To revitalize the economy, the U.S. needs to return to a gold standard and simplify the tax code, Steve Forbes ’70 said at a lecture in McCosh Hall March 10.
Forbes, the chairman and editor-in-chief of Forbes Media and a two-time Republican presidential candidate, returned to his alma mater for an event sponsored by the James Madison Program in American Ideals and Institutions. He told the audience that the recent economic decline was not the result of free market capitalism, but of flawed monetary and tax policy.
“If the Federal Reserve does not supply enough money to meet the organic or natural needs of the marketplace, you’re going to stall the economy. If it prints too much money, you get the economic equivalence of flooding the engine,” Forbes said. With the right amount, he continued, you have the chance to grow.
According to Forbes, the Federal Reserve in recent decades has “flooded the engine.” He added that an unstable currency also misdirects investment into illiquid assets such as land and buildings, which gave rise to the housing bubble. Furthermore, an unstable currency distorts market information, causes wages to stagnate, and undermines social trust, he said.
What does Forbes think the U.S. should do?
“The dollar will be re-linked to G-O-L-D,” he said. “Why gold? It’s the one thing in the world that keeps its intrinsic value better than anything else — like the North Star, Polaris, something you can fix off of.”
Other major economic problems are higher taxes and an increasingly complex tax code that is “nine million words [long] and rising,” Forbes said.
“We spent 6.5 billion dollars, according to the IRS, filing out tax forms last year. Imagine all that wasted brain power going to three million full time jobs if that was released to do productive things,” said Forbes, who advocates a reduced, flat tax.
Though America’s economic outlook appears grim right now, Forbes said increased support in Washington for the gold standard and simplified tax codes are signs of positive change.
“Once again, we’ll recreate the kinds of momentum and conditions we had before 2007 where everyone in the world, as Lincoln put it, will have the chance to improve their lot in life, and we’ll have these great booms again,” he said.