Free markets, lower taxes and deregulation will speed up the slow recovery of the country’s economy, according to Steve Forbes, who gave a lecture Tuesday night titled “Steve Forbes: How Capitalism Will Save Us” in the Student Union Ballroom at the University of Massachusetts.
“Think of it as an automobile,” said Forbes, the founder and current editor-in-chief of Forbes magazine. “We were going 20 miles per hour last year. Now we’re at 35 to 40 miles per hour, when we should be going 75 miles per hour.”
The event, which was attended by almost one hundred people, was organized by the UMass Republican Club.
Forbes primarily blamed high tax rates for the decrease of the country’s total economic productivity. For one, he compared Texas, which does not have a state income tax, to California, which has a maximum rate of 9.3 percent for every individual. California’s economy, he said, “is in big trouble.”
In addition, Forbes said the federal tax code is very hard to understand. He called it “one of the biggest burdens in this country” and “a huge source of corruption” because of its ambiguous nature.
“[Our federal tax code has] nine million words and rising, and nobody knows what’s in it,” he said.
On the other hand, Forbes admitted that simplifying the tax code would be very hard. The last time lawmakers tried to reformulate the code, they ended up amending it 14,000 times, he said.
The country’s complicated tax laws also reduce individual productivity in the U.S., he said. According to Forbes, the Internal Revenue Service (IRS) found that Americans spent 6.5 billion hours last year doing their taxes.
“What a waste of brain power and resources. Simplify the thing,” Forbes said.
As a solution, Forbes said that the government should establish a flat income tax rate of 17 percent for people with annual salaries of at least $46,000. This, he said, would encourage “simplicity of collection” and would “leave the world unmolested by the IRS.”
Forbes has previously introduced this suggestion during his presidential campaigns back in 1996 and 2000.
Furthermore, Forbes said freer markets will help mend the current state of U.S. economy, although he admitted that commerce is “not perfect.”
“Free markets are moral, contrary to the Hollywood caricature of anarchy and ‘rich getting richer,’” he said. “And even if you’re that Hollywood caricature and you lust for money, you don’t get it unless you provide someone else’s wants.” Forbes said that markets aim to meet the needs and wants of consumers and those freer markets can “turn scarcity into abundance.”
For example, he said that when they were invented 30 years ago, cell phones cost thousands of dollars. But because service providers decided that cell phones should be a common commodity, they made them more accessible to the public by lowering their prices.
This concept can be applied to the current healthcare crisis in the United States, Forbes said. He said that because of President Barack Obama’s healthcare laws, “we don’t have real free markets in healthcare.”
In turn, Forbes said the government should stop tightening regulations on healthcare laws. If providers were allowed to manage their services without being monitored by the government, it would be possible for them to make healthcare more plentiful and accessible and to provide more assistance to those who can’t afford it.
Forbes also blamed the Federal Reserves for the economic crisis in his speech, saying that the rate at which they are printing money causes the fluctuation of the dollar’s value, and is therefore unstable.
“If you start having uncertainty what money is really worth, it makes commerce very difficult,” he said.
Forbes said that the Federal Reserves tend to print too much or not enough money, which hurts the stability of the value of the dollar, and in turn “distorts the economy.”
“You can have a magnificent vehicle, but if you don’t have enough fuel, you’re going to stall; if you have too much, you’re going to flood the engine,” he said.
Gold, on the other hand, is more stable in critical economic times, Forbes said. He said that gold is flexible and that it does not restrict the economy. Additionally, he predicts that the global market will, in the future, gradually depend more on their gold reserves and less on the dollar
“I think in the next five years, for the first time since 1970, the dollar is going to be linked with [gold],” Forbes said.
Consequently, Forbes criticized Presidents George W. Bush’s and Obama’s monetary policies, and urged the Federal Reserves to manage their gold instead of printing more money.
“Don’t like Wall Street? Don’t occupy it. Occupy the Federal Reserves,” he said.
Ultimately, Forbes said that although it seems hopeless at the moment, people should feel more positive toward the country’s economy, as it will continue to improve in the following years.
“Don’t despair; change is coming,” he said.
Ardee Napolitano can be reached at [email protected]