George Gilder on why free marketers shouldn’t stress incentives

Matt K. Lewis Senior Contributor
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Most free market economists stress the importance of incentives. Humans, they argue, are rational creatures. We respond to carrots and sticks. Policy should reflect this.

But in his classic work, Wealth & Poverty, George Gilder criticizes the emphasis. “By focusing on incentives rather than on information,” he writes, “free market economists have encouraged the idea that capitalism is based on greed.”

Gilder’s book has been out for 30 years now, but a new edition was just released. The original version, he boasts, “made me President Reagan’s most quoted living author.” It was also a favorite of a young Paul Ryan.

During a recent wide-ranging conversation, Gilder and I talked economics, technology, Christianity, and even Mitt Romney. (You can listen to our full conversation here.)

Long before Arthur Brooks popularized the moral case for free enterprise, Gilder was stressing the point. As he told me,

The golden rule of capitalism is to understand that the good fortune of others is also your own. That no entrepreneur can succeed unless other entrepreneurs succeed … entrepreneurs want their customers to succeed. Entrepreneurs, at the heart of capitalism, pursue a golden rule that’s completely consonant with Christianity.

Gilder, who once served as a speechwriter for George Romney, also offered a few reassuring words about Republican presidential nominee Mitt Romney. “Bain & Company is really a leading supply side source,” he said. “So Romney back then in the early years — in the 80s and early 90s — was a supply side leader.”

So can conservatives trust Mitt Romney? “In economics, he’s fine,” Gilder said.

You can listen to our full conversation here. Or download the podcast on iTunes.

Matt K. Lewis