Steve Forbes on Trump, Taxes, and 100 Years of Forbes Magazine
Also: GOP Congress should fix health care, taxes, and easy money.
"We don't see business as evil," says Steve Forbes, marking the 100th anniversary of Forbes magazine, the iconic business publication started by his grandfather. "We see it as a noble undertaking."
And thanks to capitalism, progress in the 20th century will pale in comparison to what's coming in the 21st. "In 2117," he says, "we'll be infinitely better off."
Forbes sat down with Reason's Nick Gillespie at Freedom Fest in Las Vegas to discuss the legacy and future of the magazine, his assessment of President Trump, and where the legislative agenda for Republicans is falling short.
Edited by Austin Bragg. Cameras by Meredith Bragg and Justin Monticello.
Subscribe to our YouTube channel.
Subscribe to our podcast at iTunes.
This is a rush transcript. Check all quotes against the audio for accuracy
Nick Gillespie: Let's talk about turning 70. How does that feel, and looking back, what are the highlights of your public career?
Steve Forbes: Well, 70, glad to have made it, and at this stage of life it's nice to have a guilt-free excuse for plenty of cake, cookies, and ice cream, so not going to complain.
Gillespie: In terms of your achievements over the years, talk about your forays into the Republican nomination process for the presidency, and your advocacy of the flat tax. Do you feel like that accomplished what you hoped it would accomplish?
Forbes: Well, I would have liked to have won. It's more fun to get more votes than the less votes. But I do think we got some good ideas out there, even though the US has not made much progress on the tax front. Forty countries and jurisdictions around the world, like Hong Kong, have had the flat tax, and it's worked fairly well. So this is no longer laboratory stuff, this is real world stuff. The disappointment is that in the last 20 years, we haven't had a presidential candidate make that a forefront issue. A couple of them in the last election had some variations of the flat tax, but they didn't put it out there, so nobody knew. It's like, the tree falls in the forest, but if you don't hear it, did it really fall?
I'm just waiting for a political entrepreneur to do it. I would have thought in 2016, when Trump rose up, that the other 16 opponents would have said, "I got to do something a little differently, or I'm going to get steamrollered." Instead, they had all the same kinds of consultants. They made all the same calculations, and they all went down for the count. Shakespeare talked about killing all the lawyers, I think they should kill all the political consultants. But that's another subject.
But in terms of the flat tax, tax simplification's out there. Republicans at least have to pay lip service to it. Another thing I think we got out there, the idea of medical savings accounts. Now they call them health savings accounts. The idea of being patients should be in control, and not government, not third parties, not bureaucrats, not big companies, but we the people, individually. So we got that idea out there.
I think, too, we gave some credence to the idea of a new Social Security system for younger people. When I ran in '96 in Arizona, I shocked one of my campaign colleagues when I said, "We're going to Sun City, and I'm going to talk about Social Security." "Oh, we can't do that!" But once you make it clear you're not going to take anything away from them, this is about their kids and their grandkids, they'll listen.
Gillespie: Explain a little bit of what your alternative Social Security plan was, because that's also something that has not advanced, even as the economics or the finances of both Medicare and Social Security have just gotten even more in the tank.
Forbes: Well, in Social Security for younger people, they'll own their own accounts. Personal accounts. That way, if anything happens to you, you own it. I think just change the whole mindset. That money that goes into your account, you get your first part-time job, you say, "Capital, what's that all about?" You learn: Because of the result of your labor. Not a gift from politicians or employer, you created those resources. They belong to you. A whole different mindset. I think people would learn more about money at an earlier age, since it's their own property.
Gillespie: Do you feel, over the course of … You were talking about '96, when you were running, but even over the past 30 or 40 years, a longer period, are people more savvy about investing, or about economic truisms, in terms of if you save a little over a long period of time, you're going to do pretty well. You can't wait until the very end, and try to park a lot of money, even if you have it. Do you feel like we're growing as an investor society?
Forbes: There's been some progress, because of the rise of 401Ks. Suddenly, okay, it's not just some magic thing that's going to appear at age 65. There's something you have to look after. I'm surprised there hasn't been more real education done, and more real reform done on that front. Don't put all your money in the company stock, and basic stuff like that.
So I think we have to do a lot more, but when people have something, they'll learn about it. You don't make them passive, and therefore they become more active in it. One of the things that I think has arisen universally, in recent years, is the idea of index funds. Now have hundreds of billions of dollars. You have low fees, and just let the thing work, put in your certain amount each month or quarter, or whatever. By golly, you'll do better than most money managers. I think that's becoming more of a conventional wisdom.
Gillespie: For 100 years of Forbes, it's probably harder for a magazine to last 100 years, even than a human being. Talk about the origins of the magazine, briefly. And then, do you think it is still holding true to the role that it played 100 years ago?
Forbes: It was started by my grandfather, B. C. Forbes, who was an immigrant to this country. Grade school education. One of 10 children. He wanted to be a business writer, and then his own boss. So he first immigrated from Scotland to South Africa, was there for the founding of a once-famed paper called The Rand Daily Mail. Worked for Wallace, who later became a novelist. He liked to drink, so my grandfather had to write Wallace's editorials from time to time.
South Africa was too small a pond, and so he came to New York. He always had that entrepreneurial spirit. When he landed in New York, he couldn't get a job. Most people say, "Oh, I can't get a job." But he did something unusual. He went to an editor and said, "I'll work for you for free." You could do that in those days.
Gillespie: So he was an unpaid intern?
Forbes: He was an unpaid intern, so to speak. But he took a risk. He didn't know whether the editor would take his free labor and then toss him out. But he knew if he did everything the conventional way, he'd go nowhere. So he eventually got the job, then he had so much energy, he used an assumed name, got a job at another publication. Probably the happiest moment of his life was when the two editors got into an argument as to who had the best business writer. It was my grandfather in both cases.
So eventually, he decided … He became successful. He became a syndicated columnist for Hearst, a big newspaper chain at the time. Hearst, by the way, was the character for Citizen Kane.
Gillespie: He was the one with the sled problem, right?
Forbes: Yes. Rosebud. Okay?
Gillespie: Spoiler alert!
Forbes: But my grandfather decided, instead of just writing about these makers and shakers, he would do it himself. So he started Forbes in 1917, and in the first issue he said, "The purpose of business is to produce happiness, not to pile up millions."
Gillespie: Wow. And that comes through, even today. In the publication, there's always the Words of Wisdom, and isn't one of the catchphrases something like, "In all of your getting, get wisdom."?
Forbes: That's from Proverbs. Yeah. He put it in the first issue of Forbes, "With all that getting, get understanding."
Gillespie: Yeah. There you go.
Forbes: It resonates 100 years later.
Gillespie: What is the essential role that Forbes Magazine plays now? And where do you see it in the next 100 years?
Forbes: I think we're unique from other business publications. I think this is one reason why, around the world, entrepreneurs identify with Forbes. We don't see business as evil. We don't see them as miscreants, having to be sat on, unless they wreck the world and kill all of us with pollution, or bad dog food, or whatever. Kill your pets. We see it as a noble undertaking. Yes, human beings, what they are, some are going to go off the rails.
So from the beginning, my grandfather was, somebody said, like a drama critic. Loved it when he got it right, but hits you hard when you got it wrong, but loved what it all represented. And to him, what we called entrepreneurial capitalism today, is how you enable people to do great things, be creative, learn from your mistakes, and you're doing well, you make other people better.
Gillespie: Are you optimistic for the next 100 years?
Forbes: Yes. Look 100 years ago. Despite two world wars, Great Depression, 911, all the catastrophes we've had. The great inflation of the 1970s, the disaster of 2008, 2009. By the way, all of these economic catastrophes have their origins in bad government policy. It's not that free markets are inherently unstable. Governments are inherently unstable in what they do. But when you look at all of that, look at how far we've come, even though they tried to discredit capitalism, even though today you're not supposed to use the word capitalism.
Gillespie: Or we talk about late capitalism.
Forbes: Well, whatever. But the fact of the matter is, look at the huge progress that's been made. In the last 30 years, people living in dire poverty, down half. Over a billion people, as the world has become more integrated, coming out of dire poverty. You look at longevity. No big deal, today, people live 80s or 90s. Another little factoid, people dying from natural disasters, down 98% because of structures warning from a capitalist system, so when you look at all that progress … We're going to write in our 100th Anniversary issue, in 2117, despite all that's going to happen, we'll be infinitely better off then, and a richer world in terms of quality of life.
Gillespie: Let's talk about Donald Trump. He's about six months in, no significant legislation coming out of the Trump period so far. Rate him. The way that you rate restaurants. Does he get a green light, a yellow light, or a red light?
Forbes: Well, we used to grade mutual funds, A through F for performance. And right now, he hasn't completed a year yet, so I'll give him an incomplete. But what he has done, in terms of Gorsuch … Now not much happened in the first term, no surprise. But that's a generational thing. That's going to be 25 years. Hugely important, not just for his decisions, but his ability to articulate why this is constitutional. People read those decisions, they're going to be impressed by them, like they would have with Scalia. Hugely important.
Deregulation, utterly unglamorous. All presidents pay lip service to it. They are actually trying to do things on that front.
Gillespie: Let's talk about that a bit, because in places like the FDA, the FCC, and the EPA, he's definitely appointed people who are enormously important.
Forbes: Strong. Scott Gottlieb has worked at the FDA. Has written about their problems. He knows where their strengths are, and where their weaknesses are, and can make informed policy decisions, instead of having … It's nice to have the right ideology, but you have to know what you're doing.
EPA. Pruitt. Enormously important. Profound change. And you're starting to see it play out in the energy industry. Education, I hope they back Betsy DeVos. She's been fighting these wars for 20 years, so these are experienced veterans. So-called net neutrality, where Netflix and others want the government to subsidize their costs of doing their programming. Getting it out to we the people. No, they're going to attack that.
Gillespie: Here's a question for you. Trump's budget, according to economists and researchers at the Weidenbaum Center at Washington University in St. Louis, they said if his budget was enacted as written, it would reduce the number of regulators in the government by something like 1% or something, but it would actually increase spending by regulatory agencies by 3%. Is it more complicated, in a way, to get rid of regulation-
Forbes: Most regulation, as I understand it, would be on the immigration side. I hope, in the next few years, as we talk about it, we start with reforming our own immigration service. So if you come and play by the rules, you're not left in limbo, as can happen with people having to hire lawyers, and papers get lost … it's a disaster. So don't punish those who've played by the rules.
Gillespie: Would you expand immigration? Legal immigration.
Forbes: I'd like legal immigration, because I think people bring-
Gillespie: So, in a broader sense than Trump, where is he going wrong? Where is he falling short, by your account?
Forbes: Well, I think despite all of this good stuff on regulation, getting Gorsuch through, which is enormously important, two big things. Well, actually three. One is health care. You can't undo Rome, or build Rome in day. But there's some basics they got to get done to create a more individual patient-oriented system. When you do that, by golly, a lot of these other problems start to disappear, like this desire to impose electronic records. That happened naturally, when you have to please the patient. So in terms of the legislation, that's what I want to see. Is it moving the ball forward there? Because then we can build on it. Remember, the other side has been building on this stuff-
Gillespie: Since Truman, I believe. Yeah.
Forbes: … for decade after decade. We got to do the same thing. We're in this for the long haul. We're going to relentlessly pursue it. That's where the regulatory stuff is important, showing even our own people, "This is nitty-gritty stuff that you do day, by day, by day. And don't think one thing, and then you can retire a hero on the white horse."
Gillespie: So health care. What are the other-
Forbes: Taxes. They're not going to get real tax reform. Paul Ryan, I think the body snatchers have got to him in Washington, and came out with this crazy 20% border sales tax. So it delayed healthcare, and because they worshiped the Congressional Budget Office, like ancient people would worship idols, Vestal Virgins, and the like, they delayed health care. So just make across the board rate cuts, like Reagan did. And do the serious reform after next year's election. Go to something like a flat tax. Legacy. Great legacy to have.
But in the meantime, you get the rates down, by golly, it'll have a ripple effect, positive through the economy. One of the things I hope they realize is, they're going to be accused of pandering to the rich. Get over it. If the economy starts to really have real life, nobody cares. Nobody cares, outside of the Beltway and the mainstream media.
And then on money, sound money. Stable money. We have 16 ounces in a pound. We have 12 inches in a foot. 60 minutes in an hour. No one would argue we should change that to stimulate the economy. Yet in the money, measure of value, it makes it like a claim check. Worthless in, and of itself, but because of trust, we use that to do numerous, complicated transactions each and every day. We've had huge sufferings from unstable money. Not to get too much in the weeds, but in 180 years where we had the gold standard most of the time, from Alexander Hamilton, George Washington, up to the '70s. We had the highest average growth rates in the history of human beings. Despite all the convulsions and everything that had happened. Since then, it's fallen by at least a third, or 50%. Compounded, if we'd had those growth rates for another 40 years, we'd be 50% larger today.
Gillespie: But we're not going to go to a gold standard. How do you stay alive today?
Forbes: But in the meantime, recognize you don't manipulate the currency. Have the fed don't talk about reducing that bloated portfolio, have it run down now. Get that money back into the system again. No more zero interest rates. That's price controls. These free marketeers, "Oh, price controls are bad." But when the fed does it, "Oh. No, that's necessary." One of the things we got to hammer home, hammer home hard, economies are not machines. They are people. And the idea that you can guide the economy like a pedal in a car, is preposterous.
Gillespie: All right. Well, we will leave it there. We have been talking with Forbes, on the occasion of FreedomFest in Las Vegas, his 70th birthday, and the 100th anniversary of Forbes Magazine. Steve, thanks so much for talking.
Forbes: Thank you. Appreciate it.