As Republicans struggle to score a legislative win on taxes, Steve Forbes dismissed fears that the American economy is doomed to slow economic growth or secular stagnation as “preposterous.”
Forbes, the chairman and editor-in-chief of Forbes Media and former Republican presidential candidate, blamed the current economic rut on correctable policy errors in a lecture sponsored by the Cornell Republicans on Wednesday.
The real source of wealth in society derives not from physical things, Forbes said, but from the human mind, as the modern economy cannot prosper without “human ingenuity.” Free markets will always turn scarcity into abundance, he said, using automobile innovation as an example.
“One hundred twenty years ago, a car costed over 110,000 dollars,” he said. “It was a toy for the rich. But Henry Ford came along with the moving assembly line and turned this toy for the rich into something every working person can afford.”
Rejecting the argument that automation will deprive Americans of jobs, Forbes said that free markets will allow people to apply ingenuity and advance a society built on knowledge and innovation.
The fear of robots, he said, is misguided, since society has been utilizing robots throughout history. He urged students to think about how the invention of the tractor — which was viewed as a robot when it was first introduced — freed up millions of acres for farmland and hours of labor.
Forbes also said that Republicans are unable to pass a tax cut because they are putting “process before progress,” and relying too heavily on the Congressional Budget Office to predict the future to change various laws and tax codes.
“The blunt truth is, if the Congressional Budget Office knew what would happen, they would be buying lottery tickets or speculating commodities,” he said.
Forbes proposed that Republicans follow the actions of Ronald Reagan and pursue a straight tax cut, which he said would reduce the business tax rate to 15 percent.
Republicans led on cuts to healthcare rather than taxes primarily because the CBO calculated that the government would save $1.1 trillion over the next 10 years following healthcare cuts, which would ultimately allow for additional tax cuts, Forbes said. However, the plan to cut healthcare and then follow up with cuts to larger company’s tax bills is an unfortunate message to the American people, he said.
Forbes also criticized the federal income tax code, calling it a “monstrosity” that not even experts in the Internal Revenue Service truly understand.
“Take this monster,” he said, referring to the federal income tax code. “I would say bury it, but I don’t know if the EPA would let us bury something so toxic.”
The problem with the American healthcare system stems from the lack of real free markets, Forbes said. There is a disconnect between providers and consumers, since the system is controlled by insurance companies, rather than by the patient. Hospitals’ revenues depend on negotiations with insurers and the government, but not with satisfying patients, he said.
“The crummiest motel in America wouldn’t dare put you in a room with another guest with a curtain in between,” he said. “But they do it routinely in hospitals.”
Nationwide “shopping” for health insurance, equal tax treatment and increased transparency between hospitals and patients are all factors key to improving the healthcare system, Forbes said.
Hospitals should also be mandated to publicly post how many patients die from infections they have received after admission to the hospital, he said.
“Ninety thousand patients die from infections after being admitted to hospitals,” he said. “Experts say 80 percent of these deaths could be prevented.”