was never published because he withdrew from the race. it was because i wrote that polk that i can write wealth and poverty so rapidly. wealth and poverty really originated, of the research in the book a rope for george romney called the mission in the dream. ..

>> also administers prices and they are called attacks. so lower tax rates expand the economy and lead to more revenues for the government. and less zero-sum struggle over government savers. >> we have been talking here on booktv with george gilder, author of several books, including a new addition of "wealth and poverty" which came out originally in the early '80s. this is booktv on c-span2. >> up next from this years freedomfest, the annual lived in conference held in las vegas, booktv speaks with steve forbes, former republican candidate for president and chair and editor-in-chief of forbes me. he discusses his latest book, "freedom manifesto," a follow-up to his book "how capitalism will save us." this is half an hour.

>> now joining us on booktv is magazine publisher, politician, and frequent author, steve forbes his newest book is coming out in august of 2012 and it's called "freedom manifesto: why free markets are moral and big government isn't." we are at freedomfest in las vegas where mr. forbes is speaking. mr. forbes, why is it that free markets are moral but government isn't? what's an example of how that is? >> we've make the emphasis is big government. there are functions of government going back to what james madison defined but in terms of big government not being moral it does the opposite of what it purports to do. it ends up creating and abiding worry have less ability to get it. it creates dependency and not a sense of independence. it plays up crony capitalism which hurts real on governorship and creativity. so all the things the government says it does helps, takes the

rough edges off the market, make sure the markets go in the right direction. they do the opposite they are short term oriented right to the next election. they have their own agenda. they don't respond to the marketplace the way a business has to do. they have their own agenda in terms of special interest groups and the like. the bigger they get, the more harm to do to the economy and the less chance you have as abraham lincoln park, to improve your lot in life. >> how do free markets -- is morality a part of koppel is a? >> morality is the basis of capitalism. golfing about free markets based on values, a something to needs and wants of other people. contrary to the hollywood cartoon character of businesspeople being villainous and rubbing their hands, even if you lust for money, you don't get it unless you provide a product or service that somebody else wants.

so without his realizing it, it enhances humanity. you've got to great change of cooperation. you've got to get people to work with people. you got to persuade people to buy what you're offering. and so in that sense, free markets open up the creativity. anyone from anywhere can go in and do something. most new efforts to succeed. by golly, you have the chance to do it, and it breaks barriers between communities and ethnic groups. we take for granted in this country, for example, that if you start a business, you want to get the best people possible. that's a truism. that's a recent phenomenon. many societies are getting over the fact you can go beyond the family, you can go beyond your immediate group or your village. so commerce breaks these barriers down in a way they made not love your neighbor that you which are like to sell them something rather than blow him off. >> how would you describe the american capitalist system today? are we closer to socialist

system are a free market system at this point? >> this is why we did the book is that we are at a true juncture. are we going to go the way of western europe, or are we going to achieve the exceptional capabilities, the attributes of america which attracted entrepreneurs and people who want to do things and have a chance to get ahead. this is why the huge growth of government is not just about numbers of gdp. it suffocates an economy. it creates dependence rather than independence. it tells your sense of those to solve problems. there's a moral dimension to it. so do we have free markets with sensible rules of the road where we get creativity, get a chance to get ahead, you get this ever widening circles of cooperation, breaking down barriers and enabling people to realize their dreams or to have a thing where

you are braking capacity? you wait for the government to give you something. so where's the dynamism going to come from? that's what the whole book, free trust, trust but verify. you get the rise of the internet. how do you make commerce get richer and deeper? you get things like paypal and innovations like that, enable people to do more. that doesn't come from government. i come some people, what's the opportunity, what's the problem, how to resolve? that's why by the way steve jobs touches such a chord when he died late last year is precisely, people sensed this was a guy driven by dreams, doing things that yeah, help them, but also enabled, enriched the lives of hundreds of millions of people around the world. no government can do that. >> you write in trenton that big governments are most concerned, therefore it's with its its own

bureaucratic interests. >> a british historian observed something when is writing about the british navy, after world war i, britain had won that war, downsized sharply the navy, fewer capital ships, dockworkers and sailors and the like, how over the government agency running the running the navy increased in size. organizations expand. they feel the amount of work they have to do, the hours they need to do. have nothing to do with their site if you let them expand, they will. in the case of government, damning thing is the own interest, bureaucratic interests, main thing is to come human nature, to expand the not just government. in the organization left alone will fall into this, lose sight of why they were created and become self interested, inward turning. the nice thing about free

markets is if you have a company that does that, you cease to exist. you don't have the power of the government to keep you going. >> so if you are in congress, if you are the president, do you go to zero-based budget? it comes back -- >> it's more than budgets but it's creating the environment where entrepreneurship can flourish. for example, one of the things we discuss in the book is degrading the value of the dollar. it's not just about consumer price index. it's about coercion. suddenly the government takes resources from you without taxation, without borrowing. it disrupts contract you make. it has people go and do things they normally wouldn't do. why do we have all of these derivatives from wallstreet? if you have chronic instability and exchange rates, chronic instability in interest rates and the valley of money, you've got to hedge around it. trading opportunities. so it's a huge cost, drives people into investments in the past and to hard assets and so

do dozens of the future. so that's the thing that government has got to get away from. the degrading passion is like changing the minutes in an hour. imagine if that changed each day. "60 minutes" one day, 40 the next day. figure out how many hours you work. you hire somebody, 15 bucks an hour to do a job. is that a las vegas our, and arizona our, a canadian our, bangladesh our? you have a whole industry of smart people figured all this out. so that's one of the things that government can do to create an apartment to simplify the tax code so that complex a huge source of power. half of washington revolves around the they lose the power when you're able to devote your brainpower and your resources to doing productive things. so yes, spending. the thing to remember about spending is the money doesn't come from heaven. it comes from you.

so you put in the political sausage factory, stated out to constituency groups. that's not stimulus. it's more like a waste. >> just go back to your original point, would you like to see no floating currency? to interpret a crackly? >> i would like to see the dollar as hamilton and washington created it. we had it for 180 years. what that does is provide stability, "60 minutes" an hour, 16 ounces in a pound. so it doesn't restrict money supply. if you have a vibrant economy of the gold supply, it blossomed. if you have a stagnant economy, it stays stagnant. what it means though is if you make a contract two years from now at a fixed amount of dollars, the valley of the dollar two years from now will be the same as it is today. not to bore you but when you make an investment, you're in effect when you value that investment, it's a future stream

of income. at present valley. if you think you can buy facebook shares, if you think you'll be, grow 10 times in the next five years, well, you don't know what the dollar is going to be worth, where they would be getting 100 cents, 120 cents. you get less investment. so the economy stagnates just as it did in the 1970s. so again, government creates the environment. simple tax code. stable money. don't go on these spending binges and don't try to run the economy. >> you've been preaching this manifesto, this message for many years. homegrown opportunity was your mantra in 96. but why are we still having come why we still talking about this? >> good question. we answer that question in the book. after the terrible decade of the 1970s that milton friedman come along, free to choose, huge

bestseller, huge series on television. and ronald reagan comes in, makes free market reforms. america blossoms again. why in the world have begun backwards? this gets to something not understood. free markets are not inherently unstable. every major economic price system has its origins massive government errors, but free enterprise gets the blame going back to the depression. we destroy the global trading system. started the world and a downward spiral. that was government. so doing this current crisis with the federal reserve started to print too many dollars, the central bank did the same thing. you get the housing bubble. that could not have happened if the federal reserve had and print the money. but they don't typically. it's the evil banker to get the

blame. so that's why when you get a crisis like this, government grows because it says we are here to help you, things aren't working, we've got to step in and increase our power. they also use the compassion card. this is to help children. you're against children? this is health education? you don't like education? so you go on the full defensive. so it's not enough to say free markets work. if people feel free markets are amoral, sort of a bargain but they give us material things so we put up with this, it will wither away. it will die. we're trying to say no, free markets just don't deliver goods to they deliver goods precisely because it's based on morality, a moral optimism about the future. you don't make investment if you're thinking is not a future. you don't take a risk if you have an environment of pessimism. you take a risk and you think i may lose everything, but it may work. so i will try. that's faith in the future. that's why we get that kind of

optimism in the free markets. >> and "freedom manifesto" there's a list of federal taxes in here. accounts receivable tax, building permits ask, cigarette tax, corporate income tax, dog license tax, federal income tax, fishing license tax, i rest this, but attacks, luxury tax, marriage license, payroll, property tax, real estate tax, and i'm kind of editing as ago he. social security tax. trailer registration tax. utility taxes, watercraft registration taxes, et cetera, et cetera. why did you include this list of different taxes and "freedom manifesto"? >> because it just shows what you might call tax greed. government coercion greed. that is almost everything you do now end up getting tax. we really don't realize you get up in the morning, what's the first thing to do quick u-turn on the electricity. look at your massive electricity bill. turn on your water. look at your water bill.

kitchen, have a cup of coffee, sales tax. to work, sales-tax. that list doesn't include the upcoming taxes on medical devices in the obamnicare taxes. so you could expand that at least 16 coming without one. and so the bottom line is everything you do is ending up getting tax and that reduces your capacity to great resources and reduces your freedom. >> you also talk about the fact that tax withholding, we never think about money. >> once upon a time we pay taxes once a year, which make people very conscious of the income tax rate. and so in wartime, when everyone was brought into the income tax code system, it had been about 20, 25% of the population, now since wartime bring animals everybody, how would you

collect? half the population are not able to pay the tax? so an executive at macy's, we have layaway plans. you put some, a certain amount of money aside and the make monthly payments. why not do the same thing on the income tax, have withholdings? a with each paycheck certain that is taken out, therefore it's a convenience for you, therefore you don't have to worry about that once your thing. what it does, at least for a while is none issue to what you were getting. every kid to get a first part-time job, i thought i was supposed to get ask. what am i getting why? what is fica? what is this stuff? people almost think they're saving money when they get a refund from the irs. >> is there anyway of eliminating the withholding? >> what you do, since withholding, theoretically you could, but withholding has been with us for six decades, as we go to a simplified tax system. single raid, so you do it on a

single sheet of paper. that is all. no more lobbyist. since 1986 when we last tried to simplify the tax code, 14,000 amendments and changes to the tax code. it's a horror. it's a political everything brings out the worst in us, as people. should we take this deduction or not? do i get 10% to 20%? its corrosive and corrupting. so bring a something like a simple tax and guess what? one, it's a single raid and disk you still have the withholding, but the rate is low. appliance is on. 25 countries have done. appliance recover get more growth. and you would have less corruption. >> steve forbes, as a business owner yourself, what kind of resources do you devote to your taxes, your corporate taxes, et

cetera, to the regulations part? >> on a personal site its huge what i have to pay, just tax-preparation. we do a lot of things around the country. state-by-state. it's just mind boggling. and for what purpose? >> do you do it yourselves because 35 years ago i could give my own tax return. i can't do it now but i wouldn't even attempt to do it with all those crazy calculations. so again, that's why in this book we're trying to make the case, morality comes from free people and free markets. government ends up being immoral. it's not moral equivalence between the two, but big government and moral because it goes it's the very things that enrich the human spirit. it's more pessimistic than optimistic. it's about politics, not the needs and wants of other people. it's about the here and now and not creativity and innovation.

and so, and it's all lobbying and the like. so that's why we've got to make the case because otherwise yes, you have, after ronald reagan you've got a spirit of prosperity but if people don't realize the role of government, they don't stabilize and the up and and and we'll get a crisis again and we'll be right back here again. the divide will get bigger. free markets at the high moral ground. they are based on morality. it enhances their sense of humanity in the way we don't even realize. and that's what we've got to get across because otherwise people will say government is inefficient. but by golly, they mean well. no, they don't. they are the very things they accuse the private markets of being. >> and "freedom manifesto" you talk about bain and company which is one of the political issues of the 2012 election season.

what's your take on being? >> well, name is an example of extraordinary creativity of american capital markets. ask yourself, why is it that we create so many new companies, companies that eventually become big companies? for western europe or japan. and the reason is the diversity of our capital markets. so bain capital, they go in, they turn around companies, they give good returns to pension funds to who are the customers? public pension funds are the biggest. nonprofits like universities, individuals way back. so it's our ability to get things that enable us 50% over time, 18% higher growth rate in use in europe. so you look at europe, i don't want to bore the viewers with the number, but this country, take banks. american banks, about

$1.4 trillion, in europe, that number is 6 trillion, even though the european economy is about the same size of the u.s. what you call bonded debt. companies borrow commercial paper. bonds and other sources, about 5 trillion in this country. only one injured. but that means you is top heavy with banks. what that means it is a a small company and you start to grow, you don't have the venture capital industry we have. you don't have all the diverse sources of capital here. so you eventually get force, most cases, to be a part of a big company, and so you don't get the microsoft, the apple on a scale we in this country. so you look at the 1970s, terrible decade. look at what was emerging, microsoft, apple, oracle, charles schwab, southwest airlines, fedex and others. you have a capital system that could nurture them, get them to grow, the independent companies of the future.

so again europe grows at 2%, we grow at three an and a half even though we're the largest economy in the developed world. if feldman ends up messing up the market, you get decent instrument's that come in to deal with it, tried to make money off of it but if you can stabilize the dollar, a lot of that stuff goes way because it's not needed anymore. >> is it time interview to end the post office monopoly? >> other countries have asked the been ahead of us on that, privatizing the post office. one of the chapters is called fedex or the post office? and fedex symbolizes the creativity of delivering new ways of being efficient, doing things differently. the post office symbolizes sluggish service, lack of innovation. and yes, we should privatize it and they can do so in a way

where people can still get a magazine if they want. but the amazing thing about technology is that can help. free markets about turning scarcity into abundance. that's something government cannot do. 30 years ago, the cell phone was the biggest shoebox out of about 30 or 40 minutes of battery life and it cost $3995. >> did you have one? >> no. still stick with my landline. but the amazing thing is, if government had gotten involved in that, today it would still be as big as a shoebox, maybe 15 minutes of battery life and cost 9995, and the president would be railing against greedy cell phone makers. today there are 5 million in the world, have a cell phone, do medical services that with your cell phone. they become handheld computers. and so than the simple ones are

virtually giveaways instead of $3995. so the consecrate tv and innovation. one other example. i just cited high-tech examples, cell phones but even simple things. you go to a starbucks, 12-ounce, 16-ounce, 20-ounce cup of coffee. do you notice the lives of the same size so they don't have to have three different kinds of inventory? those little things are constantly happening in this economy. and that's what we should seek to preserve. that is morality. these little things, big things constantly happening. that's the glory of the thing. because are like fish in water we don't realize what the system is. >> this is your second book written with "freedom manifesto," coming out in august 2012. this one is new as well. "how capitalism will save us." who is elizabeth? >> elizabeth worked with us in

the 1990s, public relations. she did a lot of writing for us. did actually work with some radio scripts, radio show in the '90s. so she understands entrepreneurs capitalism, a very capable writer -- capable writer. she also helped write this book "flat tax revolution." so she got the ability of the knowledge, so i put her to good use. >> as you well know, flat tax any kind of tax reform would need to go through the legislative process. what your current opinion of congress and some of the debates that they are having, or not having, about economic matters? >> well, take a tax thing. i think most people not recognize we've got to simplify this thing. and what really stunned me was the simpson-bowles commission, appointed by the president to do with the deficit a couple years ago. democrats on that signed onto the idea of simplicity and reducing tax rates across the

board. it didn't go as far as the flat tax, but they grasped the concept. and on title months the grasp the concept of their needs the fundamental reform. so i think after the election, which will be a surprise next year, is there's going to be a lot of ability to get things done because among democrats, the majority but certainly a minority realized these things have to be done. so in that sense i'm optimistic. i think romney will win the election but i think you will find -- one of things we had on is in terms of entitlements, sort of the attitude there must be, we must raise the retirement age to 85, shoot grouse osha doesn't take any more medicare and kind of role, they are very positive reforms. i mentioned the cell phone. why can't we get back to the same kind of creativity in health care, create more health care, cheaper health care, get

sensible safety nets instead of the crazy system we have today. government doesn't run agriculture but if we did have anymore beef we would all be starting to in terms of food, private companies process the food, others deliver the food. everyone from casinos and restaurants and supermarkets, grocery stores sell the food. wide in the world can we do the same thing in health care. equivalent of food stamps. so people get the basics and get real free market. i live in new jersey and you really got me going on this, talking about this but this is a moral thing. in new jersey we have crazy legislation. i can buy a perfectly good health insurance policy in pennsylvania half the price i get images, even less than wisconsin. but it's illegal for me to do. i can buy a car in the states but i can't buy interest. why not open up nationwide shopping for insurance to get

hundreds of companies to compete. that will start to change a health care is delivered, but you, the patient come in charge and come up with ways of getting more availability and health insurance. and you can do it, exciting ways to do it where people with chronic condition. so that's what we need. that's the spirit. government will kill creativity, kill abundance. free markets will bring creativity when we can't even imagine the steve jobs said about markets, he was once asked you do marking service. he said no, because people don't know what they want until we show them. that's what ought partnership is. that's not just say i will more peanut butter and jelly sandwich, we will do that for you. at showing you things you didn't even know you needed. today's lectures become tomorrow's necessities. today's things that are highly expensive and scarce become abundance tomorrow. so it's the staples principal. any high-tech thing today, tomorrow becomes cheap and available like cell phones, like tvs, flatscreen tvs, 15,000

of years ago, 500 bucks today. that's the glory of the consecrate to the. people figure out doing new things. >> let's very quickly go back to what you talked about, would you be willing to pay more taxes? because the simpson-bowles plan also include more taxes but do you think you pay enough taxes to pay? >> i certainly pay enough, and one of the things we point out in the book, quoting "the wall street journal," a top percent of income earners in this country pay more income tax proportionately than the top 10% in any other industrialized country. so there's not a shortage of taxpaying. the key thing is, is how to get a system that encourages more creativity, so the government ends up collecting more. surveys have shown, research has shown, countries have low tax rate systems, low tax burdens, end up collecting more revenue than those of high t