We spoke with the president and editor-in-chief of Forbes Group. | Forbes Magazine
Rainer Zitelmann, author of the forthcoming book In Defense of the Free Market (Unión Editorial, May 2023) and regular contributor to Libre Mercado, recently met in New York with Steve Forbes, the chairman and editor-in-chief of Forbes magazine and its group of international titles. Below you can read their conversation.
Rainer Zitelmann: The U.S. has much less economic freedom today than in the past. Why?
Steve Forbes: There are two main factors that have caused the decline of economic freedom in the United States. The first is the rise of a new form of socialism. Instead of the old idea of state ownership of business and industry, modern socialists seek control by expanding regulation and interventionism. Increasingly, these politicians have made sure to endow the state with the power to determine what it can and cannot do.
The scope of regulation has increased enormously over the last century. The Trump Administration reversed it, but those four years were just a respite. Biden has not only reversed Trump's advances, but he has also increased the scope of regulation to unprecedented limits. The latest example is in the proposed rules regarding electric vehicles. Through coercion, it is intended to destroy the use of the internal combustion engine and subject the auto industry to government tutelage.
In addition to regulation, the second factor that has brought us here, and which continues to be absolutely ignored by politicians and pundits, is the devaluation of the dollar. Money is a measure of value. Just as scales measure weight, clocks measure time and rulers measure length, we need stable money to measure the value of goods and services.
The Bush Jr. administration deployed a deliberate, but undeclared, policy of weakening the dollar. Commodity prices soared under his tenure and there was also a sharp rise in housing prices. The result was the crisis of 2008-09, which of course was attributed to the free market to exculpate the governments' economic policy mistakes. Did we learn anything from that disaster? No, because the Federal Reserve and other central banks opted to continue lowering interest rates and topped it off by printing money in a frenzy during the coronavirus pandemic.
The antidotes and solutions are simple: just lower taxes, stabilize the dollar and deregulate. The Supreme Court has been making and will continue to make decisions that will help in the battle against the advance of the administrative state, but political leadership is needed. Thus, to reverse the decline of economic freedom, Republicans must win the White House in 2024.
Rainer Zitelmann: What should the United States do to reduce its gigantic debt?
Steve Forbes: To deal with the growing fiscal crisis, we must create the conditions for a booming economy, with tax cuts, spending restraint, deregulation and a stable dollar. That's what the U.S. did after World War II, when debt went from 120% to 35% of GDP. The cycle continued until the deterioration of economic policy that resulted in the abandonment of the gold standard in the early 1970s, which triggered stagflation.
Rainer Zitelmann: There is talk of Ron Desantis as an alternative to Trump. Does he represent a clearly market-oriented approach?
Steve Forbes: So far, none of the Republican candidates or potential candidates for the White House have spelled out their growth agenda as Ronald Reagan did when he ran for president in 1980. The key to Reagan's ideological platform was a 30% across-the-board cut in personal income tax rates. Well, those who aspire to the presidency of the United States today must explain in detail what they would do with the currency, how they would liberalize the economy, and what geopolitical role they would play in an increasingly dangerous world?
Rainer Zitelmann: Inflation has been rampant in much of the world lately. Some politicians and media claim that we have already passed the peak. What do you think has caused the inflation crisis and what do you think will happen next?
Steve Forbes: Rising prices have been the result of serious interference and disruptions by monetary authorities and governments that have ended up undermining the value of their currencies. Unfortunately, the Federal Reserve and other central banks believe that inflation is fought by depressing economies and impoverishing people. This is similar to what doctors did with patients, more than two centuries ago, when bloodletting was the solution offered to the sick.
Rainer Zitelmann: The European Union has banned the registration of new cars with combustion engines from 2035. For me, this is a sign that Europe is moving closer and closer to a planned economy, as politicians, rather than companies and consumers, decide what is produced. What do you think of the ban? And do you expect the United States to introduce similar legislation?
Steve Forbes: These proposed bans in Europe and also in the U.S., in fact, are part and parcel of a modern, planned, socialist economy. They are using fake science and all kinds of bullshit to justify this power grab and this assault on freedom!
Rainer Zitelmann: With capitalism under threat worldwide and anti-capitalism on the rise, what can we do?
Steve Forbes: You have to go to a practical level, argue for tax cuts and against prohibitionist nonsense as we see on a daily basis. In the U.S., I think many voters are getting tired of so much interventionism and are going to react as they did in 1980. We must emphasize that our current problems are the result of egregious government error and overreach!
This article was originally published in Spanish in Libre Mercado.