Freeman

BOOK REVIEW

Wealth and Poverty

Gilder Saved the Soul of Economics

MAY 01, 1996 by RAYMOND J. KEATING

Filed Under : Poverty

Throughout much of the twentieth century, economists seemed destined to make themselves irrelevant. Emphasis on aggregate demand management and input-output economic models came to dominate the discipline, truly making it a dismal science. Though many outstanding economists fought nobly against this trend, by the 1970s the Keynesian victory of macroeconomics over microeconomics seemed almost complete.

It is against this backdrop that George Gilder’s Wealth and Poverty was published. One should not underestimate what Gilder accomplished in this volume. He helped smash the Keynesian demand management model of the economy and replace it with a supply-side model centered on individual actions. Government as the lifeblood of the economy gave way to the entrepreneur as the true source of economic dynamism and growth.

Gilder even put to rest the idea that economics had to be dull, plodding, and increasingly narrow in focus. In Wealth and Poverty, Gilder managed to spark the reader’s imagination. Wealth and Poverty called for the economist to understand much more than mere mathematics and GDP numbers; he must be willing to examine the entire human condition—history, psychology, technology, business, and faith—as Adam Smith had done.

Much of the moribund economics discipline still fails to acknowledge the merits of Gilder’s Wealth and Poverty—to the detriment of both themselves and, unfortunately, their students. In contrast, I have come to view Wealth and Poverty as a vehicle of redemption—saving the soul of economics, if you will.

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May 1996

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Unfortunately, educating people about phenomena that are counterintuitive, not-so-easy to remember, and suggest our individual lack of human control (for starters) can seem like an uphill battle in the war of ideas. So we sally forth into a kind of wilderness, an economic fairyland. We are myth busters in a world where people crave myths more than reality. Why do they so readily embrace untruth? Primarily because the immediate costs of doing so are so low and the psychic benefits are so high.
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