Some implicitly accept the behavioral dream of  “Skinner box” economics of stimulus and response, in which lower rates impart a stimulus of reward for more work and risk-taking, yielding more revenues for the government.  A successful economy, however, is driven less by the sharp edge of incentives than by the unimpeded flow of information.  Capitalism is more an information system than an incentive system. Increasing revenues come not from a mere scheme of carrots and sticks but from the development and application of productive knowledge.

By focusing on incentives rather than on information, free market economists have encouraged the idea that capitalism is based on greed. But greed, in fact prompts capitalists to seek government guarantees and subsidies that denature and stultify the works of entrepreneurs.  Greed, as I put it in Wealth and Poverty, leads as by an invisible hand to an ever-growing welfare state – socialism. It is not the enlargement of incentives and rewards that generates growth and progress, profits for the entrepreneur and revenues for the government, but the expansion of information and knowledge.

From the new edition of Wealth and Poverty by George Gilder

HKO

It is socialism that seeks unearned wealth and is thus more driven by greed than capitalism.  It is time for capitalists to bury the “greed is good” moniker.

Wealth is a responsibility as well as an asset.  Any business person who is worth millions of dollars on paper, but ends up bankrupt from illiquidity, only to find those assets worthless, understands this.

Government bureaucrats have the power to control assets but they lack to knowledge to use them wisely.   Insulated from the consequences of spending money that they did not create, it is no surprise that they would act irresponsibly with it.   The growth of government can follow the growth of wealth in the private sector but it cannot lead it.

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