Capitalist Tool II: Defending Dynamism

An interview with Malcolm Forbes, Jr.

Virginia Postrel & Charles Oliver from the May 1991 issue

People usually describe Malcolm S. Forbes, Jr., as "low- key," "serious," and "bookish," in contrast to his more flamboyant father, Malcolm, Sr. In person, Steve Forbes is soft- spoken and earnest, but he shares his father's famous wit. He notes that the United States should consider siccing the International Monetary Fund on Iraq: "That would knock them down very quickly."

Forbes, 48, a graduate of Princeton University, has been in charge of Forbes Inc. since his father's death last year. But he has long been involved in the editorial process at Forbes. While Forbes readers appreciated his father's insightful restaurant reviews in his "Fact and Comment" column, policy makers turned to Steve's column, also titled "Fact and Comment," to find the cutting edge of economic analysis. Steve was one of the first to push supply- side economics, and he continues to be a strong voice for tax cuts and deregulation. He is generally credited for the magazine's publishing Warren Brookes's cover story questioning global warming. And Forbes is the only person to win the Crystal Owl award--given each year by US Steel to the most- accurate economic prognosticator--more than once. He currently owns four Crystal Owls.

REASON Editor Virginia Postrel and Assistant Editor Charles Oliver interviewed Forbes during a February visit to Los Angeles.

Reason: What directions do you see Forbes going in over the next 5 to 10 years?

Forbes: We will continue to evolve as we have done for the past 20 years--concentrating on the people who run and manage companies, people who can make decisions, people who start new enterprises, because without good management you'll not for long have a good business.

We are not only a drama critic of companies--telling who's doing well and who isn't and why, coming to conclusions. We also unearth trends such as the litigation scandal where [Ralph] Nader got very close to the trial lawyers--each scratching the other's back, wrapping themselves in virtue. We will continue to take the veil off of that sort of thing.

Reason: Now that Nader piece was extremely controversial. You were deluged with letters.

Forbes: Right. But his response wasn't as strong as we had expected it to be. He was full of anger and outrage. But he really didn't wound or demolish the premises of the piece.

Reason: But surely you didn't expect that.

Forbes: No, we didn't. But I think he was quite surprised that anyone would dare to treat him as he treats others.

Reason: Forbes has a reputation for challenging the conventional wisdom. Were the Nader piece and global warming piece examples of using that viewpoint on a political issue, or did they reflect some particular ideology?

Forbes: Our ideology, if there is one, is "Let business be done by consenting adults." We don 't have an ideology or party line, but we're always looking for things that others haven't found.

On the Nader story, for instance, we stumbled onto that because of our earlier story on the scandalous ways that trial lawyers have affected the economy and the way judges have allowed that to happen. When we were researching that story, we stumbled across the fact that there was this unpublicized, very close relationship between Nader and the trial lawyers. They worked very closely, like hand in glove. We didn't search out Ralph Nader. We came upon it doing another story. That's often where you get your best stories--you start one story and end up getting evidence that warrants another one.

Reason: Some have said Forbes is getting too much into political issues and inching away from pure business journalism.

Forbes: Quite the opposite. Nader has had a major impact on business and not always for the right reasons. One of the institutes that he has been associated with came out with a piece a few months ago alleging that five major insurance companies were on the rocks. It had to, at least in two of those cases, withdraw that statement and in a third do a semiwithdrawal.