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"In an economy, everything useful or interesting depends on agents of change called entrepreneurs," according to George Gilder. Entrepreneurs create "surprises" that move the economy forward. He claims, "In 2010, entrepreneurial companies backed by venture capital generated over a fifth of America's gross domestic products and companies less than five years old created all of the new jobs, [while] older companies actually shed jobs." Entrepreneurs create their own market. Gilder calls the new economics "Information Theory." Traditional economists are retrospective, only examining what has already occurred. Then they advise politicians, who in turn authorize bureaucrats to impose regulations on what they know nothing about. The author says that the divorce of knowledge from power creates crisis. Gilder writes, "The great mistake of the Bush and Obama administrations' response to the crisis of 2008 was to shield the owners from the costs of their mistakes." He blames the crisis on those who "lacked relevant information." Politicians failed to hear the longtime leader of BB&T, a bank that "made it through the sub-prime crisis without a single quarterly loss," when he went to Washington to protest TARP bailouts. "They were only listening to the failed banks." Local BB&T branch managers were responsible for loan decisions; they were most familiar with the people who applied for loans. Yet, BB&T was pressured by regulators to use the "mathematical models" of Citigroup and Wachovia that were held up as "best practices," right up until those two banks failed. Gilder criticizes new regulations on entrepreneurial finance in the form of the Dodd-Frank Wall Street Reform and Consumer Protections Act, which has increased "the distance between the people in authority and the people with entrepreneurial knowledge." Although current U.S. policy is hostile to the private economy, it can be reversed. Gilder describes turnarounds in Israel and New Zealand once socialism was diminished. He defines socialism as the control of the economy by those removed from information and knowledge. Gilder says that the political redistribution of wealth is "the death of creativity," and that it condemns millions to "perpetual dependency." (Regnery Publishing, 2013, 348 pps., $27.95) |
From Henry Ford offering automobiles when there were few roads and no gas stations, to Steve Jobs selling iPods long before anyone realized they were a near necessity, entrepreneurs step out in faith. Their success often comes from years of "doing what other people consider insufferably boring or unendurably hard." The jobs and products created by entrepreneurs are beneficial to all aspects of society.
