About the Speech
Steve Forbes, editor of Forbes magazine and 1996 presidential candidate, spoke about the U.S. economy, the stock market crash and the flat tax plan during the Burkett Miller Distinguished Lecture Series on Nov. 6, 1997.
Forbes is not announcing if he will run for president again, but joked the real reason he ran for president was to "satisfy" his ambition to host Saturday Night Live. More seriously, Forbes said that the United States would survive the stock market crash, but it could not ignore it." The stock market fall was a wake-up call," Forbes said.
Forbes said that it would not be appropriate for him to give stock market advice for reasons previously stated by his grandfather. "You make more money selling the advice then following it," Forbes quoted. To prevent the crash, the United States should have told struggling countries to "re-peg" their currency instead of raising their taxes. He compared the international monetary fund to a doctor 200 years ago." They are bleeding those countries when they really need a transfusion," Forbes said. Countries could stabilize their money by making their money sound, lowering taxes, and giving property rights to individuals.
Forbes believes that the U.S. economy is strong but it will take work to keep it that way." No nation has the global impact that the United States has today," Forbes said. Three main events have made the United States the only superpower, Forbes said. The first was the end of the Cold War. It gave the United States both security and it redefined the government as a larger entity." How was it that the anti-government country came to have a huge government?" Forbes asked. It was because a large government was needed to handle the war efforts, he said. Second is the moral movement that citizens have pushed in the United States. For example, people consume much less alcohol than previously in the 1820s." Everyone took a swig from the jug in those days," Forbes said. Morals are important to the economy because "economics has a moral foundation." Morality also helps shape the direction that the nation will follow by directing human nature's "capacity for good or evil," he said. Third is the new economic era. The new era is best symbolized by a microchip, showing a nation that stretches the mind instead of using its brawn. In addition, the changes in technology have a simplistic basis." You succeed most when you provide a product that is simple and easy to use," Forbes said.
However, it will need to make some changes to stay strong, starting with the tax code. "You have to kill the beast [tax code], drive a stake through its heart, bury it and hope it never rises again," Forbes said. His solution is to move to a flat tax plan, like he supported during the last primaries. He also supports term-limits, campaign reform, vouchers and charter schools for education and medical savings accounts to replace insurance.
Dr. Dwight Lee from the University of Georgia responded with a counter discussion. He agreed that the flat tax "would be far better than the mess we have now" but the rates would eventually be increased. He said congressmen would raise the rates slowly, like boiling frogs in water. His alternative is to eliminate all federal taxes and only have a state tax." I want my tax dollars wasted right in the state of Georgia," Lee said.
Given a chance to answer Lee, Forbes said corruption could be avoided by setting safe guards such as requiring congress to have a two-thirds majority in order to raise the rate.