america reviving2

INTERVIEW: Steve Forbes Explains Three Ideas for Reviving America

This article was written by Jerry Bowyer and reposted with Permission from Mr. Bowyer and Forbes.com.

What’s the difference between 2% growth rate and a 4% growth? At 4%, there are labor shortages; at 2% you have labor gluts. At 4%, crime rates plummet; at 2% riots are no longer rare. At 4%, immigrants come here; at 2% they leave. At 4%, the world sees us as an almost unattainable goal to shoot for; at 2% the world sees us as something to shoot at.

If you want to get there, it’s not that complicated: Flatten the tax code, and replace fiat currency with a gold standard, and move health care into a market system. The first would exorcise the most institutionally important expression of envy from our national life. The second would put the single most important price in the economy back under the control of the people so it can do its job as a conveyor of information. The third would liberate the most promising sector of the economy from being a drag on the economy to being its leading sled dog.

Steve Forbes has been America’s most consistent, long-term voice in favor of the growth model since Jack Kemp. His new book, Reviving America, continues that legacy. We sat down over a Skype line recently. You can listen to the audio in entirety here. Last week’s column focused on Steve’s diagnosis of our current problems. This week, we focus on his prescription. The partial transcript, edited for clarity, can be found below:

reviving america bookBOWYER:  Your book is called “Reviving America”.  It’s very policy oriented.  The policies are: get rid of ObamaCare and replace it with a market system; get rid of the IRS and replace it with a flat tax; get rid of fiat money and replace it with a gold standard.

Have I accurately described where you’re going with this so far?

FORBES:  Yes.  And the exciting thing is, even liberals, if they’re not interested in big government but actually want to help people ‑‑ the two should not be confused ‑‑ should embrace this agenda.

I mean, in terms of where we’re headed with healthcare, it’s ultimately rationing and lack of innovation.  And there are very exciting things that can be done in healthcare to get a more consumer real market. But, the thing to keep in mind, as you know, about free markets is they always turn scarcity into abundance ‑‑ if you let them.

BOWYER:  Yes.

FORBES:  And you can see the same thing in healthcare.  So whether it’s nationwide shopping for health insurance, whether it’s having clinics and hospitals post their prices, or hospitals post how many patients die each month from infections received after they’re admitted to the hospital, whether it’s getting rid of these certificates of need ‑‑ I mean, Dunkin’ Donuts is not going to need to get a certificate of need if it wants to set up shop near Starbucks.  They just go do it and see how it works. So there’re a lot of good reforms and ‑‑ which would turn what looks like a hopeless liability into the greatest growth industry ever, because healthcare is personal.

BOWYER:  Yes.

FORBES:  And on the tax side, it’s a moral issue there.  The IRS estimates we spend six billion hours a year filling out tax forms.  Experts estimate that we spend between 2- to 300 billion dollars a year complying with the Code.  If you just go back a generation and add up those tens of billions of hours, those trillions of dollars, the immense brainpower, all spent on a useless activity ‑‑ and then just imagine those resources and time and brainpower had been applied to new products, new services, new medical cures, new medical devices, how much better and richer the world would be.

So it’s not just about what your after-tax income would be; it’s huge opportunities for a better world that have been lost to an artificially created activity that is absolutely useless, and in fact worse than useless and corrupted.

BOWYER:  Yeah, there’s a compliance tax.  There’s not just a statutory tax and an effective tax rate.  There’s a compliance tax.  And there’s a sort of distortion-of-decision tax.  There’s a fear tax, too.  Did I really get it right?  Can I do this?  You know, just like an ulcer tax.  So ‑‑

FORBES:  Yes.

BOWYER:  So you said this is a moral issue.  You know, [for] my first job out of college I was a tax accountant with Arthur Andersen & Company.  It was like my first professional job, [it] was in the mid ’80s.  And we would sit around during tax season, and we would actually ‑‑ even though we were tax accountants — we would lament how complex the system is; because even though it gave us employment as long as we wanted, I would talk to my colleagues about the flat tax, and they would say, yeah, you know, this is the best-paying job I could get, because we save our clients so much money.  But I still wish it didn’t exist.  I wish that the best-paying job for me would’ve been an engineer, because I’d feel a lot better about actually creating something rather than playing this complex game of cat-and-mouse with the IRS.  So you would liberate a lot of brainpower if you shut down the IRS.

Steve Forbes3FORBES:  Yes, absolutely.  And on the money thing ‑‑ you made a point, even if you get things right on spending, regulation, taxation, and the like, if you don’t get the money right, you’re going to have problems, because money makes it possible for us to interact with each other, trade with each other.  That’s how we get progress.  That’s how we reduce barriers between people.  And when you mess with that, it has profound and ugly implications and results.

BOWYER:  Right.  Witch burning, for example.  Right? I think in your last book, “Money”, you point out that there’s a spike in witch burnings when you have debasement of currency. Rene Girard just died several weeks ago, the ‑‑ sort of the theorist of the scapegoat.  And he says that during times of social tension, people look for the scapegoat.

FORBES:  Yes.

BOWYER:  The scapegoat is innocent, right?  So it might ‑‑ the scapegoat might be the witch, it might be the outsider, the foreigner ‑‑ the immigrant I think is kind of the scapegoat right now, maybe, for some on the right.  The banker, the rich, the top one percent, are the scapegoat for those on the left.

But when you have these mysterious plagues or when the fields are not producing their harvest, you look around and you say who doesn’t quite fit in?  Oh, gypsies just came through our town or Jews came through our town or that woman acts kind of strange.  She mutters to herself. You start looking for somebody to blame.  And you’re not really paying a whole lot of attention to whether they’re actually guilty or not.

FORBES:  Well, you’re angry and frustrated, you lash out because you don’t know what’s happening.  That’s why the Depression was so devastating.  It was not just the decline, nobody, one, saw it coming and two, nobody can understand why it happened.  It was like something from out of the sky, suddenly, just plagues, locusts descending upon you.  And to this day, people will point to that as saying, see, markets, don’t work.

Cross-Posted with Permission from Forbes.com.

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