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The Destruction of Entrepreneurial Knowledge

George Gilder

Under capitalism, economic power flows not to the intellectual, who manipulates ideas and basks in their light, but to the man who gives himself to his ideas and tests them with his own wealth and work.

It is these capitalists, extending the division of labor by launching new goods and services, who expand the market, not the other way around. It is these often self-denying explorers beyond the bounds of the existing marketplace and its prevailing goods and services who extend the frontiers of human possibility, not some impersonal mechanism of exchange. The greatest damage inflicted by state systems of redistribution is not the “distortion of market,” the misallocation of resources,” or the “disco-ordination” of producers and consumers, but the deflation of capitalist energy, the repression of entrepreneurial ideas, and the stultification of wealth. Steeply “progressive” tax rates not only destroy incentives; more important, they destroy knowledge. They take from the givers and thus prevent them from giving again, from reinvesting their winnings in the light of new information generated by the original gift.

Such entrepreneurial knowledge can never be captured and reproduced in a government plan.

From the new edition of Wealth and Poverty by George Gilder

HKO

Stephen Moore also noted in Who’s the Fairest of Them All, ” If income and wealth are not attached to the owner that produced them, they tend not to get created at all.”

Especially in the new technical age products are often produced BEFORE they are demanded. The producers must take a risk, invest and give BEFORE they can receive.  Keynes wholly rejected Says law that “supply creates its own demand.”  Current policy is demand focused but has done little to stimulate because supply is stilled by hideous friction costs such as taxes, regulation, and uncertainty.

Category: Business, Economics

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