George Gilder

The greatest damage inflicted by state systems of redistribution is not the “distortion of markets,” the “misallocation of resources,” or the “discoordination” 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 the new information generated by the original gift.

Such entrepreneurial knowledge can never be captured and reproduced in a government plan.  As the economist Jay Forester, one of the leading mathematical modelers of world economic activity, wrote, the vast bulk of human knowledge that makes an economy work is in people’s heads.  It consists of a mass of technical information, skill, intuition, and practical experience- what the scientist and the philosopher Michael Polanyi called “tacit knowing,”  all the lore and learning that men half -unconsciously collect as they do the business of the world.  When one moves from this multifarious mass of information to rely on written or documented learning alone, one reduces total knowledge by a factor of millions, which  is to say, incalculably. But, Forrester pointed out, when one moves on from written knowledge to mathematical data- the kind of information that can be programmed on a computer- one reduces the total knowledge by another factor of millions, by another  astronomical swath.  Yet every socialist plan normally begins with just such a draconian reduction, just such a holocaust of human learning and skills, leaving only a pile of statistical ashes, a dry and sterile residue of numbers, from which to reconstruct the edifice of economic activity.

… Economies run not only on light but also on heat and energy, not merely on information but also on courage and skill.  Entrepreneurial learning is of a deeper kind than is taught in schools, or acquired in the controlled experiments of social and physical science, or gained in the experience of socialist economies.

From the new edition of Wealth and Poverty by George Gilder.  Originally published in 1980 the new version is updated with 40,000 words and views on the current scene

HKO

Everything than can be measured is not worth measuring and everything that is worth measuring cannot be measured.  The problem with central planning is the attempt to plan the unplannable, expect the unexpected and to control the uncontrollable. Human progress is just too messy to plan and in doing so we restrain true progress and human potential.  We never get to see what didn’t happen as a result.

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