top of his company, ready to make it all but obsolete as was the case with the Internet in 1995. It shouldn't surprise anyone that he cannot see that China is being more and more aggressive in how it goes after the Internet targets that it wants, such as pornography where distribution is a serious crime. Granting access to a source of information as harmless to them as Wikipedia is one thing, but their information controls are still firmly in place. The biggest mistake he makes here is in assuming that the Internet will liberalize their government when hitherto, the only liberalization policies put into place have been pragmatic ones.

What might be more effective is if the first world countries would grow spines and tell China that if it doesn't reform, that it'll find itself without a market for its goods. While that would require a reduction in taxes and regulation so that manufacturing could actually come back home, it'd be a far more ethical thing to do than to pretend that if we take their money that they will suddenly start down the path of gaining their freedom. Isn't that the ultimate irony of this situation? The main reason that we need trade with China is because the amount of wasted taxes, the amount of regulation and the presence of extremely greedy unions in key manufacturing sectors has caused us to really need their cheap labor to be safely profitable.

We cannot call Google and Microsoft evil, until we are all willing to admit that since we buy goods made in China that we are part of the problem. There's a bit of irony in there when you realize that many of the cheap goods we enjoy are only there on our shelves because of outsourcing to China. So either we change our laws and economy or we continue to silently acquiesce to the way that the Chinese government treats its people. The safe money is on the bet that nothing short of a war or economic depression would cause the former to happen.