Wealth and Poverty is a book that would not be popular with modern racial activists (like Black Life Matters.) The author praises capitalists as the most important people in creating value and prosperity. They are not driven by greed, but are powered by information. They take risks and know to maximize value of their capital. Even if they have capital taken from them, they are likely to create new capital (while the taken capital will have limited value.) Gilder believes that broken families and welfare policy are the primary policies that keep the poor down. He thinks some level of subsistence aid and benefits are valuable. (He sees this is a step above China where those that don't work don't eat.) However, the current scheme discourages people from working. It is actually quite demeaning because it assumes that taking away benefits when people start working will not discourage work. The welfare structure discourages nuclear family. However, the nuclear family is one of the key "innovations" that has allowed great economic growth. In addition to family, faith is an important component in getting out of poverty. Welfare makes it less likely that the families will move out of poverty. It also emasculates the working man, and makes it more likely that families will struggle from broken homes. Welfare recipients are also encouraged to work "under the table" so that they do not lose their benefits. Government has been quick to integrate new immigrants into the welfare culture, rather than let them innovate and grow.
On the other end, large corporations are also problematic. They are often efficient at producing some well established good. However, they are bureaucratic and slow to innovate. They are more likely to seek out benefits. Big businesses are eager to seek regulations that will make it more difficult for others to compete. Big corporations are also apt at demanding bailouts when the markets turn against them. Chrysler is an interesting case in point. They received a huge government bailout in part to "keep them American". Alas, today, they are no under their second foreign owner.
A key point of the analysis is that the same "facts" can tell very different stories depending on how they are analyzed. There are always more variables that can be added to analysis to tell different stories. Some "tricks" include using dynamic vs static data. ("The lowest 20% of earners has seen no earnings increase" is often looking at the static group. However, if we look at the participants, we may find that Jeff Bezos was once in the lowest quartile and now is a multi-billionare. Meanwhile, a high school student has now taken his place in the "lowest 20%") Accounting can also change the analysis. Our "progressive" tax structure becomes extremely regressive when transfer payments are included. A marginal dollar of earning can cause the loss of medicaid and welfare benefits. Working an "above the board" job could result in a loss of income. For health benefits it could be much worse. Medicaid covers medical expenses without cost. However, a purchased health plan will often have deductibles and copays, making the costs higher.
His argument as a whole is very sound. However, there are a few areas where he misses the mark. For transportation, he objects to government takeover of railroads. However, he misses the fact that this was necessitated by the government subsidization of other means of transit (such as highways, parking and airports.) The public sector spent heavily to favor cars, both in direct construction costs (roads) and in regulations (parking requirements). In many cases the railroads subsidies were an extension of this in a hope to retain existing infrastructure after roads and parking reached capacity. Another issues is with the environment. This is a tricky one. Government regulation has often proved problematic in this area. There are huge amounts of regulation that attempt to protect the environment. However, they are excessively complex and prone to abuse. Environmental Impact requirements can be used as an excuse to stop valid economic activity. Meanwhile, environmentally destructive activity can continue to hum along. This is a challenging area. There needs to be a way to internalize the shared environmental costs, yet we also need to allow for innovative activity.
Some of the fixes Gilder proposes would make a lot of sense, but may be difficult to implement. It is interesting that he has given examples of left-wing governments (in Canada and New Zealand) that have implemented more supply side policies. Right wing governments often get bogged down in talk of "balanced budgets". In the US, the Republicans and Democrats are both beholden to their special interests and favored parts of the bureaucracy. The suggestion to eliminate means-testing in welfare benefits could be very expensive, but very beneficial to the economy. Today there is a perverse incentive to reduce income in order to receive benefits. Similarly, the tax system encourages various shelters to avoid taxation. It would be better if the government would just back off. Alas, there are huge bureaucracies created around these programs that encourage their propagation.
George Gilder believes that most economists miss the point. Economics is all about the unknown. Entrepreneurs are the most important part of the economic system. They take risk. The success or failure is unknown. If we prevent them from having the chance of big gains, we prevent the societal benefits that they will provide. (Ironically, the vast riches often come when the companies move to a static turf-defense stage.) Qualcomm seemed to violate the laws of physics with CDMA. It was less efficient for voice communication. But much better for transmitting data.