Selasa, 31 Juli 2012

Why capitalism succeeds and redistribution fails

George Gilder, long one of my favorite business and economic philosophers, has written yet another brilliant essay, "Unleash the Mind," in which he explains how capitalism really works, why the redistribution of wealth only destroys wealth, and why increasing wealth is not a zero-sum game. Some choice tidbits from a rather long article:

America’s wealth is not an inventory of goods; it is an organic entity, a fragile pulsing fabric of ideas, expectations, loyalties, moral commitments, visions. To vivisect it for redistribution is to kill it.

Capitalism is the supreme expression of human creativity and freedom, an economy of mind overcoming the constraints of material power.

All progress comes from the creative minority. Under capitalism, wealth is less a stock of goods than a flow of ideas, the defining characteristic of which is surprise. If it were not surprising, we could plan it, and socialism would work.

Most of America's leading entrepreneurs are bound to the masts of their fortunes. They are allowed to keep their wealth only as long as they invest it in others.

In capitalism, the winners do not eat the losers but teach them how to win through the spread of information. Far from being a zero-sum game, where the success of some comes at the expense of others, free economies climb spirals of mutual gain and learning. Far from being a system of greed, capitalism depends on a golden rule of enterprise: The good fortune of others is also your own.
The secret of supply-side economics is not merely to incentivize people to work harder or accept more risk in order to gain a greater reward. The reason lower marginal tax rates produce more revenues than higher ones is that the lower rates release the creativity of employers, allowing them to garner more information ... command more capital ... attract more highly skilled labor ... reduce time and effort devoted to avoiding taxes ... conduct more experiments ... try more business plans ... generate more productive knowledge.

Read the whole thing, it's quite illuminating. HT: Ashby Foote

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