Free-market intellectual George Gilder remains an optimist despite U.S. policies he views as less enlightened than Communist China.
If think tanks fuel the public debate with their ideas and research, from where do think tanks get their intellectual energy supplies?
If you’re a conservative and free-market oriented think tank, then George Gilder is one of your key sources.
No less than Stephen Moore, the chief economist of the Heritage Foundation and a former member of the Wall Street Journal editorial board, speaking at the Altegris investment conference in San Diego, acknowledged his debt to Gilder’s influential work.
Gilder, whose bestselling classic Wealth and Poverty made him President Reagan’s most quoted living author, shared the same stage with Moore, but I had the opportunity to sit down with Gilder privately, mainly to discuss the issues just under the surface of today’s conservative intellectual debate: namely, the fact that free-market conservatism, practically speaking, appears to be “out of favor,” to put it in investment-speak.
So much discussion — at the Altegris annual conference, but at others as well — takes aim at easy money, loose fiscal policies, heavy regulation, Keynesianism and so forth, and yet that approach to governance won handy electoral victories in 2008 and 2012.
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Gilder acknowledged that current political arrangements are less than wholesome to his camp.
“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.
But despite this trend he decries, Gilder’s indefatigable optimism could not be suppressed.
“The economy of the mind can change as fast as markets can,” he said, noting that after World War II, everyone was predicting another economic depression. “But in 1946 a new Congress came in and achieved a 61% drop in government spending; 150,000 regulations were laid off. Tax rates were, effectively, cut in half. That set the stage for the golden age that followed.”
A walking, talking economic encyclopedia, Gilder offered further substantiation from the other side of the globe, noting that Chile similarly reformed its economy in the 1970s, cutting 500 government corporations down to 25.
Israel, he said, was nearing 1,000% inflation in the 1980s. “Socialism had reached the end of the line,” he said. A reformist government reduced government ownership of corporations from 80% to 20% and undertook other liberalizations that set the stage for its leading-edge high-tech economy today.
New Zealand, he said, went from “one of the world’s richest nations to just ahead of Tunisia.” Then a reformist Labor government “zeroed out” government programs and the island nation, which had been importing food, became a leading food exporter, its dairy farms, for example, becoming a competitive threat to Wisconsin dairy farms. “These policies can be changed on a dime,” Gilder said. “Look at how the energy industry broke away from the general sclerosis against every policy Washington was promulgating… It is only the unexpected eruption of creativity that has saved our economy,” referring to the technological innovation that has enabled the exploitation of shale energy reserves in places like North Dakota.
Gilder, who since Wealth and Poverty has long been credited as a techno-prophet envisioning developments in information technology through his subsequent books and Gilder Technology Report newsletter, is also the chairman of George Gilder Fund Management.
So I naturally asked him his advice for investors.
His general advice was that the ideological shifts cannot be predicted and that investors would do well to always increase their knowledge, which “equals” wealth.
“In a bad economy, keep on learning,” he said.
But, more specifically, he expressed enthusiasm for the way that information theory is “transforming” areas like pharmacology, energy, mobility and bitcoin micropayment technology.
Gilder said the biggest advances he sees are in “programmable biotechnology” that develops vaccines which can communicate with immune systems to kill specific types of cancer cells.
The techno-futurist says science today can adapt drugs to the “particular genetic signatures of particular people,” a hugely positive trend that runs counter to current FDA thinking that therapies must somehow apply to everyone to be considered safe.
Gilder recommends Peter Huber’s book The Cure in the Code for investors seeking to learn more about how medicine is becoming an information industry capable of customizing drugs suited to individual patients.
Most of the companies pioneering these new technologies are private — for example Seattle-based Immusoft Corp.