George Gilder on ‘Emergency Socialism,’ Accommodating Surprise, and Separating Power From Knowledge
Nearly four decades after investor George Gilder’s book “Wealth and Poverty” helped shape the economic policies of Ronald Reagan, Gilder sits down to discuss his forthcoming book “Life After Capitalism.”
“As Peter Thiel declares, in the past, when you went public as a company, you gained new influence and power and marketing ability, and new capital and freedom. Now, when you go public, you get nationalized. And you become a kind of instrument of government policy,” says Gilder.
Gilder also believes that many of the policies surrounding public health during the pandemic were actually weakening people’s immune systems under the guise of protection.
“We’re trying to engineer a new dark age for our immune systems, trying to retard the learning processes that render our immune systems capable of facing the new threats—the unexpected threats—that may arise in the future,” says Gilder.
We dive into environmental and pandemic policy, Silicon Valley and academia, and Gilder’s information theory on economics, which applies the study of how information is communicated and stored to our mental, physiological and political systems.
“This information theory that’s often applied to fiber-optic lines or wireless transmissions actually also applies to our minds and bodies,” says Gilder.
George Gilder, such a pleasure to have you on American Thought Leaders.
Great to be here.
George, you are, as many people may remember, the author of an incredibly influential book from almost 40 years ago. It’s hard to believe.
More than 40 years.
Oh, more than 40 years ago.
Almost 45 years ago.
Wealth and Poverty, of course, is the book, and significant in the economic philosophy of Ronald Reagan, what’s often called the Reagan Revolution.
Last night we were talking and you offered a really fascinating view. You were talking about learning curves. Basically, you made a comparison of how learning in our lives is somehow parallel to the way our immune systems learn in our biological lives, which I thought was just an incredibly fascinating idea. I want to get you to expound on that a bit for me.
I’m doing what’s called the Information Theory of Economics. I’m applying the information theory that Claude Shannon and John von Neumann and Alan Turing, the great figures of the computer revolution developed to enable these worldwide webs of glass and light that span the globe and allow us to communicate almost instantly everywhere around the world. It has created what we call the Age of Information, and established four great information companies, the four most highly valued companies on the face of the earth; Apple, Google, Microsoft, and Amazon.
I’m applying this theory, this information theory behind the computer technology to economics. The key proposition that emerges is that information is surprise. It’s unexpected bits. That’s how Shannon defined it. If everything I say today you already understand, no information is being communicated. The principle that information is surprise is fundamental to the computer age.
But many people in Silicon Valley are forgetting the foundations of their technology. They imagine that information is some determinist expertise, a science, as if science can predict the future. But the great insight of capitalism and of free economies is to accommodate surprise, entrepreneurial surprise. Human creativity always comes as a surprise to us. If it didn’t, we wouldn’t need it, and socialism would work, planning would work. That is Albert Hirschman’s great insight.
So with information theory, the three key propositions beyond that information itself is surprise, is that wealth is knowledge. We know that. That Neanderthal in his cave, as Thomas Sowell pointed out years ago, had all the physical resources we have today. All the difference between our age and the Stone Age is the growth of knowledge.
But if wealth is knowledge, what is economic growth? It’s learning. This is evident from all the great business consultancies; Boston Consulting Group, Bain & Company, and Accenture, all of them document learning curves. The most fully established principle in business strategy is that with every doubling of total units sold, costs drop between 20 and 30 per cent in all fields, whether it’s poultry, eggs, microchip transistors, lines of software code, or trucking miles, it doesn’t matter. The learning curve is absolutely essential.
And then, the third principle is that money is time. When everything else grows abundant, and I believe we live in a world of super abundance now, what remains scarce is time, those hours and minutes we spend to earn the money to purchase goods and services. The real foundation of value is time. And these are time prices, and I’ve got a whole book about them.
But this is a revolution in economics that I believe consummates the revolution that was initiated with Wealth and Poverty in the Reagan years. It means that capitalism is not principally an incentive system. All the economic models treat you and I as if we’re in a Skinner box, responding to rewards and punishments. It’s homo economicus. And homo economicus is not a man. It’s a mechanism. And mechanisms don’t produce surprises unless they’re breaking down. Human minds produce surprises. And that’s really the principle now.
Information theory began with a paper by Claude Shannon. His PhD thesis at MIT, as few people know, was on genetics. He first applied this information theory that later animated the entire computer age. He first identified it in biology with DNA programming ribosomes to produce proteins, which transmit information through our bodies and our systems. And our systems, like our economies, grow by learning. We have to learn how to do things.
And of course there’s a tremendous learning curve going on, as with an infant that grows up and learns how to talk and walk and maneuver and ultimately invent. This information theory that’s often applied to fiber optic lines or wireless transmissions actually also applies to our minds and bodies, and our interplay with other minds and bodies in a world economy.
You took this a step further and focused specifically on the immune system as a learning system.
Right. And that is really important today. Because the real thesis of the dominant, big media academic system of the world that they’re trying to impose on us is that somehow the Industrial Revolution, the rise of energy production, globalization, urbanization, mass agriculture is all some kind of big mistake. It ultimately produces pandemics—we’re too much involved with one another, we’re too urbanized, and we’re too creative. Creation has become stigmatized as pollution, and our very emissions of CO2 are somehow depicted as a plague on the planet.
Information theory really shows the opposite. Economic learning and growth and wealth and longevity, both in economics and in biology have steadily expanded. Since the Industrial Revolution, our population has risen from 300 million to 8 billion, more than 11 times. Our longevity has risen from about 30 years to over 70 years globally.
During this period, longevity has increased mostly not in rural reaches where people are socially distanced all the time as a matter of course, but in cities. That’s where the greatest rises in longevity have occurred. South Korea has led the world in increases in their longevity and productivity and creativity over the last decades. They’re one of the most urbanized countries in the world. Most of the population lives in Seoul and its environment. And there are a couple others, big 20-million person cities.
But the reason they’ve been such a spearhead of the world economy, growing as fast as any country in the world since the 1960s after the Korean War, is that they’re more urbanized. Because when people are all in cities, they all have cell phones, and they’re all communicating constantly with one another. Social distancing doesn’t do anything for us.
Sunetra Gupta from Oxford University, an author of a book on pandemics written about 10 years ago, says that everything we’re doing for Covid is wrong. We don’t want to social distance. We want to teach our immune systems the nature of the viruses they face.
After people were separated, when they came together again, half the people died because the immune systems on each side didn’t know each other. When the Indians, the natives in the United States encountered Europeans, many of them died of various viruses. But today, because of globalization and urbanization, our immune systems, all the T-cells and killer cells and B-cells, that whole elaborate system that protects us and keeps us alive, and rarely encounters a completely unfamiliar virus.
Sunetra Gupta, this great Oxford expert on pandemics says she fears that we’re trying to engineer a new dark age for our immune systems, trying to retard the learning processes that render our immune systems capable of facing the new threats, the unexpected threats that may arise in the future.
So, wealth is knowledge, growth is learning, money is time, and information is surprise. And those principles apply in biology, and also in cryptography, which is another great theory that Claude Shannon developed during the war. His cryptography system was suppressed and classified during the war.
And so, when they built the internet, they built it on his information theory, but without his foundation in cryptography. That’s what we’re trying to restore today in a new global internet with a blockchain support, and a thus the greater security, identity, and benefits that blockchain can confer when it’s understood and applied correctly.
Before we continue, I want to talk about how you’re actually a board member of the Brownstone Institute, and you’re from Great Barrington.
I am. My business is in Great Barrington.
You were talking about Sunetra Gupta. Dr. Sunetra Gupta is one of the three original signatories of the Great Barrington Declaration, which clearly is named after where you’re from. Please explain to us the connection with all these factors.
Well, it’s been quite providential and amazing to me that I was one of the first people questioning the lockdowns and the whole emergency socialism, emergency Marxism that the U.S. adopted in the face of the Covid threat. From the beginning it seemed amazing to me that people were toting up deaths, but 80 per cent or more of the deaths were people over 65 with deadly comorbidities already.
As a matter of fact, when they actually studied the data, they determined that only 6 per cent of the deaths were not accompanied by other deadly comorbidities, other cancers, heart disease, awful obesity, and diabetes. All these diseases were already killing most of the victims of Covid in Italy. They found only 5 per cent of the deaths were not accompanied by other comorbidities.
And as soon as you realize that, you realize that this was mostly a trumped up crisis, and it was not real. The Spanish flu killed millions of young people around the world. President Eisenhower, who had been through the Spanish flu, knew enough in the 1950s not to close down the economy in order to fight a new form of flu.
Here we had a much milder disease, much milder, incomparably less serious than the Spanish flu or the Asian flu of ‘57 and ‘58. But we locked down the whole economy. We destroyed millions of small businesses. We made people wear masks, and mandated masks on airplanes. It’s just complete superstition.
There is virtually zero evidence that the propagation of a flu like this that depends on the robustness of people’s immune systems can be inhibited by making people wear masks. And this was evident to me from the beginning. So I began, and I discovered that I had friends. I met all sorts of new friends, and my chief writer on my newsletter business, John Schroeder, has written two books about attacking Covid policy.
William Briggs, who was a brilliant statistician from Cornell, has written a book with the Discovery Institute, and I co-founded Discovery. And then, I discovered in Great Barrington, Jeffrey Tucker was holding out. I knew Jeff sort of, but I hardly knew him. The next thing I heard, there was the Great Barrington Declaration. So I went over. I’m part of AIER (American Institute for Economic Research), which was the host of the Great Barrington Declaration.
I started discussing it with Jeffrey and I wrote a forward for his book. We were on our way to the Brownstone Institute, which has assembled people from all around the country. Everybody at the conference dinner had a fascinating story about various grassroots resistance to requiring little kids to wear masks, and getting vaccinated for something that doesn’t affect kids.
It’s just a bizarre episode of the madness of crowds. And it’s sad to see it’s virtually global. Only a few countries like Sweden have really resisted. It’s great to be in Florida with Governor DeSantis. Dr. Ladapo is his chief medical advisor who’s speaking to the Brownstone Institute, and has held out against the mandates of vaccinations and masks for what’s actually just another flu. It’s just not comparable to the Spanish flu or the Asian flu of the ‘50s.
We have fewer pandemics. The more we globalize, the more we urbanize, the more we interact with each other, the more our immune systems learn to deal with the threats and slings and arrows of the modern world. Sunetra Gupta, the Oxford epidemiologist says we’re all returning to our caves. We imagine that if we stop producing energy, we’ll have to return to our caves, because we certainly can’t fuel a modern society with sunbeams and breezes. I’ll tell you that.
It’s the almost the stupidest idea in the history of technology. There’s never been such a completely silly proposal to go to zero CO2 by 2035 or whatever these imbecilic governors are proposing. The mistakes we’re making are so egregious that they could bring down the whole society. They could bring down the power grid, which is what sustains our lives. It’s a real threat.
All our gasoline is 10 per cent ethanol, and this is supposedly designed to save the planet. Having 10 per cent ethanol that gunks up our car motors and makes the gasoline less efficient and clean takes 80 per cent of all the footprint of all our energy in the world, which is consumed by producing corn to put in our cars.
With an oil well, you drill it in a particular place and when it’s finished, you remove it. Corn fields are plowed by tractors and nitrogen fertilizers and just a huge supply chain to sustain the production of corn just to gunk up our cars with 10% ethanol. It’s the worst thing for the planet we do. And we’re doing it in the name of…
Of the environment. We waste the environment in the name of the environment. And it’s unbelievable, not to be too indignant, but it really is unbelievable. I’m 83 years old and I haven’t seen any policy as stupid as ethanol in all our cars, and windmills spread out all over the place. All energy is free until you convert it into power that can actually move a motor, or transmit a frequency, or accomplish a purpose.
The fact that wind and sun hits everywhere on the earth is irrelevant. All that means is you got to move the energy further, which means power lines all across the country, and then you got to back it up because wind and sun are erratic. They aren’t really sources of power at all. They have to be backed up.
It means the grid becomes more complex and more subject to sabotage. Putin has declared, believe it or not, that he will wipe out our power grid if we involve ourselves more in Ukraine. And actually, we are making it easier and easier to wipe out our power grid. It’s a terrifying prospect.
And as William Happer, a great Princeton physicist, and Richard Lindzen of MIT, their chief meteorology expert, have both declared, there’s a greater threat of having too little CO2 than too much. And if CO2 drops much more, that will actually threaten agricultural production, and ultimately all life forms on the planet.
Of course, we are not going to do that. But to hear people talk of CO2 as a poison when it’s the chief source of all our food and lifestyles and ability to sit here and discuss policy, and propagate it across the world through The Epoch Times, it is really completely dependent on CO2 every step of the way. The idea of getting rid of CO2, you can’t even laugh at it’s so stupid.
As you’re discussing all this, the common theme that I’m seeing is the power of ideology or the power of ideas. For example, this idea of total lockdown or partial lockdown, it seems like there’s increasing evidence that we chose to believe an idea that came out of communist China.
It really did come out of communist China.
Okay, so what do you make of that?
I think that there are too damn many communists in China. They actually have a propensity to believe that force can actually produce good effects, and can generate growth and progress. Marxists have been proven wrong over and over again. They are being proven wrong again as their people in China rebel on the streets, and they’re going to have to be shooting their people again, which is not a good sign of successes in governance.
China, however, as you know better than I do, is a tremendously diverse and creative place, and there’s tremendous enterprise going on. They aren’t studying gender science in their universities, they’re producing engineers by the millions.
Since we’re on this topic, I’ll mention this. You obviously are a proponent, from what I heard, of globalization, of mixing economically. But it seems like the Chinese Communist Party has leveraged the globalism to its own benefit by benefiting from all sorts of open rules that the system has, but choosing not to follow them at all. And the world seemed to be perfectly good with this.
That’s a good point. The only point I’ll make is that under Jiang Zemin and Deng Xiaoping, China did open up massively on the economic front. Not on the political front I acknowledge, but on the economic front, they massively opened up. And because of their previous great episode of totalitarian excess, the one-child policy, they are going to be the most rapidly aging society on the face of the earth.
China has been free to the extent that it favored technological creativity, and entrepreneurial efflorescence. Alibaba in particular created the structure for online commerce which really was the structure for capitalist growth in China. They defined contracts and supply chains and all the rules that make a capitalist system work within the online domains of Alibaba.
That’s been central to their success. And Jack Ma did that. He was the leader of it. I knew him. And as soon as they start cracking down on Jack Ma and Pony Ma and all the people who are really crucial to their success, they are beginning to fail.
To the extent they opened up, they prospered. And because they started further behind than any other country, they grew faster than any other country in the history of the world. Now, they’re retrenching and adopting emergency totalitarianism, and ultimately it can bring them down.
This is probably a subject for a different day, but I would argue that they took advantage of the idea of free trade and openness, while themselves pushing a dramatically mercantilist type policy.
But we benefit. The result of this was that seven out of the top 10 most valuable companies on the face of the earth, making profits at margins of 20, 30, 40 per cent, rose up during that period. China was making margins of four and five per cent. And most of their best companies did originate in Taiwan anyway.
Foxconn was making all the products for Apple. Many Chinese companies contributed to Amazon’s emergence. Microsoft triumphed during this period. The whole idea that we were victims of China’s free trade policy is just wrong. It’s just not true. We shouldn’t give up on globalization and trade. That’s our most powerful element.
We’re trying to suppress Huawei for copying our standards, our platforms, and our systems. They were plighting their trope to the future of American technology in all its specifications. And now we’re forcing them to develop their own chips and develop their own platforms and standards. As to the victims of this, it helps communism because it means that they won’t be dependent on us anymore. But it doesn’t help us. It reduces our markets drastically, and actually is jeopardizing our greatest asset, which is our semiconductor industry.
I love The Epoch Times, don’t get me wrong, but you need to be a little more shrewd about figuring out how to deal with this imperial threat that is arising in Asia. I don’t deny it, but isolating it and pushing toward an adversarial, militarized confrontation strikes me as favoring communists. Communism is only good for war. That’s the only thing it’s good for. It’s not any good for economics. It just destroys any economy that it seriously attempts to organize.
I’m going to have to invite you back for a whole discussion about China because I’m deeply interested in this. I would argue what you just said is precisely the reason why we have to cut off our ties. But there’s something else I want to cover. Since we’re thinking about Covid, it’s what I would call it the mind virus. Because of globalism, you mentioned earlier that somehow this very strange, terrible lockdown or emergency Marxism policy caught on like wildfire. You could call it a mind virus.
And it was sped up through the same globalization that offers the transfer of information. It actually facilitated everyone tossing out their decent pandemic policies which they had set for decades, and adopting terrible, destructive policies, arguably destroying the world economy.
Suicidal. Ultimately, it’s suicidal. If we continue to lock down every time we have a flu crisis, we won’t have a country anymore.
Yes. Communism seeks to reconstruct the system from the ground up,. This woke Marxism, which you alluded to earlier, it sees the whole western idea, the Enlightenment, as the root of all evil. It must be destroyed from its foundation up. But this feels analogous to what we’ve been doing through these policies across the world, without maybe even realizing it.
It’s one of the great errors of the universities in the United States. All of the professors really live in a dream world where they get tenure, automatic support forever. They live in a kind of Marxist utopia already, and they imagine it’s natural, and that by extending it further into this society, it can actually prosper. It’s a great disease.
It does begin with the intellectuals. It’s really astonishing to see. It is called “La trahison des clercs,” which in French means the treason of the intellectuals. And this really is a treason of the intellectuals going on in all the universities. On the basis of their emergency model, the population is too big.
There’s a great new book that’s just been published. I wrote the introduction to it. It’s called Super Abundance. It’s by a professor at St. Andrews in Scotland, and a professor at BYU in Hawaii. Gale Pooley and Marian Tupy are the two authors. It demonstrates that over any period you want to measure, with the time that a worker has to spend to earn the money to buy goods and services, the more people, the lower the prices. Since 1980, for example, the population of the world has grown 75 per cent. This is since Paul Ehrlich was predicting famine and collapsed by 1995 or something, or the turn of the 20th century.
But during that period when human populations grew 75 per cent, what happened to prices? Prices dropped by 75 per cent. In other words, prices dropped just as fast as population grew. That meant each individual human being produced more resources than they consumed. And that only happens under conditions of freedom. If you crack down, lock down, mask up and social distance, the population stops growing and resources become more scarce and prices start going up. That’s what we’re experiencing today, and the Brownstone Institute is fighting against this.
There’s something I call the megaphone. The megaphone is the ability in our highly networked system for multiple organizations; media, social media, universities, government, and NGOs all to simultaneously say the same thing even if that thing is false, and possibly even believing it. With this treason of the intellectuals, can you qualify what the treason is against?
It’s against human life.
Against human life.
It’s what Bill Buckley used to call, “immanentizing the eschaton.” The eschaton is the final thing, the apocalypse, the end times. And intellectuals tend to believe that their particular level of enlightenment and accomplishment is an eschaton, a final thing.
They’re saying they are giving value, when in fact what they’re offering is possibly the antithesis to the word value. I don’t know what that is, lack of value.
Damage. This has the ability to change policy across the world in an instant.
I wrote a book called Knowledge and Power, and this is exercise of power against knowledge. Ultimately, human progress depends on liberating individual human minds. One human brain is measured by something called a connectome. An MIT biologist wrote a book about connectomes and he showed how a single human brain has a connectome that would take 10 to the 21st power of petabytes of information to capture. And the connectome of the entire global internet takes a few petabytes to capture.
But the global internet takes gigawatts, billions of watts of energy to sustain, while one human brain, which is as complex as the global internet, takes 12 to 14 watts to sustain, many billions less power than the global internet.
Economic growth and progress depends on liberating and emancipating individual human creativity. That means liberating knowledge, and endowing people with knowledge with the power to pursue it. And the opposite is concentrating power with a few people, and thus eclipsing this vast potential of human minds that’s unleashed as population grows.
That’s an amazing realization that this concentrated power can grossly limit human potential and human endeavor.
And it’s true. Its beauty is its truth. In other words, separating power from knowledge and really rendering knowledge illegal is what they are trying to do in China, and imitatively in the United States. It’s a mimetic war of oppression that we’re currently going through in the name of emergency socialism. “It’s just two weeks to flatten the curve.”
Covid is the mildest pandemic we’ve ever had, essentially. And so, for us to panic and abandon our whole Constitution and principles of living, and don masks and hide in caves is just an evil movement. It just is. And it’s deeply false in its propositions. That’s why the Brownstone Institute is rising up to battle the troglodytes and zero-Covid and zero-CO2 and zero-life.
George, this is an absolutely fascinating discussion. Any final thoughts as we finish?
Well, I’m delighted to read The Epoch Times. You’re doing a tremendous job. For breakfast this morning, I had one of my rare mornings with the New York Times. You should see today’s Times, it’s almost a parody of itself. It’s got this whole long article about how Musk is ruining Twitter, and that somehow if you have freedom at Twitter, the world is going to come to an end.
Another front page story is the terrible threat of Harvard’s policy on Asians. But they really are trying to break down American society into ethnic groups which are transformed into kind of Marxist classes. It’s really evil and it’s making everybody a victim. The big story in the World Cup is that not enough attention was paid to the black soccer players.
It’s wonderful to have black soccer players, but the idea that somehow in athletics blacks are being ignored requires that you have to be in this strange, twisted mindset of the pre-Epoch Times, of New York Times in order to believe these things. It makes me very grateful for what you guys are doing is all I can tell you.
Maybe just tell me how is Epoch Times different in your mind?
It’s really devoted to the truth. It reports truly on the world. It isn’t twisted by some crazed ideology like the New York Times is, and many of the other media are. It has a balanced view of real developments across the world. And you have some really good reporters. You did a really good piece on Covid like a couple days ago. Zhang, is that her name?
Yes, she did an excellent job. They’re just a lot better than the New York Times reporters. The good New York Times reporters have left. Alex Berenson is off doing his Substack blogs. James Brooke was a great international correspondent for the Times. He’s left and he is writing for the New York Sun and the Berkshire Eagle.
They are left with ideologues, who have this peculiar, twisted view of the world where all that matters is ethnicity and skin color. Minds don’t matter. The Epoch Times has completely transcended the ideological trap that the mainstream media has eagerly entered.
We’re just finishing here, but maybe a few words about your upcoming book, which I’m very excited to be reading.
It’s called Life After Capitalism. It’s a sort of an ambiguous title. I offer information theory as a way to redeem capitalism, from a theory that reduces human beings to homo economicus, just responding to incentive systems of rewards and punishments. This is corrupting capitalism. I want to transcend that model. So, that’s Life After Capitalism.
But also it applies to this regime we have in the United States, with these ESG (environmental social governance) rules on big corporations. As Peter Thiel declares, in the past when you went public as a company, you gained new influence and power and marketing ability and new capital and freedom. Now when you go public, you get nationalized and you become a kind of instrument of government policy. This is Life After Capitalism, and it’s a serious threat to our future.
We’re going to have you back to talk about the book. George Gilder, it’s such a pleasure to have you on the show.
I’m glad to be here. Thank you so much.
Thank you all for joining George Gilder and me on this episode of American Thought Leaders. I’m your host, Jan Jekielek.