and everybody fights in the lobby for washington. that is an ugly facet of the welfare state. >> george gilder, are you working at all with the romney campaign? >> i am not working with it. i work for george romney who is miffed that. and i wrote a book for him called the mission and the dream, which is never published, because he withdrew from the race. and it was because that book that i could write "wealth and poverty" so rapidly. they really originated, a lot of the research in a book that i wrote for george romney, called the mission and the dream. and now, and then after writing wealth and poverty, one of the

first people that came and asked me to speak was bain capital company. they were a great force in the supply-side. they provided the microeconomics of the supply-side theories. the learning curve of the fact that lower prices expand market share, which was to lower costs, and more prosperity. this is both for the government, which also administers prices, and they are called taxes. so lower tax rates expand the economy and lead to more revenues for the government. and bless zero-sum struggles over government savings. >> we have been talking here on booktv with george gilder, author of several books, including a new edition of the "wealth and poverty", which came

out originally in the early '80s. this is booktv on c-span2. >> up next from this year's freedomfest, the annual libertarian conference held in las vegs, booktv speaks with steve forbes, former republican candidate for president and editor of forbes media. he discussed his latest book, "freedom manifesto", a follow-up to his book "how capitalism will save us." this is half an hour. >> joining us on booktv is a magazine publisher, politician, and frequent author, steve forbes, whose newest book is coming out in august of 2012. it is called "freedom manifesto." why free markets are moral and big government isn't. we are at freedomfest in las vegas. we are speaking with mr. forbes. why is it that free markets are moral, the governor isn't.

>> we make the emphasis that it is big government. in terms of big government not being moral, it does the opposite of what it reports to do. it ends up creating an environment that we have less ability to get ahead. it creates dependency and not a sense of independence. it plays with crony capitalism, which hurts oil entrepreneurship and creativity. all the things that government says it does helps to take the rough edges off the markets and make sure that the markets go in the right direction. they do the opposite. they are short-term oriented to the next election. they have their own agenda. they don't respond to the marketplace the way that a business has to. they have their own agenda in terms of special interest groups and the like. the bigger that they get, the more harm they do to the economy and the less chance you have, as abraham lincoln put it, to improve your modern life. >> how is it that free markets make it moral?

is reality the heart of capitalism. >> reality is the basis of capitalism. based on values, based on meeting the needs and wants of other people. contrary to the hollywood cartoon character of business people being villainess and running their hands through the misery of others, you don't get money unless you provide a product or service that somebody else wants. so without us even realizing it, it enhances humanity. you have to create chains of cooperation. you have to get people to work with you. you have to persuade people to buy what you are offering. in that sense, free markets open up for creativity. anyone from anywhere can go in and do something. most new efforts don't succeed. but by golly, you have a chance to do it. it breaks barriers between communities and ethnic groups. he started business, you want to get the best people possible.

that is a recent phenomenon. for many societies. you can go beyond the family. you can go beyond your immediate group were your village. and so congress breaks these barriers down and away that they may not love their neighbor, but you sure like to sell them something rather than blowing them up. >> mr. forms, how would you describe the american capitalism system today. are we closer to socialist system or a free-market system at this point? >> this is why we wrote the book. we are at a true juncture. are we going to be the exceptional capabilities and unique attributes of america? which attracts people that want to do things and get ahead for over 200 years. this is why the huge growth of government is not just about the numbers of gdp. it is suffocating to the economy

and creates dependence rather than independence. it dulls the ability to solve problems. there is a moral dimension to it. so that we have sensible markets, we get creativity and a chance to get ahead in these ever widening circles of cooperation, breaking down barriers, and enabling people to realize their dreams. we have a thing where you wait for the government to give you something and if they take away, you go and rise in the streets like europe are or anywhere is the dynamism going to come from. that is why the whole book in terms of trust -- you get the rise of the internet. how do you make congress get richer and deeper and you get things like paypal and innovations like that. it enables people to do more. that doesn't come from government. that comes from people. what is the opportunity on the problem, how do we solve it. that is why steve jobs touched

such a corps when he died late last year. it is precisely because this is a guy driven by a dream, doing things that yes, helped him, but also, it enabled and enriched the lives of hundreds of millions of people around the world. government did not do that. >> you write in "freedom manifesto", that they government's foremost concern is with big government. >> a british historian, perkinson, observed something when he was writing about the british navy. after world war i, britain had downsized the navy, the government agency running the navy increased in size. so he came up with parkinson's law, which is organizations expand, the amount of work that they have to do, the hours they

need to do it come have nothing to do with their size. if you let them expand, they will. in the case of government, their main thing is their own interest. bureaucratic interest, the main thing is human nature to expand. this is not just government. any organization left alone will fall into this. why they were created and become self-interested in returning and bloat. the nice thing about free markets is that if you have a company that does not, you cease to exist. you don't have the power of the government to keep you going. >> so if you were in congress or the president, deep until you go to zero-based budget? >> it is more than that. it is creating the environment where entrepreneurship can pledge. one of the things that we discussed in the book is degrading the value of a dollar. it's not just about the consumer price index. it is about coercion. suddenly, your government takes resources from you without

taxation, without borrowing. it disrupts contacts that you make. it has people have people go and do things they normally wouldn't do. why do we have all these derivatives from wall street. if you have chronic instability and exchange rates and chronic and the stability of money, you have a hedge around it. that is trading opportunities. it drives people into the investments of the past into hard assets instead of investments of the future, and that is the thing that government has to get away from. it is like changing the minutes in and hour. imagine that changed each day. sixty minutes one day, 40 the next day, you just figure out how many hours are working. you hire somebody to take $15 an hour to do a job. is that a las vegas hour, and bangladesh at work, you are going to have to have cost our rates and you'll have a whole industry of smart people are doing all this stuff out.

so that is one of the things that government is to create an environment. but by the tax code because that is a huge source of power. simplify it. they lose the power, but you are able to devote your brain power and resources to doing productive things. yes, spending, the thing to remember about spending is that money does not come from others, it comes from you. put it in the political sausage factory and spit it out to certain groups, it is more like likely. >> just go back to your original point, would you like to see no float and currency? >> i would like to see the dollar as hamilton and washington created it, when we had it for 180 years. what that does is provide stability and value. again, 60 minutes, 60 minutes in

an hour. 16 ounces in a pound. you have a stagnant supply of money of money in this economy. what it means is that if you make a contract two years from now of a fixed amount of dollars, the value of the dollar's two years from now will be the same as today. not to bore you on this, but when you make an investment, you are in effect, when you value that investment, it is the future stream of income. so if you think that you buy facebook shares that you think are going to grow 10 times in the next five years, well, you don't know what the dollars would be worth whether we will get the hundreds and dollars from $127, you get less investments. so the economy stagnates just as it did in the 1970s. 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. >> steve forbes come you have been preaching this message for many years. you had an opportunity to meet with your mantra in 1996. why are we still having this conversation and talking about it? >> that's a good question. and we were asked that question in the book. after the terrible decade of the 1970s. milton friedman came along, free to choose, huge best seller ended series on television. ronald reagan comes in and makes free-market reform. america blossoms again. why in the world are we going backwards? this is something not understood, and that as free markets are not inherently unstable. every major economic crisis has its origins massive government errors. the free enterprise gets the blame. going back to the impression, when we have the global trading system with this withholding care of, and started the world and in a downward spiral.

that was government. governments here and elsewhere put this in the depression. that was government are not free market. so from the federal reserve, started to print too many dollars from other central banks do the same thing. you get a housing bubble. that could not have happened if the federal reserve had not printed the money. but they don't get the blame. it is the evil bankers to get the blame. that is why when you get a crisis like this, government froze. things are working, we have to step in and increase our power. they also use the compassion card. this is to help children. you are against children? this is health education. you don't like education? so you go on the moral defenses that it's not enough to say free markets work. if people feel that free markets are somehow immoral, that it is sort of a semi- corrupt bargain, but they give us material things, so we put up with us, it

will wither away. it will die. we say no, free-market systems don't deliver goods, they deliver goods precisely because moral optimism about the future. you don't make an investment if you're thinking that there's not a future. you don't take a risk if you have an environment of pessimism. you take a risk and you think well, i may lose everything, but it may work. so i will try it. that is faith in the future. that is why you get that kind of optimism and free markets. >> in "freedom manifesto", there is a list of federal taxes and here. accounts receivable tax, building permit tax, corporate income tax, federal income tax, fishing license tax, irs penalties, local income tax, a luxury taxes, marriage license tax, property tax, real estate tax, and editing as i go here, social security tax and trailer registration tax. utility tax. watercraft registration taxes,

etc. why did you include this in "freedom manifesto"? >> because it just shows government coercion. that is almost everything you do now. it ends up getting taxed. we really don't realize. you get up in the morning. what's the first thing you do? you turn on the electricity. if you miss the electricity bill, and turn on the water. you miss the utility bill. you go to the kitchen and have a cup of coffee or a cup of tea. the list doesn't even include the upcoming taxes on medical devices, obamacare taxes, so you could expand that by 16 without one. the bottom line is, everything that you do ends up getting taxed. and that reduces your capacity to create resources and reduces your freedom. >> you also talk about the fact that tax withholding -- we never think of that money is being

hours. >> yes, and i came in world war ii. once upon a time, we pay taxes once a year, which made people very conscious of the income tax rate. so in wartime, when everyone was brought into the income tax system, 20 to 25% of the population, bringing in almost everybody, how would you collect? half the population would not be able to be the taxes and save the money. an executive at macy's say that we have layaway plans. but some of a certain amount of money aside and you have a certain amount of the product come you make of the payments on the product. why not do the same thing on income tax? each paycheck from a certain amount is taken out. therefore, it is a convenience for you and you don't have to worry about that once of your thing. at what it does is, for a while, and nuncio to what you're

getting. every kid gets the first part-time job. i thought it was supposed to get this. why am i getting this? what is fica and what is the stuff? so people almost think that they are saving money when they get a refund from the irs? >> is there any way of illuminating the withholding? >> welcome what you do, you go to a simplified tax system. single rate, generous exemptions from for me dude on a single sheet of paper. no more lobbyist. since 1986, when we simple private tax code, 14,000 amendments and changes in the tax code. it is a horror. a political horror and brings out the worst in us as a people. should we comply with this thing, should we take this deduction or not? should i get 10% or 20%? it is corrosive and corrupting. so if they bring in something

like a simple flat tax, and guess what? it is a single rate and yes, you can still have the withholding. but the rate is low, compliance is higher, 25 countries have done it. the rate compliance rate gets more growth. and you would have less political corruption. >> steve forbes, as a business owner yourself, what kind of resources do you devote your taxes, corporate taxes and etc. to the regulation part of this? >> welcome the personal side is huge. just tax preparation and a lot of things around the country. you will do numerous state funds and state budgets. it is just mind-boggling. for what purpose? >> do do them yourself? >> oh, yeah, 35 years ago, i could do my own tax return. i can't do it now. i would not even attempt to do it with all of those crazy calculations. so that is why this book, we are

trying to make the case. reality comes from free people and free markets. government ends up being immoral. it is not moral equivalence between the two. big government is immoral because it goes against the very things that enrich the human spirit. it is more pessimistic than optimistic. it is about politics not meeting the needs and wants of other people. it is about the here and now and not creativity and innovation. it is about lobbying on the right. that is why we have to make the case. because otherwise, yes, you will have like you had with ronald reagan. a brief year of prosperity. but people don't realize the role of government, they don't stabilize them, they don't than them, and we are going to get crisis again and buy back your. we have the occupied the high moral ground. free markets are the high moral ground. meeting beneath and wants of other people.

and it enhances the sense of humanity in a way that we don't even realize. that is what we have to get across. because otherwise people say by golly, they mean well. no, they don't. they are the very things they accuse the private markets of being. >> in "freedom manifesto", you talk about bain capital and company, which is always are one of the political issues of the 2012 election season. what is your take on bain capital? >> they are an example of an extraordinary creativity of american capital markets. ask yourself, why is it that we create so many new companies and new companies become big companies in western europe or japan? and the reason is that the diversity of our capital markets. bain capital, they go in, they turn around companies, they give good returns to pension funds, and who are their customers? public pension funds are the

biggest and company pension funds. nonprofits like universities. individuals. they are way back. it is our ability to get things and get these efficient capital markets, that enable us to get 50% higher growth rates than you see in europe. if you look at europe, but in this country, take the banks. american banks are about $1.4 trillion. from europe, that number is $6 tio as a whole is about the same size as the u.s. what you have is bonded debt. bonds and other sources. about $5 trillion in this country, only one in europe. what that means is that europe is top-heavy with banks. what that means is that if you are a small company and you start to grow, you don't have the venture capital industry that we have. you don't have all the divorce social issues.

in most cases, they become part of a big company. you don't get them on the scale that we have these. look at the 1970s. a terrible decade. but look what was emerging. microsoft, apple, southwest airlines, fedex, and others. he capital system that could nurture them and get them to grow and to be independent and companies of the future. so again, europe grows at 2%, we grow at 3.5%, even though we have the largest economy in the developed world. because we have the ability to address. if government ends up messing up the markets, as it does what it trashes the dollar, you get these new instruments for comment but deal with it and try to make money off of it. if you stabilize the dollar, a lot of that stuff goes away because it's not needed. >> is it time, in your view, to end the post office monopoly? >> other countries have actually

been ahead of us on that in privatizing post office. fedex or the post office. fedex symbolizes in a very real way from the creativity of delivering new ways of being efficient, doing things differently, and the post office symbolizes sluggish service, lack of innovation, and yes, we should privatize it and we could do so in a way people out in the middle of nowhere getting a magazine if they want. but the amazing thing about technology is that free markets are going to turn into abundance. that is something the government cannot do. thirty years ago, the cell phone was as big as a shoebox. at about 30 or 40 minutes of battery life. $3995 did you have one? >> no. [laughter] >> i stuck with my landline. but the amazing thing is, if

government can go out and get involved in, today, it would still be as big of a shoebox. maybe have 50 minutes of battery life and cost $9995 and the president would be railing against rudy cell phone users. today, there are 5 billion in the world. you can have cell phone for medical services now and thinking and they become handheld computers. the simple ones are virtually giveaways worth $3995. that consecrates creativity. even simple things. you go to a starbucks or a similar kind of coffee shop, they have 12-ounce can of 16-ounce, cups of coffee, the lids are the same size so they don't have to have three different kinds of inventory. those little things are constantly happening in this kind of an economy. that is what we seek to preserve. that is reality. the little things, big things

constantly happening. ever wider circles of cooperation. that is the glory of the thing. because we are like fish in water, we don't realize what the system is. >> this is your second book written with elizabeth ames. this is "freedom manifesto", coming out in august 2012. this one is new as well. "how capitalism will save us", also written with elizabeth day. who is elizabeth day? should. >> she did a lot of writing and work with us in the '90s. she worked with us on a radio show in the '90s. she onto understands entrepreneurial capitalism. a very capable writer. she also helped out as a book editor, advocating a flat tax. so she has the ability and the knowledge. put it to good use. >> as you well know, a flat tax or any kind of tax reform would need to go through the legislative process. what is your current opinion of

congress and some of the debates that they are having or not having about economic matters? >> well, taking the tax thing, most people recognize that we have to simplify the thing. what really stunned me was the simpson-bowles commission. ordered by the president a couple of years ago. signed onto the idea of simplicity and reducing tax rates across the board. they didn't go as far as the flat tax, but they addressed the concept. and on entitlements. they addressed the concept. there needs to be fundamental reform. so i think that after the election, what is going to did he despise next year, is that there's going to be a lot of ability to get things done, because among democrats, not the majority but a minority, but these things have to be done. i am optimistic in that sense. i think that mitt romney will win the election he will find --

one of the things that we hit on his terms of entitlement. sort of this attitude that we must raise the retirement age to 85, shoot grandma says she doesn't take any more more medicare, or she's in a fall off a cliff or something like that. there are very positive reforms. why can't we get that same kind of creativity in health care? read more health care, cheaper health care, sensible safety net, we do it with food, the government doesn't do with agriculture, but in terms of food, agriculture produced food, agriculture companies processed food, everyone from casinos and restaurants and supermarkets and grocery stores sell the food, you have everything from food banks and food stamps to do it. what can we do the same thing in health care? the equivalent of food stamps?

so that people get the bases and get real free markets. i live in new jersey and you had me going on this. this is immoral. in new jersey, we have crazy regulations. akamai perfectly good health insurance policy in pennsylvania at half the price that can in new jersey, even less in wisconsin. but it is illegal for me to do it and by a car in the states best i can do that, but i can buy insurance. nationwide shopping for insurance. you get hundreds of companies competing. the patient charts, and come up with ways of getting more availability and health insurance. and you can do it, there are exciting ways to do it for people with chronic conditions. that's what we need, and that's the spirit. governmental kill creativity in abundance. free markets will bring creativity in ways that we can't even imagine. what steve jobs said about marketing, he did a marketing survey that said people don't know what what they wanted to show it. that is what entrepreneurship

is. not just saying that i want more peanut butter and jelly sandwiches. yes, we will do that for you. show me the things you didn't even know you needed. luxuries become tomorrow's necessities. today's things that are highly expensive and scarce become abundance tomorrow. it is the staples principal. any high-tech thing today, tomorrow becomes cheap and available like cell phones and tvs, 15,000 years ago, 500 bucks today. constant creativity. people figuring out new things. >> very quickly, let's go back with simpson-bowles. would you be willing to pay more taxes because simpson-bowles included more taxes. do you think you pay enough taxes today? >> well, i certainly pay enough. in one of the things that we point out in the book, "the wall street journal", the top 10% of income earners in this country pay more income tax