A Bible for Supply-Siders

While preparing the Administration's economic policy in recent weeks, many Reaganauts have been reading a new book that tries to lay the intellectual foundation for their promised "new beginning." David Stockman, President Reagan's Budget Director, bought 30 copies and sent them to Administration aides. Says he: "It's the best thing written on economic growth in about 15 years." The book causing the stir is Wealth and Poverty (Basic Books; $16.95) by George Gilder, 41, a sociologist-turned-economist, who once wrote speeches for Nelson Rockefeller.

In a broad look at societies from the Kwakiutl Indians in British Columbia to the blacks of Albany, N.Y., Gilder has produced a 306-page ode to the economic and moral benefits of unfettered capitalism. Some Reaganauts expect Wealth and Poverty to become a classic of supply-side economics, the school of thought that believes Government policy should focus more on helping private enterprise boost the output of goods and services.

Gilder maintains that steeply progressive tax rates and Big Government destroy wealth and perpetuate poverty. He contends that federal levies, which skim off as much as 50% of income from wages and 70% of earnings on interest and dividends, deaden incentives to work, save, invest and take risks. The result: instead of using their savings for productive investments, too many people seek tax shelters and pour their money into "gold, baubles, flimflam films and real estate." High taxes are responsible for the U.S.'s While poor preparing the productivity growth because Administration's so economic policy much money has gone into unnecessary investments.

Poverty, in Gilder's analysis, "is less a state of income than a state of mind." Basing his conclusions on more than a year's research in New York and South Carolina ghettos, he believes that generous Government welfare payments discourage work and foster an attitude of dependency. Says he: "The poor choose leisure not because of moral weakness, but because they are paid to do so. In order to succeed the poor need most of all the spur of their poverty."

The poor will fare best, Gilder says, in a vibrant economy in which low tax rates spur investment and speed the creation of new jobs. He unabashedly touts a Robin Hood-in-reverse creed: "To help the poor and middle classes, one must cut the tax rates of the rich." Gilder argues that only the rich have enough capital to stimulate rapid economic growth, and only reasonable tax rates can induce them to invest rather than spend their money in unproductive ways.

Ever since Adam Smith's Wealth of Nations in 1776, capitalism has been generally extolled as the most efficient economic system or as the philosophy most compatible with political liberty. But even capitalism's most ardent supporters have had trouble answering charges that it is morally bankrupt because it appeals to people's greed for profit. Forcefully confronting these charges, Gilder maintains that the entrepreneur is not a selfish accumulator of wealth but the creative figure in society, who uses his talents and capital in risky ventures that have no guarantee of reward. The businessman's sacrifices and courage are the engines of economic progress.

Explains Gilder: "The very conscience of capitalism is the awareness that one must give in order to get, supply in order to demand."

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