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Steve Forbes gives economics lesson in Lehigh Valley

By Stephen Althouse, WFMZ.com Reporter, news@wfmz.com
Published On: Apr 18 2013 11:18:00 PM CDT
Updated On: Apr 19 2013 06:41:48 AM CDT
Steve Forbes

Steve Forbes

EASTON, Pa. -

While Steve Forbes is well known for being one of the first mainstream advocates of a flat tax, his ease at charming audiences is much less understood or appreciated.

Make no mistake, Forbes knows the first law of communication: It’s not what you say but what people hear. 

And Thursday night the editor-in-chief of Forbes magazine and two-time Republican presidential candidate gave the people what they paid for as he weaved an informative and thought-provoking narrative about economic theory at the State Theatre in Easton that could have earned him another shot at guest hosting Saturday Night Live.

Imagine, Forbes said, if the government was in charge of food production.

“We wouldn’t have to worry about obesity because we’d all be starving,” he deadpanned with the timing of a comedian.

And who among us would ascertain Forbes’ hidden knowledge for ditching a disastrous date?

“Start talking about monetary policy and the evening will be a very short one," Forbes said with a wolf's grin. "You will never see that person again.”

But the punchlines by Forbes’ own admission were “rewards” for sticking with him as he sliced and diced the national and international economy.

The good news, according to Forbes, is that things are improving, but not nearly as much or as fast as they should.

“This 2 percent growth is nonsense,” he said with tinge of disgust in his voice. “It should be 6 percent.”

The reason for the 4 percent difference is what Forbes’ anointed as four “headwinds” that are marginalizing financial growth.

One is the aforementioned monetary policy and the Federal Reserve’s penchant for manipulating interest rates that causes “crazy” swings in the value of the dollar to the point it is so inconsistent and unpredictable that it throttles investment.

His solution?

“Go back to the gold standard,” he said, in which the value of the dollar is in direct correlation with the amount of gold the United States has on hand.

Another impediment to a roaring economy is spending, as in there is too much of it going on in Washington, D.C. and various places in between.

“We are consuming more wealth than we are creating,” Forbes said.

And of course taxes got a mention as the third reason the economic engine isn’t humming. His analysis on this subject was very simple: The lower the tax rate the more growth there will be in the economy. The higher the tax rate the less growth there will be.

And it wouldn’t have been an evening with Steve Forbes if he didn’t push for a flat tax.

“It’s simply a monster that can’t be reformed,” he said of the current tax system.

And fourth were government regulations, which Forbes said dulls the blade of the free enterprise system carving out new growth, new products and new demands.

Despite all that, he noted that he did think things were fundamentally going in the right direct, if for no other reason that the free market and free societies eventually right wrongs and adjust accordingly.

Noting that it’s going to be rough for a few years, he said that it takes courage to invest when the going is tough, but down the road investors and  innovators will reap the rewards when the economy turns and Forbes said it will turn in the next few years.

“I’m optimistic,” he noted.