On April 13, 2016, Steve Forbes, American publishing executive, Editor-in-Chief of Forbes Magazine and two-time candidate for the Republican presidential nomination, spoke at Southern Methodist University in Dallas.
After listening to his nearly one-hour-long speech, I came to a firm conclusion: Steve Forbes should be the next president of the United States.
Of course, he won't be. I know that this seems like a completely rash, insane statement, but, within a short period of time, Forbes completely convinced me that his intelligence, extensive background in finance and business, and sheer common sense regarding a plethora of issues that the United States faces makes him a lot better man for the job than anyone running right now or the man currently in office, for that matter.
Forbes opened his speech by discussing the current problems with the free market of the United States. He reminded us that “free markets always turn scarcity into abundance.”
He even went so far as to provide his audience with an example.
“Back in the 1920s, the first automobile cost an equivalent of $120,000. Everyone said they were just a ‘toy for the rich.’ But along came Henry Ford – he and his gifted engineers perfected the moving assembly line and turned a toy for the rich into something that every working person could afford.”
He pointed out that this can only happen if free markets are allowed to operate.
One of my favorite examples that he gave of this came when he began talking about the lids on Starbucks’ coffee cups.
“You can buy your drink in three sizes: 12 oz., 16 oz. and 20 oz.,” Forbes began. “You notice that the lids on those things are all the same size, even though you have three different drink sizes?”
Forbes argued that it’s things like that we take for granted and “that’s the essence of free market capitalism.”
In other words, it’s all about innovation.
As Forbes said, “The real source of wealth is innovation, the human mind, and knowledge.”
Forbes broke the rest of his talk down into three parts, each highlighting important reforms that need to be made in order to help the failing state of our country. As Forbes said, “When the U.S. is in trouble, so is the rest of the world.” (You can also read about all of this in his book, “Flat Tax Revolution.”)
1. ObamaCare
Simply put, Forbes said, "Repeal it."
“Costs are going up again, despite all of the promises,” Forbes said. “Millions of people are just now discovering this thing called ‘deductibles,’ which are costing me a lot more money.”
He provided his audience with a new outlook on health care, one that I had previously not thought of. We don’t look at the true blue cost of healthcare.
“If you add up in your lifetime what you make in co-pays and deductibles and what you pay in taxes for Medicaid and Medicare, you’ll be paying $1.9 million,” Forbes said, “and most of us have no idea that that’s really the cost.”
“Why do we have a health care crisis?” Forbes challenged his listeners. “It’s not the quality of the care because it’s some of the best in the world.”
Forbes goes on to identify another important point: “Why is demand in health care a crisis? Remember what we talked about earlier in regards to a free market. Demand for anything else in this country is considered a great opportunity.”
According to Forbes, here’s the real problem with healthcare: “We don’t have a real, free market.”
“It’s all third-party payers,” Forbes said. “You know who the real customers are? Insurance companies, government, and employers. The patients are not the real customers.”
So, what can we do about it?
“Get some consumerism and transparency,” Forbes said. “How about we require hospitals and clinics to post the prices of their treatments so we know what they charge? How about each hospital posts how many people died after receiving treatment or how many people come back for re-treatment?”
Forbes also brought up a choice of policy.
“I don’t need pregnancy services, as you might have gathered from looking at me,” Forbes said. “Why should I have to pay for them? I don’t need them. Let’s get policies that meet our own particular needs.”
“Isn’t that what freedom is all about?”
I can't help but agree with Forbes when he said that “this is not rocket science.”
“If the government ran food, we would all be starving.”
2. Federal Income Tax
“We are overtaxed,” Forbes said.
“Our policy-makers don’t recognize that taxes don’t just raise revenue, they are a price and a burden,” Forbes said. “The concept is simple: when you lower the price of good things like productive work and risk taking, you get more success. When you raise the price, you get a lot less.”
“People think ‘Oh, we have a crisis in debt, so we need to raise taxes' and that is absolutely the wrong thing to do,” Forbes said. “You don’t take an anemic patient and bleed the patient. You do the opposite.”
“It’s an absolute monstrosity,” Forbes said. “Gettysburg Address was 272 words. The Constitution and the amendments are 7,000. The Bible, which took centuries to put together, is 737,000 words. The Federal Income Tax Code and all of its rules and regulations is over 10 million words.”
Also, nobody really even knows what’s in it.
Forbes proposed that we, “throw it out and start all over again.”
“I’d replace it with a simple flat tax and generous exemptions for adults and for children,” Forbes said. “For example, a family of four would pay no federal income tax on their first $52,800 of salary and, above that, only 17 cents on the dollar. No tax on savings, no debt taxes and, on the business side, cut it from 35 percent to 17 percent.”
“The IRS estimates that Americans spend 6 billion a year filling out tax forms,” Forbes said. “Think of all of the wonderful things we could’ve come up with during those hours.”
3. Monetary Policy and the Federal Reserve
“You can get taxes right, you can get regulations right, but if you don’t get the money right, you are in trouble,” Forbes began.
Why is that, you ask?
“How do we make progress?” Forbes probed the audience. “We do it trading with each other and buying and selling with each other. We do it billions of times a day all around the world. Money makes these transactions infinitely easier.”
“We need to leave the dollar alone,” Forbes said. “Money works best when it has a fixed value.”
“Imagine if we flaked and changed time as much as we change money,” Forbes said. “What if an hour was 60 minutes one day, 42 minutes the next day, and today it was 30 minutes? Life would be chaotic.”
According to Forbes, “That’s exactly what we do with money.”
“It makes investment harder,” Forbes said. “You know, investing is risky enough, but if you don’t know whether you’re going to get paid back in a 100 cent dollar, an 80 cent dollar or an 110 cent dollar, you get less of it.”
“Since the early part of the last decade, look what’s happened: less investment and more stagnation,” Forbes said. “The Federal Reserve is now trying to ‘fix the economy’ by messing with money and manipulating interest rates. We should have learned from the Soviet Union that does not work.”
Forbes finished by once again discussing the importance of free markets.
"Markets are about us interacting with each other," Forbes said. "Free markets help us to do for others while simultaneously doing for ourselves. If we start with these three reforms, this malaise will quickly go away."
"This is not the time to despair. We know what needs to be done, let's do it."