George Gilder was a featured speaker at the Strategic Investment Conference last week, discussing the future potential and challenges of the U.S. economy. In this excerpt of an interview with Gil Weinreich of ThinkAdvisor, he compares our current economic climate to that of Communist China:
“This administration is much more hostile to free enterprise than the Chinese communists,” he said.
“The Chinese have got free zones [free-market-oriented special economic zones] all over the place. The Chinese communists have 40% lower government spending as a share of GDP than the U.S,” he added, noting that even Russia’s economic trajectory is set to achieve lower spending to GDP in the coming years.
However, Gilder remains hopeful for an economic recovery if we see a shift in public policy that allows creativity and innovation to flourish. He draws examples of recovery from countries around the world–like Chile, Israel, and New Zealand–that have instituted market-friendly reforms and are now reaping the benefits.
So, what is the next step for the U.S.? To answer this, Gilder turns to information theory–a concept that is explained well in a BusinessMirror review of Gilder’s presentation at the conference. John Mangun writes in his op-ed, Government policy is high entropy:
One basic idea that Gilder made in his presentation is that, in order for innovation and productivity to thrive and, therefore, see standards of living increase, government policy must create a low-entropy environment of legal, regulatory, tax, monetary-policy and stable institutions.
To support the businesses and entrepreneurs that are the foundation of a prosperous economy, we need to give them a low-entropy environment–a climate of order, predictability, and stability–so they can make informed decisions and take calculated risks. You can read more about Gilder’s information theory of Capitalism in his latest book, Knowledge and Power.