Speaker 0 00:00:00 Um, my name is Jennifer Anji Grossman. My friends know me as JAG. I am the CEO of the Atlas society. We are the leading nonprofit, introducing young people to the ideas of I'm Rand in creative ways. Today we are joined by Steve Forbes. Um, a man who needs no introduction, but before I even get into introducing him, I want to remind all of you who are joining us on zoom. I think we have a record audience, of course, Facebook, Instagram, Twitter, YouTube, LinkedIn. Uh, you can use the comment section to start typing in your questions for, uh, the chairman and we will get to as many of them as possible. So, uh, Steve Forbes is an old friend of mine. He is the chairman and editor and chief of Forbes media. He is the host of the podcast what's ahead, which illuminates the issues of the day with both quick analysis of, uh, as well as deeper interviews with leading business and economic minds. He writes the fact and comment editorial for each issue of Forbes magazine. And he has authored seven books, including money, how the destruction of the dollar threatens the global economy and what we can do about it. A book, which was the basis for a PBS documentary, which I highly recommend in money. We expressed, of course, it's two presidential campaigns promoted and helped to popularize the ideas of the flat tax sound, money, school choice, and term limits. Steve. Welcome again, thank you so much for joining us.
Speaker 1 00:01:52 Great to be with you. Thank you. So,
Speaker 0 00:01:56 As I mentioned you more than anyone put the flat tax on the map in, in your book, uh, the flat tax revolution using a postcard to abolish the IRS. You recount the experience of several countries, uh, that have adopted the flat tax more recently here at home. Some states have opted for the flat tax yet it's almost absent from the, the national debate. Uh, what, what are the prospects now of fundamental tax reform of the kind represented by the flat tax?
Speaker 1 00:02:36 Well, at the flat tax does is just get rid of the current tax code in whatever country, as you know, in the U S we have a horrific tax code, not to mention all the rules and regulations and rulings that come with it. So it probably comes to more than 10 million words. Nobody knows what Senate, not even the IRS. And so what it does just throw the thing out, just put in generous exemptions for adults and for kids. And that's it. Uh, you can literally do your tax return with a few key strokes or postcard if you still want to write, know how to do cursive anymore. And, uh, then, uh, but the thing to keep in mind is this is not an abstract idea. Over 30 countries around the world have adopted variations of the flat tax Hong Kong, uh, did it back in 1947 duration of the flat tax.
Speaker 1 00:03:23 And that's one thing that kept that economy going even after the Chinese took over in 1997. Now, sadly, that economy is going to be, uh, uh, suffocated. The freedoms are being suffocated, but the flat tax was key along with the British illegal system and enabling that, uh, barren, uh, spec, a land that has to import even water, uh, to become a global Colossus in terms of the economy, uh, per capita income among the highest in the world. So the flat tax allows people to focus their energies on productive things, rather than an, a stupid tax code. And just why I want to emphasize this. This is not just a moral issue. This is a really, I mean, they're not going to economic issue. It's a moral issue. Uh, if you go back 20 years, the IRS says we spend 6 billion hours a year filling out tax forms.
Speaker 1 00:04:16 Uh, experts say we spend two to 300 billion a year filling out these, uh, crazy, uh, tax reform, uh, forms and trying to comply with this idiot code. So go back 20 years, take over a hundred billion hours, literally trillions of dollars. Just imagine for a moment of all those resources, all that brain power, all that time had gone for new services, new products, new cures for diseases, new medical devices, how better off all of us would have been what the economists call opportunity costs huge. And, and so far it surprises me. No presidential candidate has really, uh, vigorously advocated it since I ran some of, uh, taken it up, sort of ran. Paul did sort of Ted Cruz did sort of, and, uh, Donald Trump indicated he might've been a second term, which did not come in 2020. So, uh, it hasn't happened, but I'm taking heart that some entrepreneurial Politico we'll see the popularity of it cuts across the board. And I noticed the other day, governor Ducey of Arizona put in a two and a half percent flat tax, and he wants to get rid of the income tax in the state of Arizona. So some people are clued in. I hope we can get somebody in 20, 24 to really run on it. And so we can find me free the American people to focus their energies on productive stuff. Instead of wasting all this immense brainpower, very brainy people on this crazy code, corrupt code, it brings out the worst in everybody.
Speaker 0 00:05:50 Uh, yes. And I'm not sure you know, about the brainpower over at the, the IRS, but, um, you have a plan even to liberate some of that brain power as well. And reading your book. I learned that there was at least one entitlement program that you would support, which would be a retraining program for the IRS bureaucrats, who unfortunately would be put out of work by, by the flat tax. Um, unfortunately the Biden administration appears to be moving in the opposite direction, uh, demanding 80 billion in new funding for the internal revenue service. Others are calling for a bi-partisan compromise, uh, of about half that amount. What are your thoughts about that proposal?
Speaker 1 00:06:41 Yeah. 85,000 new RS agents, just what we need. And as for the so-called compromise a rotten apple, if he cut it in half a stilt rotten, so a, whether it's a 40 billion or 80 billion, it's gross intrusiveness and a, they see this as a setting the foundation for a wealth tax. Uh, they're just not content to collect your income. Now they want to collect, uh, the tax on everything you own. And they say as usual, oh, the rate will be low. It'll only go after the rich, but just remember with the income tax, it started with a rate of 7% highest rate on the equivalent of over $10 million today. And within a few years it reached a peak then of 77%. And we've been battling that monster ever since it's like an entitlement. And when, when it comes in very, very hard to, uh, slay that monster.
Speaker 0 00:07:38 Yeah. I, I remember I was, uh, a part of the national commission on economic growth and tax reform. And, uh, one of the things that I included in the final report was data that was correlating the top tax rate since the introduction of the personal income tax in the United States back in 1918 or so, um, with the revenues as a percentage of GDP. And the most striking thing was that no matter how high or low the top tax rate went, that number, uh, revenues as percentage of GDP never really rose above, you know, 19%. So, um, I guess, you know, my question is this, this data exists. Uh, you're clearly going to get more revenue, even if that was your, your chief goal from a, a larger thriving economy, why wouldn't even, you know, spend oriented politicians want to offer for a higher growth tax code?
Speaker 1 00:08:53 Well, that's a very, very, uh, fundamental point. Uh, it shows that, uh, when you get off people's backs, people become more creative and everyone benefits from it. Uh, capitalism is capitalism is not a zero sum, uh, society. Everyone gets a chance to move ahead. And what we see here though in play is that these people who advocate all of these new government controls higher and higher taxes, they're not interested in prosperity. They're interested in power. They'd rather have a smaller economy with them in charge telling you, seeing telling you what you can and cannot do in an open society where the checks come in, but they end up going back to the people. And, uh, that's why, uh, I wouldn't mind given Congress, uh, tenfold res and the bureaucrats at tenfold res if they all went on a 10 year vacation.
Speaker 0 00:09:51 Sounds good to me. Um, out, count me in for that. Uh, well, one of the things that I find really concerning about this proposal to increase funding and easily decrease the manpower at the IRS is that there really doesn't seem to be any accountability. Um, for example, the, the recent, uh, illegal release of tax data to pro Publica, uh, I mean, releasing IRS data is, is a crime punishable by five years in person. Why, why aren't we seeing more demands for accountability?
Speaker 1 00:10:27 Well, that's right. And we've seen in the past the IRS repeatedly being weaponized, politically being used for political purposes, we saw that, remember the name Lois Lerner, uh, 10 years ago in the Obama administration, the tea party movement rose up in this country, not centralized spontaneous local groups, and the IRS just dragged its heels on giving them the approval, trying to neuter them for the 2012 election. And, uh, we've seen that with the release of these tax returns, which is grossly illegal. Why are they doing it? Uh, you read their analysis and you would think they're economically illiterate, uh, confusing wealth with income. And, uh, but no, this is part of a political agenda to stir up envy so that they'll get more support for a wealth tax, more support for, uh, hanging the so-called rich. They're the source of all your woes, that kind of scapegoating.
Speaker 1 00:11:21 And, uh, that's, what's at play here. And the fact that there hasn't been more of a genuine outcry, because if they can do it to those a high-income earners, they can do it to anybody and everybody who gets in their crosshairs. So weaponizing the tax collector, that's a real bad road to a tyranny. And that's why I wish the Republicans and others would do the be more vociferous because he mentioned compromise. Uh, they're trying to do a compromise infrastructure bill, uh, fine, not, but well take what you can, but they include increasing, as you mentioned, the size of the IRS thinking well with having more IRS agents, that will mean more revenue without having to increase taxes that are public. So that's great. They won't raise taxes in this bill. There'll be other bills coming along, which will do it. Republicans wake up. But in this bill, they, oh, no sensible tax increase. But what they do is weaponize the IRS, which means political power, again, to them power more important than revenue or prosperity.
Speaker 0 00:12:29 Um, so is it true that that Biden is, uh, is now proposing that the IRS have the capability to monitor our personal bank accounts, to monitor inflows and outflows? Uh, obviously when you're audited, that is when you have a legal obligation to make all of your financial data available. But I mean, to have the IRS being able to monitor what we earn, what we spend, I mean, that that's really terrible, terrifying.
Speaker 1 00:13:02 Yes. And, uh, you would think that, uh, especially younger people who, uh, say they prize their privacy, uh, would be up in arms about this and tweeting and using social media to denounce it, because this is just an open invitation again, for a wealth tax and for political control tyranny, knowing everything you do. Uh, why did you buy that piece of jewelry? Where did the money come from? So that's why they want to go monitor your inflows and outflows, not just in your bank accounts, but every other financial accounts, you have your brokerage account and everything else. And, uh, the next thing they'll want to do as a permanent power is to come into your home without a warrant, any time to make sure you're not hiding event gawk painting or something like that, escaping the wealth tax and depriving the people. When you hear politicians talking about, we are here to help the people know they're here to help themselves at the expense of the people. So,
Speaker 0 00:14:01 And I want to encourage those watching, um, to please go ahead type in your questions. This is an amazing opportunity to have this hour with, with Steve Forbes. So let me know your questions. We'll get to as many of them as we can, but just more broadly. Uh, Steve, what are your, what's your assessment of the Biden administration so far? Um, not just with regards to taxes, but you know, you'd also include us. One of the things that I find most disturbing, which is the call for a global minimum tax needs to be that forming cartels and fixing crisis, uh, was a crime, but also monetary policy. What, um, what are your chief concerns?
Speaker 1 00:14:51 Well, it seems that this administration, if they got in a back room and plotted to say, how can we undermine the United States? How can we make it weaker? How can we throw away this great advantage we have in the innovation productivity, uh, that, uh, people from seemingly obscure backgrounds rise up and do great things. How do we crush that? And you would come up with their program, uh, doubling the capital gains tax. That's not designed to increase revenue. We know from experience, every time you increase that tax, you have less revenue. Again, it's about control. You can't do anything without a Senator Warren's permission and stuff like that. So they keep creating these agencies. They want political control. Now, the Biden administration in terms of what they're doing, they know on the one hand, if they raise a say business taxes a lot, uh, guess what'll happen to the Capitol as a Walter Rich wrist in the late great banker once said, and others have echoed it, uh, capital goes, that's just not money it's people too.
Speaker 1 00:15:55 As we see in the United States goes where it's welcome and stays where it's well-treated. And so they fear that the money will somehow seep out of the U S so they figure if they get a global agreement, then everyone raises taxes, minimum tax. That way they'll collect a lot of taxes. The economy will not be affected. The economy will not be hurt. They tell us, but they'll make sure they collect a lot of money to help we, the people. And, uh, so the result would be stagnation. And so you couldn't design a program to a better debilitate, an economy than what they're designing. And in terms of, and in terms of new businesses, we, one of the great advantages this country has had vis-a-vis other countries is the number of new startups, the number of new businesses we get each year, uh, Carl Schramm, who studied these things for Kaufman and others of calculates in the 1980s and nineties, the us started 800,000 new businesses a year.
Speaker 1 00:16:55 Then it went down and down and down about 400,000. And the last few years started to move up again till COVID came along. But one of the great advantages of the United States is that we create about 50 to 100 new, big companies, every generation, uh, not just big companies, getting bigger as you see in Europe, but because of the breadth of our capital markets in Europe, most of the capital in many Asian countries, most of the capital comes from the banks, which so you don't get this kind of diversity of sources of capital specializing in various aspects of the economy. Uh, as you know, you have various stages for VCs now, very sophisticated system. And so you don't get that in Europe. So you, you take the biggies of today, uh, Google, what they now call alphabet, uh, twenty, twenty five years ago. If you said Google or alphabet, you'd think Gale alphabet, you learn that.
Speaker 1 00:17:49 And when you're four and a Google, some big number, huge giant company that we now fear, we must bust up, or you take a Facebook. That was something you had in college, a little book of the faces of the, of the incoming class now, a giant company. But the key thing is if you have true free markets, you get, uh, like a flowing stream or river, you constantly get new and better things. And I'm old enough to remember when general motors was a big, bad company and got to get an antitrust to bust it up because it's so big and powerful, mighty some industrial comp company in the world. Well, we saw it happen to GM. IBM, same thing in the 60 seventies, eighties, oh, I gotta go after this Mon monster. Well, by the early nineties, IBM had one foot in the corporate graveyard with the rise, first of a mini computers.
Speaker 1 00:18:43 And then, uh, the, uh, personal computers, especially when they are networked in the mid 1980s. Now IBM's a formidable company today, but ain't nothing like the boogeyman. It was, and he has 60 seventies and eighties. And, uh, you, you remember Walmart was once the big, bad company exploiting and doing all these evil things, then suddenly it became the David against the Goliath, Amazon. So if you have these free markets in ways that people cannot anticipate, if we knew it was coming, then it would already be here, but we don't know the future. We don't know how these things are gonna unfold. And so, uh, that's what, uh, makes an economy dynamic and, uh, may, uh, strike central planners is very messy and all that sort of thing. But, uh, creativity is, is not a straightforward, clean thing. It's trial and error. George Gilder and Tom have made the point.
Speaker 1 00:19:38 I asked the question, what is the difference between us today and people in the stone age, same human body, same planet, same resources, same appetites difference between them and us as we know, more, more knowledge. And so you can have terrible physical events, you know, wars or natural disasters. But if knowledge is not lost, you can quickly rebuild and move forward. Classic example, world war two tens of millions of people killed young people, creme of generating of a new generation, a wounded, or killed a massive physical destruction, including two nuclear bombs, uh, set off and people thought, God, it's going to be a generation or two before we recover within a handful of years, thanks to U S military security, which gave people the confidence. They weren't going to get overrun again, within a handful of years, Western Europe and Japan exceeded pre-war levels of production, miraculous.
Speaker 1 00:20:37 Why? Because knowledge was not destroyed. And how do you get knowledge? Once you make sure you don't lose the knowledge you have, which we've done on money policy, which we can get to, but also new knowledge, whether in the marketplace intellectually, and that comes from experimentation with a lot of failure, but you learn, you learn by trying. And then when something's invented, you keep improving it. The learning curve, which is why, when countries like China came up, oh, they invented this. They invented that, but they did not have an economy. They didn't have a society that allowed for the development of these things. There were five, none of these things, the expansion of the use of these things. So just to close out on that, if you'd said 20 years ago, grandma could operate a supercomputer. Uh, you'd have gotten, uh, some rather strange looks, well here we have grandma today I'm of that age grandpa.
Speaker 1 00:21:28 And, uh, you have a handheld smartphone, whatever, whatever you want to call them, power of a supercomputer. And we take it for granted that we have the whole world at our fingertips. I'm old enough to remember card catalogs and libraries and physically look up things. And we get so spoiled by it. We think it's the most natural thing in the world to be able to call up everything at our fingertips. So you place a call to outer Mongolia. It takes more than five seconds. Say what a piece of crap this is, you know, give me something new. It's amazing. And there's more to come, especially on the healthcare side.
Speaker 0 00:22:03 So state, you said that, you know, we can't predict the future. We can't notice nature. And yet as an economic prognosticator, you've, uh, you're the only writer to have won the prestigious crystal owl award four times. So a lot of people are wondering about the future in terms of inflation, given you know, the huge amount of money, uh, that's been printed and the unprecedented government spending the Larry Summers, um, warning about, uh, Biden's policies and, um, and the effects on, uh, the dollar. So how worried should, should we be? And in what safeguard should individuals take to protect themselves against, uh, inflationary risk?
Speaker 1 00:22:55 Well, the thing to remember about money is money is not wealth. It's simply makes it easier for us to buy and sell with each other. You know, you go to a restaurant, you check your coat. What do you get? You get a piece of plastic or a piece of paper worthless in and of itself, but to claim on a real product, same thing to a ticket, to an event, maybe ellipses on your handheld or a piece of paper, but again, a call on a real product. Well, money is all purpose, uh, an effect claim, check on products and services you produce. And, uh, that way you don't have to worry. I don't have to worry if Jennifer Grossman wants this or that, or the other thing we can still do transactions with each other. Strangers can do transactions with each other. So, uh, and so it enables, uh, short-term investment long-term investment increases social trust between, and it creates the kind of levels of a cooperation, or which allows for these massive supply chains, intricate supply chains that make these handhelds possible hundreds of thousands of parts from all around the world, coming together without some czar in charge.
Speaker 1 00:24:01 There's once a great story of, uh, in, in the 19, I think it was fifties. Uh, somebody from the Soviet union came out to Iowa and, uh, they showed how a great the Iowa was in terms of producing these products and then getting to market and all that. And the guy asked from the Soviet union, well, who, who who's the commissar who's in charge? He said, nobody, you found that incomprehensibly mean nobody's in charge. How do you make it happen? Ha, well, it does happen. It does happen. So on the money side, they now think that if they manipulate money, which is a measure of wealth measure of value, that a, they can somehow create instant prosperity. It's like a new diet, put 32 ounces in a pound. You lose half your weight. Oh my goodness. What a miracle? No more obesity. Well, we know in that simplistic case, that's nonsense, but the same is true of money.
Speaker 1 00:24:57 You manipulate money, not tied to something, uh, of stable value. I E gold has been the most reliable one, not perfect, but most reliable one over time. And Meraki's things happen. So to get you a quieter where we are now, the federal reserve started to create too much money. Even before the pandemic, they created boatloads last year. And then people underestimated the huge disruptions that came. When you shut down, arbitrarily overnight a significant amount of the economy. It's not like a light switch. You just don't turn it back on. Again, takes time to sort it all out, something that's complex. And so what we see today though, is very interesting. The federal reserve, even though they say they're still printing money, they've stopped. They're using a gimmick. I don't know how long they can do it, but in effect what they're doing, they just to confuse not to confuse.
Speaker 1 00:25:52 But a few years, if you're, uh, viewers want to impress people at a cocktail party, say the fed has been using reverse repos to, uh, try to reduce the inflation. Uh, current, current inflation. What's a reverse repo. It's a fancy word for the fed borrows money from banks. Short-term money, overnight money and using treasury, uh, securities as collateral. They call them repos, reverse reposts. Anyway, what the fed has been doing, creating money on the one hand with their bond purchasing programs, you always hear about all 80 billion of treasuries and 40 billion of mortgage security, 120 billion a month. Ah, well, the fed has gone around and neutralized it, sterilized it by borrowing it back from the banks, but only doing it short term, how long you can do that game. I don't know which like taking a, go to a pool, pouring a bucket of water in one end, then going to the other end of the pool and taking a bucket of water out. It's the same. So that's why I haven't seen gold go up, but how long they can continue these games, all of these spending bills coming down the pike. A very, very good question. That's what worries me is not just what's happening now. We're paying the price for the <inaudible> that happened in the last year, year and a half, but, uh, where we we've got some bad things, uh, possibly bad things coming. That's what you should be worrying about. So
Speaker 0 00:27:12 I have a lot of other questions for you that we have many, uh, very interesting questions from our audience. Um, some from smarter minds, uh, certainly smarter economic minds than mine, including our senior scholar, Richard Saltzman. Um, and he asks, have you been surprised that so much money in public debt has been created since 2008 yet inflation rates and bond yields have stayed low. He says, fans of modern monetary theory are gloating free lunch.
Speaker 1 00:27:50 Uh, yes. Well, they think they've found the magic way to, uh, uh, it's like alchemy. They thought if you could create gold and a laboratory, create all of this instant wealth, not realizing, correct golden laboratory easily, the value of gold would go down. There's no getting around. You have to produce products and services to create wealth, create new things. So, uh, what modern monetary theory is, it's a, the, the belief in magic that, uh, you conjure up money. You spend it and wall off good things happen, but you don't need, uh, Stephanie Kelton who is, uh, grew on this theory of magic money, uh, makes the case. You could almost say you don't need taxes. You just, uh, conjure up the money out of thin air it's there while off I order it, therefore it's there. And, uh, but what has happened since 2008, one after 2008 banks realize their balance sheets have gone badly out of whack.
Speaker 1 00:28:50 They, instead of having a lot of reserves, they thought they could do a lot of borrowing, a lot of leveraging, which would mean a bigger profits, but also it meant when times were bad. Ooh, you, you, you get squeezed so long story short, what happened after 2008 was that when the fed created all of this money, it sterilized it like they're doing today with repurchase re reverse repos. And, uh, so all of that money, most of it went to, uh, with frozen, at the fed as bank reserves, they've paid banks, a little bit of rate of interest. So they created the money out of thin air banks got the money and they are in effect, told don't lend it, uh, lend it back to the fed, put it, park it as reserves you'll have instant free money, no, no risk at all. Okay. That sounds like a good deal.
Speaker 1 00:29:39 And so the, and so they, that's how the fed enabled banks to rebuild their balance sheets. They thought, but that was a one-time event, one time event. And then you had to, Richard would know this Basel three, Basel's a place in Switzerland, but, uh, the, the bank regulators got there years ago and came up with formulas to try to have international standards for bank solvency. And, uh, so anyway, Basel three is over. So the banks were, uh, loaded with reserves now. So what happened after 2008 was a one-time event. The money was deep freeze. Just think of it, of putting in the refrigerator and then not letting it go out in the economy. Now this time they're trying gimmicks like, uh, okay, we'll create the money and then we'll borrow it back again overnight. And so that's why you haven't had the big inflation hit, even though it looks like the, the, the bank reserves are in the, what they call the monetary base, which is just currency in bank reserves have exploded. Well, they've made sure they dammed it up, but at some point with all that they're doing, we're doing other countries doing that dam is going to start to seriously leak or break. And that's what we have to watch out for.
Speaker 0 00:30:51 All right. Professor sells men who, in addition to being a senior scholar with the Atlas society, uh, as you know, is a professor of economics at duke asks a follow-up, which is that a supply siders rightly focused on a fair or lower tax rate, but shouldn't, they also focus on drinking government spending, which is the real burden on the economy. He says they rarely do. So your thoughts,
Speaker 1 00:31:20 Well, we all want lower tax rates, but, uh, I think a Milton Friedman put it very well years ago. Uh, the shows home things have gone K-wire since he made that statement, he said, he'd rather have a $2 trillion budget that had a $1 trillion deficit that he'd rather have a $1 trillion budget with a, with a big deficit, rather than $2 trillion budget that is balanced because the key thing is how much money is the government sucking out of the economy. And so whether they do it by taxation, borrowing or inflation, which is a form of taxation, they're sucking that money out of the economy one way or the other, despite what modern monetary magicians think, uh, white, black, white, right. To the contrary. And so in this case, in this case, uh, they, uh, they, they truly believe that, uh, uh, there, there are no consequences to this.
Speaker 1 00:32:18 So again, it's not just the level of indebtedness or the deficits, it's how they're handling them. And, uh, this is a very important point. Switzerland, if you look at the money supply of Switzerland, you think, oh my God, this is Argentina, run a muck, a hyperinflation. Now, why is there a large money supply vis-a-vis is a Switzerland's economy because people trust the Swiss Franc it's been better managed than any other currency in the world in the last hundred years. So people like to hold it so demand for it goes up. There's no such demand for the Russian ruble or a Zimbabwe, whatever their currency is, they keep changing it. But, uh, with, uh, with the, the Swiss Franc yes, small economy, but people love that Frank, they see it as a stable source of, uh, uh, value. And so therefore they don't mind holding it.
Speaker 1 00:33:15 So, uh, again, the key thing is, is the fed going to monetize now, uh, if assuming these massive spending bills go through, are they going to, you know, in effect, print the money and if they do, how do they propose to neutralize it and not have the interest rates go up? So to go back to these, uh, what they're doing now in the pool, you know, doing the bucket game, pouring in a bucket and then taking out a bucket of water, uh, at some point that game is going to, uh, come to an end. And, uh, we'll see what other gimmick they come up with to try to, uh, what that is in effect is what you might call a backdoor backdoor. Uh, tapering tapering is one of those words. The press loves at the federal reduce its bond buying and therefore raise interest rates. Well, the fed has already tapered, but they're doing it by borrowing short term and how long those games can go on. I don't know, but I know those games eventually and, and not, well,
Speaker 0 00:34:16 All right. We've got a question from Alan. <inaudible> very generous donor to the Atlas society. Good to see you here, Alan. And he's asking, given the exploding federal spending, does that the, does that impact or change the rate that you'd recommended in terms of, um, the flat tax rate?
Speaker 1 00:34:38 Uh, well, the flat, when, when you put in the flat tax, what you want to do is make it simple, obviously, but get the rate as low as you can. I thought we could do it at 17. Some may be jiggered to get 15 or 14 or 18, but the key thing is to get a below 20, uh, that seems to be a, a good rate to keep it under in terms of, uh, maximizing, uh, people's ability to move ahead. And, uh, so, uh, in terms of, uh, what has been done again, the key thing on the spending, it's not just the level of the spending. The key thing is preventing a bunch of new entitlement programs that Biden administration wants to put in. Because as we've mentioned, the two of us have mentioned once that entitlement comes in, it always starts small, but it explodes and is impossible, very difficult to get rid of.
Speaker 1 00:35:32 And that's what, uh, we have to do no new entitlement programs. We can fix the abominations they do on taxes. We can fix what they do on regulations. We can fix even their spending binges. Those things can be fixed, but entitlement programs extremely difficult. So, uh, if they wanted to do a one-time spend of sending people another thousand dollars or 5,000, but no new entitlements, I'd take that as a good trade because the, uh, the, the, the check is a one-time event. It's not permanent. It's the permanent stuff we have to watch out for. So in all of this, palava about compromise on this, uh, crazy stimulus bill so-called and other things keep those new entitlements out, and we can fight another day.
Speaker 0 00:36:21 David Hurwitz, another, uh, Atlas society supporter, uh, asks if the capital gains taxes are raised, uh, will people be less likely to pull their money out of the stock market, particularly when capital gains tax is as a major consideration in protecting your investment?
Speaker 1 00:36:42 Well, when they raised the rates, the reason that the revenue goes down is because selling at least so far, we'll see what these tyrants try to do is an optional event. That's why they want the wealth tax, because they know people may not sell their assets so they can't get their hands on it. And they're trying to find more ways to get their hands on what you've created. And by the way, on that, on wealth, just one side on that, these, you remember the cartoon character, Scrooge McDuck, this big character with his money, been piles of money, coins, and jewels and gold and stuff like that. That's what these people think wealth is. You just go and scoop up the money, scoop up the cash. Whereas, you know, most of the wealth, very small part of people's wealth that we write about and others write about is made up of cash.
Speaker 1 00:37:36 Most of it is an asset, a business or something like that. And if you have a hostile environment for people trading with each other, those values go down, they disappear. Poof. So if you destroy Amazon overnight, 140 billion of Jeff Bezos money goes away. It, uh, it just goes in the air, the ether poof, gone what's happening on the market goes down. So when they raised the, the, the capital gains tax, yes, people won't sell as much, but it also freezes capital in current or old investments. So you may want, at some point to sell an old asset, somebody wants something more cautious because the risky startup is now a stodgy old blue chip. You want to put the money elsewhere. It freezes it. So it, in fact, ossified in the economy and they don't mind ossification because they will be in and we see in countries like Cuba. Now the ossification, the rot can go very, very deep. And the regime doesn't care.
Speaker 0 00:38:48 Yes. So all of those people protesting lack of vaccines, just like the protests against the German measles brought down the Berlin wall. Um, okay. I was hoping we'd get a question like this. Uh, Jeff Ganesan has done the favor of introducing it into the debate here. He is bringing up the sales tax. He's saying, you know, the argument that you've heard many times flat income tax, uh, is still an income tax. Um, and that he says it won't eliminate the IRS, uh, only the fair tax, the national sales tax. So thoughts on, on that, you're
Speaker 1 00:39:31 Arguing if you have first as a, just as a general rule, if you have a national tax, you're going to have to have agents to, uh, run it and to monitor it and to collect it. Now, the size changes, obviously. Now, if you want some sort of national sales tax, whether like we have on the state level or a VAT, or what Canada and others called general services, tax, whatever name you want to give to it, you first better get rid of the 16th amendment to the constitution, which allows the income tax, because I guarantee you, they say, well, go away. Yeah. But if you don't have that constitutional change, in fact, in a new amendment saying, you can't impose an income tax, unless you get a new, new, new amendment, I guarantee you get what most states have in most countries, almost all countries have as both an income tax and a super sales tax, which leads to all the stuff that the socialist promise us that is free, all the free stuff.
Speaker 1 00:40:35 How do they pay for that free stuff? Well, the income tax is one. One of the key is especially in Europe, the vet in other countries, what they call the value added tax, which is a super sales tax because it hits every stage of production. And in most countries, the rate is 20 to 25%. So if you want to go the next time you go buy something, just add 20 or 25% to it and to see how you like it. And the other way they raise the revenue is through payroll taxes. Now we have a payroll tax year, they call it FICA to sensibly pay for social security. And for Medicare in this country combined, uh, worker, employee and employer tax is 15.3% tops out. I think at, uh, for the social security part, which is I think a 12.4 tops out at 130, 8,000 or something, the Medicare taxes forever it's on all your income.
Speaker 1 00:41:35 But, uh, so just keep that 15.3% in mind in Europe, typically payroll taxes run from 25 to 50%, 40 to 50% is not unusual in these countries. And so, uh, that's a job killer. So if you want to pay three times the FICA tax, more income tax and have a nice 20 or 25% sales tax, politicians will give you a lot of free stuff, not, and by the way, on free healthcare, our health care system, by the way, is not a free market. Now, the subject faster and the time, but the way they control the healthcare budgets, how do they do it rationing either through waiting or you don't get the care. If you need kidney dialysis in Britain and you're above a certain age, get never get to the head of a line. They just let you die. It's rationing. And we don't have to put up with that here.
Speaker 2 00:42:40 Right?
Speaker 0 00:42:41 We've got, uh, questions coming in from across our various platforms. We have one from YouTube. Scott asks provocative question. I think it's a fair one. Um, he asks, has libertarianism been too weak in standing up to critical race dogma so far?
Speaker 1 00:43:04 Well, you'd have to ask a formal libertarians that I think everyone recognizes that a what is happening here is taking Marxism, which was once about class conflict and seeing that as the whole thing of the world now, uh, you know, dividing us by class, even though you have a, you know, in the real world, you have a considerable mobility in a free market and this case it's by a race. And the idea that after all the civil rights movements that everyone's now going to be judged by race, that you must bear either have certain advantages or stigmas because of the color of your skin. Not anything you've done, but just because of the way you're born, that sounds like medieval Europe and some of these totalitarian societies, or what's happening in Cuba. If you're not part of the, uh, military or communist party elite, you just suffer.
Speaker 1 00:43:57 And we want that kind of system here where it's not you, but, uh, how you look that determines, uh, where, where you stand in society and get in society it's repulsive. And so it should defend. And I think it does offend almost everybody across, uh, whatever spectrum you want. And I think that's going to be one reason why this whole cancel culture stuff. Give me one reason why, if the Republicans don't blow it and the Republicans do try to blow elections, they, they, they really have made a fine art of it. It's why they call the stupid party. But anyway, the Republicans, uh, find ways to keep the stupidity in check they're going to do extremely well. And that's one reason why they almost took control of the house this past November, precisely because people did not like what they saw unfolding. And they were really not just offended, but fearful of what this would mean.
Speaker 1 00:44:56 And by the way, I just love this rise again in the school choice movement, which has sort of just been making glacial progress over the years. Suddenly it's not just school choice, it's education savings accounts, where the government money goes into the parent's account. The money follows the parent and the student, not the school. And the Republicans should hammer that home. Your prospects for a decent education should not be limited by your zip code. Throw that at the unions. They have no answer for it. Give us more money, but don't teach. Don't expect us to teach you.
Speaker 0 00:45:34 Exactly. All right. We have, um, the chairman of the Atlas society, Jay repair, joining us, and he is circling back to one of your previous, um, comments he asks what will be the indicators that those policies of creating money, borrowing it back. And the repo, uh, is approaching the end of their elastic limits. And reality reveals the, the economic truth. What should we be looking for when you say that that game is going to be playing out and, uh, but it won't eventually end well,
Speaker 1 00:46:12 Uh, well, first don't underestimate their, uh, ability to come up with new games and new gimmicks to, uh, keep this thing going. Cause they all know what will happen. I mean, imagine 17 trillion, I think a bonds with negative interest rates floating around the world. It's insane. So the thing to look at is the old, you don't even have to look at what the fed is doing with first reverse repos or the amount of money the treasury department has on deposit. The federal reserve, just looking at the price of gold. Now, uh, in recent years, uh, went up about 50%. But when the fed started to play these new games, it sort of stalled it around 1817, 50, 19 50. So, uh, just look at the price of gold and that starts to move up. That's a sign that their ability to do gamesmanship is perhaps coming to an end or people are just losing confidence.
Speaker 1 00:47:06 So it's not just a number per se, looking at a specific metric it's people might say, I don't want to be part of this game, which is what happened by the way, in 2008 was when people began to suspect the value of all these mortgages, which came because of the weak dollar. Yeah. The government was encouraging this bad stuff, but the weak dollar, you saw gold zoom up, you saw silver, move up, all commodities, move up and hard. Asset of houses moved up. This gets to something very important. When you, when you, when you do that, when you distort the money, that's like a virus in a computer corrupts, the information economy cannot operate without prices that tells us what's valuable. What isn't valuable that enables us to do billions of transactions each day. And so on the housing prices started to go up in the early two thousands people thought, well, that must mean there's a shortage of housing.
Speaker 1 00:48:00 No, it was artificial. It wasn't so much the houses were becoming worth more. It was the dollar becoming less valuable. We saw the same thing in the seventies and oil went from $3 to $40 a barrel wasn't it we're running out of oil, was the dollar was getting weak. So when people lose confidence in, in 2008 and around the fall, things, things were starting to get edgy starting in the fall of 2007. But in the fall of 2008, suddenly people for a variety of reasons said something's wrong here. And as you know, banks borrow each day, hundreds of billions of dollars, overnight money, which we talked about and suddenly the dealer would say, Hmm, I want 1.3 billion of securities for those mortgages. Instead of the usual billion to lend you 999 billion. Now I want 2 billion, or I'm only going to lend you 500 billion instead of a B the market froze up. Then you had a full-blown financial panic. People just said, get me out of here.
Speaker 0 00:49:09 All right. Uh, professor Salzman asks, essentially, if I can paraphrase, how would a president Steve Forbes respond to the recent antigovernment protests in Cuba and any perspective on the current administration's response?
Speaker 1 00:49:30 Uh, well, first of all, I would say these are potentially real refugees. And we have the means, unlike poor Jimmy Carter, who was clueless when you had a big wave in 1980, they couldn't determine who were the good guys and the bad guys. Well, we have the capacity to do that, but say, we know there's a human crisis building up here. You are welcome. You are a definition of a refugee. You're the definition of somebody fleeing potential torture and death. So let, let, let, let's get our immigration things straightened out for starters. And it takes more than words. It was nice that Biden said a words supporting their saying, and we love the protesters, even though part of his party loved communist governments, like the airs of Fidel Castro. Uh, uh, that that's one thing you can do. Another thing you can do is put on sadly, uh, the sanctions again, uh, hate sanctions, but they, unfortunately in Cuba, all that money goes to the government and the elites who was steal the money.
Speaker 1 00:50:33 When you have tourism, that money does not go to the hotel workers or the guides or anything. It goes all to the government. Cuba sends as you know, uh, personnel, uh, medical doctors and nurses and medicines to other countries for a fee, of course, who collects that fee, not the doctors and nurses. It's the government pocketing the money. So sadly, we got to make it clear that, uh, this is a moral issue. And at the same time, let's start to two other things. One is go after the bank accounts, freeze, the, uh, illegal, uh, gotten gains. We can track a lot of that money. So these characters, no, we, we, we, we identify and we sanctioned and say, we're gonna do everything we can. You're not going to get your ill gotten gains. The other thing we should do is ramp up the technology to get through the broadcast of radio, Marty and TV.
Speaker 1 00:51:27 Marty. I headed up the oversight agency of radio for Europe and radio Liberty. During the 1980s, I saw firsthand the power of ideas, breaking the monopoly information. That's why China has hundreds of thousands of people working, trying to control the internet equivalent in Russia. They know, uh, the free flow of information breaking that monopoly is deadly. So let's, uh, overcome the jamming that the, uh, uh, Cuban government does and get the truth in there. And that, uh, not only gives a dissident hope because they know they're not alone, but also undermines the legitimacy of the regime. And one regime is seen as illegitimate again. That's why a country like North Korea tries to, uh, uh, seal off any kind of outside influences because they don't want people to know <inaudible> is not seen as a legitimate, it eventually crumbles. So no, we don't send in the Marines, but there's a lot we can do to help the Cubans and undermine the legitimacy of this odious regime.
Speaker 0 00:52:28 Yeah. I thought what you just said about, um, sanctions is really, really interesting, um, as you know, libertarians who would tend to want to encourage free trade, but when the money is going directly to prop up and legitimate dictatorial regime, um, that's, I think where we draw the line and that's one of the reasons I was very disturbed to see the Biden administration, uh, relaxing sanctions on Venezuela because, uh, Cuba has relied on aid from, from Venezuela, from the Venezuelan regime, um, and, uh, you know, uh, any, any increased revenues that, uh, that are going to be flowing to Venezuela because of these loosening sanctions are unfortunately going to find their way to the Cuban regime at the time when they need them the most. So,
Speaker 1 00:53:24 Unfortunately, one of the things Cuba has done is rent out its forces, armed forces, and it's a secret, uh, security apparatus to other thugs around the world. And the, uh, security in Venezuela is now controlled by the Cubans. They run the, uh, interior ministry in Venezuela. So in effect, Venezuela is now a colony of Havana. They run that place. Yeah.
Speaker 0 00:53:49 Uh, well, we are going to be drawing to the closet, got about six more minutes. And I did have a couple of questions that I, uh, wanted to ask you of my own, but, um, we haven't really, I think thoughtful question from YouTube, uh, less still asks, what sort of voluntary aid mutual aid do you think is possible under laissez-faire capitalism? Well, one of
Speaker 1 00:54:16 The things you never know from the way economics and Marxism is taught is that capitalism, free markets, whatever free enterprise, whatever name you want to give to it encourages humanity. Why? Because how do you do well by meeting the needs and wants of other people? Oftentimes a Steve jobs said he doesn't do marketing surveys because people don't know what they want until he shows them. He liked to say, but you put something out there and people like it. You do well. They do well because they're getting something they didn't have before. And so it encourages people to work together without you even realizing it, you may not love your neighbor, but you sure want to sell to your neighbor. So you try to figure out how do I persuade you to buy what I'm offering? What, what, what, how, how do I persuade you? Which means you interact with people.
Speaker 1 00:55:09 And so in terms of a charity philanthropy, how was it the United States, which is the most commercial nation ever invented also be the most philanthropic nation. Uh, people say, well, those are two opposite poles. No, they're two sides of the same coin meeting the needs and wants of others. Now, maybe the skill sets are different and things like that, but meeting the needs and wants of others. And one of the things that was undermined, uh, to a extent by the great depression was that previously what they called a mutual aid societies, friendly societies, whatever name you want to give to it, uh, on the local level, people came up with ways of helping people. And, uh, it was expected that if you were helped, if you could, you know, if you weren't, uh, injured or disabled, if you could, you would reciprocate by, uh, one helping yourself and then contributing to the community mutual obligation, a sense of mutual obligation in a free society. That of those though, those kinds of relationships are very rich. And when Tocqueville visited this country, you know, he marveled at what do you call voluntary associations. People
Speaker 3 00:56:16 Voluntarily coming together for all sorts
Speaker 1 00:56:18 Of things. Well, there's fixing something, uh, professional sporting associations, raising some funds to get a schoolteacher in and by golly, even without a public school system, uh, we had the highest literacy rate, one of the highest literacy rates in the world, communities on the frontier, figuring they got to do it. And by golly, they found a way to do it. Not perfect, but humanity's not perfect. So if you want the best of humanity crooked, though, humanity may be in terms of, we're not perfect. We have a human nature is not change. You want free markets where those mutual obligations grow and nurture
Speaker 0 00:57:00 Yes. And left. Phil. I'd also say, uh, think about the displacement effects that happen when you don't have laissez Faire capitalism. When you have social engineering, when you have welfare programs, when you have these kinds of entitlements, people say, oh, well, somebody else is taking care of grandma. Somebody else has taken care of the neighbor's kids. It's not my problem. And so those kinds of civic society, muscles get vitiated and, uh, and having, um, a situation in which we'd be taking care of ourselves, taking care of each other, I think would do a lot to encourage the kind of voluntary association that, that we all want. So we are, we got two more minutes, Steve. Uh, I wanted to ask you maybe one question from my list, which is you've run a media empire, you've run for president. You've raised five spectacular young ladies. Uh, you've written seven books, uh, produced a documentary as someone who's accomplished so much. What is left on your bucket list?
Speaker 1 00:58:08 Well, coming to your event on November 4th, I'm so excited. Okay. And, uh, the, it never ends. I do a webcast. So I do at least three short ones a week, uh, mentioned earlier, I'm working on a documentary on Calvin Coolidge, a great president because he realized the presidency is not having a strong man in there, but creating conditions for the American people to achieve greatness and doing a book sadly on inflation, much misunderstood topic. But one sadly, we're going to hear more about, and I'm an optimist, an anxious one, but if people want, uh, some, uh, slogans, how about the four nos? No new taxes, no new spending, no new entitlements, no expansion of the IRS and a fifth one for the federal reserve behave itself to
Speaker 0 00:59:03 Quote Austin behave. So, uh, wonderful. Okay, Steve. Well, you made my day. I think we've got it in under an hour. This system spectacular. Everybody. You heard it. Steve Forbes is coming to our gala on November 4th and Malibu. So we'll put the link in, uh, in the platform there, check out the Atlas society. If you liked this kind of interview, if you like the work that we do, please consider taking advantage of that tax deduction while it still lasts before Steve gets his way and it's gone. Although we know that you would be supporting us anyway, support the Atlas society and, uh, definitely go check out the, um, the documentary on money and pick up Steve's latest book on money. Thank you so much, Steve forward to seeing you before long.
Speaker 1 00:59:57 Thank you. By the way, with a flat tax, you'll have more money to give. Then you deal with the current system. All right.
Speaker 0 01:00:03 And we know where you guys are going to give it.
Speaker 3 01:00:05 I think you thanks. Bye. Have a good one.