A lucid, eloquent case for Reagan-omics; Wealth and Poverty, by George Gilder. New York: Basic Books. $16.95.
This book by the program director of the International Center for Economic Policy Studies, George Gilder, may well become compulsory reading in Washington. Indeed, "Wealth and Poverty" probably offers the most comprehensive analysis of the philosophical basis of Reagan-omics -- or at least of the economic views of some key intellectuals embraced by the new administration.
On the back of the dust cover, for instance, one finds high praise from former US Rep. David Stockman, now director of President Reagan's Office of Management and Budget and clearly a powerhouse in the new regime. In fact, Mr. Stockman helped edit the manuscript. Another strong endorsement comes from Paul Craig Roberts, formerly a Wall Street Journal editorial writer and now an undersecretary in the Treasury. A third commendation is by Rep. Jack F. Kemp (R) of New York, cosponsor of the Kemp-Roth bill providing for a 10 percent tax cut per year for three years, a position that remains the official policy of the Reagan administration.
All three are enthusiasts for supply-side economics -- the economics which emphasizes the supply of goods and services as opposed to the demand for such products or their distribution. George Gilder is probably the most eloquent supporter of this theory.
But "Wealth and Poverty" is more than tax-cut advocacy. It is a passionate and highly intellectual defense and glorification of capitalism. It is a fascinating study of what causes poverty and what produces wealth. Indeed, it is a tour de force of conservative economics.
The liberal reader may find many of his views healthily challenged in this book -- and by such an array of research findings that he or she may squirm a little mentally. Some old maxims of liberalism could quiver.
The book opens thus: "The most important event in the recent history of ideas is the demise of the socialist dream. Dreams always die when they come true, and fifty years of socialist reality, in every partial and plenary form, leave little room for idealistic reverie. . . . The second most important event of the recent era is the failure of capitalism to win a corresponding triumph. For within the colleges and councils, governments and churches where issue the nebulous but nonetheless identifiable airs and movements of new opinion, the manifest achievements of free enterprise still seem less comely than the promises of socialism betrayed."
Mr. Gilder's book is, in effect, an effort to remedy this latter failure. He offers a moral and ethical justification of capitalism. Sometimes his defense of free enterprise seems overblown and starry-eyed, ignoring the harm that overtough capitalists can do to individuals. Yet the book is full of valuable insights.
For instance, it holds that the overcoming of poverty and creation of wealth depends on work (the poor don't usually work hard enough), stable families (the breakdown of the family explains much poverty), and faith. "Faith in man, faith in the future, faith in the rising returns of giving, faith in the mutual benefits of trade, faith in the providence of God are all essential to successful capitalism. All are necessary to sustain the spirit of work and enterprise against the setbacks and frustrations it inevitably meets in a fallen world; to inspire trust and cooperation in an economy where they will often be betrayed; to encourage the forgoing of present pleasures in the name of a future that may well go up in smoke; to promote risk and initiative in a world where the rewards all vanish unless others join the game."
And "wealth," he writes elsewhere, "is a product less of money than of mind."
Nor is Mr. Gilder timid. His views on the role of the sexes and on racial integration may not go down well with the enthusiasts for women's liberation or with blacks. But his arguments are based on logic, not prejudice.
Overall , this is a thought-stirring, important book.