is bad. bashes the economic force that is ripping through society. >> thank you. [applause] >> thank you for coming. sorry we started late. >> up next to mr.'s freedom fest committee and a libertarian conference in las vegas, steve forbes, former republican candidate, chaired and "forbes"

media. mr. forbes discusses his book, "freedom manifesto," a follow-up to his book "how capitalism will save us." >> now joining us on booktv is magazine publisher, politician and frequent author, steve forbes, whose 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 freedom fest in las vegas, where mr. forbes is speaking. mr. forbes, why is that free markets are moreover, but that government isn't. with an example of that? >> remake the emphasis of big government. going back to it james madison defined. but in terms of big government not being moral, it is the opposite of what it purports to do and creates an environment we have less ability to get ahead increased dependency and not a

sense of independence. it plessis crony capitalism, which hurts oil entrepreneurship and creativity. all the things the government says it does hopes the poor to make sure the markets: the right direction. they do the opposite. their short-term oriented, writes to the next election. they have their own agenda. they don't respond to the marketplace the way business has to do. they have their own agenda of interest groups. the bigger they get, the more harm they do on the less chance you have to improve your lot in life. >> host: how is it free markets make it moral? is morality part of capitalism? >> guest: morality is the basis of capitalism. the whole thing about free markets based on values in meeting the needs and wants of other people. contrary to the hollywood cartoon terra of business people rubbing their hands in "glee" at

the misery of others. even if you for money, you don't get it unless you provide a product or service if somebody else wants. so without us even realizing it, it enhances humanity. you have to create cooperation. you have to get people to work with you. you have to persuade. so in that sense, free markets open nothing can go do something. by golly you have the chance to do it and it brings barriers we take it for granted if you start the business and get the best people possible. that's a truism. but the phenomenon. you can go beyond a family in your immediate group or village and away they may not like your neighbor. but she's sure like to sell them

something >> mr. forbes, how would you describe the american capitalist system today? are we closer to socialist system or 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 the exceptional capabilities which attract entrepreneurs for over 200 years and this is why the huge growth of government is not about numbers of gdp. it creates dependence rather than independence. it does your sense of ability to solve problems. surgery of the free markets are sensible rules of the load and creativity, get a chance to get ahead and get these ever

widening circles of cooperation, breaking down barriers and enabling people to realize their dreams or do we have the same for your bread into custody and wait for the government to rise in the street like you see in europe. worse at dynamism going to come from? yes its trust to verify, but you get the rise of the internet. they get richer and deeper. and enable people to do more. that doesn't come from government. that comes from what the opportunity, with the problem, how do we solve it? this way steve jobs touched such a chord when he died late last year is precisely people sense. this is living by james had hoped 10 but anyone which the

lives of hundreds of millions of people around the world. no government can do that. >> host: you write and "freedom manifesto" but the foremost concerned is with its own bureaucratic interest. >> guest: the british historian observes something when he was writing about the british navy did after world war i, britain had won that war, don't say sharply the navy, capital ships, sailors and the like. however, the government agency running the navy increased in size. so he came with parkinson's law and that his organization said expand, the amount of work they have to do and have nothing to do with their size beard if you let them expand their will. on the case of government any other organizations left alone will fall into this, lucite but

why they were created to become self-interested, inward turning. the nice thing about free markets as if you have a company that does that, you cease to exist. you don't have the government to keep you going. >> if you were the president, you go to zero-based budgeting. >> it's more than budgets. it's great and the environment for entrepreneurship can flourish. for example, one of the things we discuss is degrading the value of the dollar. it's about consumer price index. it's about coercion. suddenly your government takes resources from you without taxation, without borrowing. it disrupts contracts you may come as people go do things they normally wouldn't do. why do we have derivatives from wall street? if you have chronic instability and exchange rates in the value of money, you've got to hedger

bounded. this trading opportunities. so the huge cost or his people into hard assets instead of the future and that's the thing government has got to get away from. changing the minutes and an hour. imagine if 60 minutes changed each day. 60 minutes one day, 40 the next day. figures out how many are working. is that a las vegas power or arizona hour, canadian hour and you have a little industry of smart people figure in all this stuff out. so that's one of the things that government does. simplify the tax code for tax complexity has washington revolves around it. they lose the power for the brainpower to doing productive

things. and so yes, the thing to remember about spending if the money doesn't come from the head. it comes from you. you spit it out to politically favored constituent groups. that's not stimulus, more like waste. >> host: just go back to your original point, would you like to see no floating currencies. we had it for 180 years. it provides stability and value is 60 minutes, 16 ounces in a pound. so it doesn't restrict money supplied to have a vibrant economy of blossoms. a stagnant economy stays stagnant. what it means is if you make a contract to years from now that a fixed amount of dollars from the value of the dollar to years of the same messages today.

when you make an investment company you are in effect when you value that investment is the future stream of income and net present value. so if your facebook shoes because you think it's going to pretend times in the next five years, you don't know what the dollars going to be, whether you're getting 100-cent dollars, 20-cent dollars, 120-cent dollars to get less investment. so the economy stagnates. so again, government creates the environment. simple tax code, stable money. to apply spending binges. >> you've been preaching this manifesto message. hope is an opportunity was your mantra and 96. why are we still -- why are we still talking about this?

>> good question. we asked that question in the book after the terrible decade of the 1970s. milton friedman, huge series on television and ronald reagan comes in, makes free-market reforms. america blossoms again. why in the world are we going backwards? biscuits to simply not understood and that is free markets are not inherently unstable. every major economic crisis has massive government errors, the free enterprise gets the blame. going back to the depression when we destroy the terrorist instead of the world in a downward spiral. britain and elsewhere put a massive tax increase, deep in depression. so when the current crisis, we started to print too many dollars for central banks of the same thing. you get the housing bubble.

that could not have happened. at the federal reserve hadn't printed the money. the evil bankers get the blame. that's why when you get a crisis like this, government grows because it says we're here to help you. we have to step in and increased power. they also use the compassion card. this is to help children. you are against children? you don't like education? so you go on the moral defensive. so it's not enough to say free markets work. if people feel free markets are somehow a moral, that is sort of a semi-corrupt bargain but they give us material things so we put up with this, it will wither away. it will die. we are trying to say no, free markets don't deliver goods. they deliver good because it's based on morality, amoral optimism about the future. you don't make an investment if you think is that a future. you don't take a risk if you

have an environment of pessimism. you take the risk and think i may lose everything, but it may work so i'll try it. that's why you get that optimism and free markets. >> and "freedom manifesto" there is a list of federal taxes in here. accounts receivable tax cut building permit tax, corporate income tax, dog license tax, federal income tax, phishing attacks, iris don't take him a local income tax, luxury taxes for a marriage license tax, payroll, real estate tax and i'm kind of editing as they go here come the social security tax, trailer registration tax, utility taxes, watercraft legislation taxes, et cetera come et cetera. why did you include this list of taxes in "freedom manifesto"? >> picture shows government coercion and that is almost everything you do now is that

giving tax do we don't realize it. was the first thing you do? u-turn on the electricity in the future electricity bill. you have a cup of coffee, cup of tea. gasoline tax and that list doesn't even include the upcoming taxes on medical devices and the odometer taxes. you could expand at the 16 coming without one. the bottom line is everything you do ends up getting taxed that reduces capacity to create resources and reduces your freedom. >> steve forbes can you talk about tax withholding would never think about money has been ours. >> is, that came in world war ii. once upon a time to pay taxes on fear, which made people very conscious of the income tax rate. so when wartime, when everyone was brought into the income taxco system, about 20, 25% of

the population, bringing almost everybody, how would you collect? half the population in a bill to pay taxes and save money during the year? and executives as we have layaway plans. pretty certain amount of money aside to get the product for you, make monthly payments. why not do the same thing on the income tax? have a withholding suit each paycheck, a certain amount is taken out so as a convenience for you. therefore you not to worry about the one seer thing. what it does is nuncio to what you're getting. every kitty gets there there first part-time job. i thought he was supposed to get ask, why am i getting why? what is the stuff? people almost think they're saving money when they get a refund from the irs. >> is there any way of eliminating withholding? >> which you do this

theoretically you could, but since it's been with us over six decades, that's where you go to a simplified tax system. senior rate on a single sheet of paper. no more lobbyists. since 1986 when we last try to simplify the tax code, 14,000 amendments and changes in the tax code. as a horror, brings out the worst in a past people. should we take this deduction or not? do i get 10%, 20%? it's corrosive and corrupting. suburban something like a simple flat tax and guess what? you are aware there's a single rate and you still have the withholding, but the rate is low, compliance is higher. 25 countries have done it. great compliance rate get more growth and you'd have less political corruption.

>> steve forbes, as a business owner yourself, what resources do you devote to your taxes, corporate taxes, et cetera to the regulation part of this? >> in the personal site is huge what i have to pay, just tax-preparation. you do a lot of things around the country. you have to do with stay filing state by state and is just mind-boggling. and for what purpose? >> could you do it yourself? >> has come a 35 years ago i could do my own tax return. i can't do it now. i wouldn't even attempt to do it with all those crazy calculations. so that's why in this book were trying to make a case. morality comes from free people and free markets. government ends up being immoral. it's not moral equivalence between the two, but the government is immoral because it

goes against the very things that enrich the human spirit. it's more pessimistic than optimistic. more about politics than they did lots of other people. this year here and now that creativity innovation. it's about lobbying of the lake. so that's why we've got to make the case because otherwise you have a brief prosperity, but people don't realize the role of government and economy to stabilize them. they up and look at a crisis began to berate back here the leviathan gets bigger. we've got to occupy the high moral ground. free markets are the high moral ground based in morality, meeting the needs and wants of other people and enhances the sense of humanity and away we don't even realize. that's what we've got to get across because otherwise people say by golly they meanwhile. now, they don't. they are the very things they use the private markets being.

>> in "freedom manifesto" you talk about pain and come to me, which is one of the political issues of this 2012 election season. what is your take? >> bain is an example of the extraordinary creativity of american capital markets. ask yourself, why should we create so many new companies that eventually become big companies in western europe or japan? the reason is diversity of our capital markets. so bain capital go win, turnaround companies come and get good returns to pension funds for customers. public pension funds are the biggest in company pension funds and nonprofits like universities come individuals way back. so is our ability to get these, sufficient capital markets that enable us to get 50% of her time higher growth rates in europe.

seelig hit europe. i do want to bore your viewers with them members but american banks lend american companies rate now about $1.4 trillion from europe that number is 6 trillion, even though the european economies as a whole are about the same size as the u.s. which you call bonded debt, or come in a skit involved in commercial paper, bonds and other sources. five chilliness country, only one in europe. that means europe is top-heavy with banks. but that means is if you're a small company and you start to grow, you don't have the capital industry we have. you don't have the diverse sources of capital here. sue eventually give forest to become part of a big company. so you don't get the microsoft and apple on the scale we get in this country. so you look the 1970s. terrible decade. microsoft, apple, oracle,

charles schwab, southwest airlines, fedex and others. a capital system can nurture them, get them to grow and be independent companies of the future. so again, europe is a 2%, weaker at 3.5 even though it had the largest economy we have the capital markets to adjust and if government ends of messing up the markets as it does when it trashes the dollar, you get new instruments to come in that deal with it and try to make money off of it. or do you stabilize the dollar? a lot of that stuff goes away because it's not needed anymore. >> is a time in your view to and the post office monopoly? >> other countries have been ahead of us in privatizing the post office. one of the chapters is called fedex or the post office and fedex symbolizes in a very real way the creativity of delivering new ways of being efficient,

doing things differently in the post office symbolizes sluggish service, lack of innovation and we should privatize it and do so in a way where people the middle of nowhere did a magazine if they want. the amazing thing about technology is take handheld spirit of free markets are about turning scarcity into abundance that is something government cannot do. 30 years ago the cell phone was the big issue box at about 30, 40 minutes of battery life has $3995. >> you have one? >> no, i use a landline. but the amazing thing is that the government got involved it would still be his biggest issue box, maybe 15 minutes of battery life as $9995 be railing against greedy cell phone makers. so today there's 5 billion in the world. have a cell phone to your banking, medical service.

they become handheld computers. so the simple ones are virtually giveaways with the $3995. constant creativity and innovation. just give me one other example, the high-tech example of cell phones. even simple things. you go to a starbucks or similar coffeeshop a 12-ounce, 16-ounce, 20-ounce cups of coffee. he noticed the list at the same size that they don't have three different kinds of inventory? those little things constantly happen in this kind of an economy that's what we seek to preserve. that is morality, little things got a big constantly happening, ever wider circles of cooperation. because will efficient water, we don't realize that the system is. >> this is your second book written with elizabeth ames. this is "freedom manifesto" coming in august 2012 and this

one is new as well, it "how capitalism will save us" also written with elizabeth ames. with elizabeth ames? >> elizabeth worked with us in the 1990s and did a lot of writing for us. she worked at the same radio scripts on the radio show in the 90s. so she understands entrepreneur capitalism, a very capable writer and also helped edit a book i did before these called the flat tax revolution, advocating flat tax. so she's got the ability and the knowledge, so i put her to good use. >> as you well know, a flat tax or any tax reform would need to go through the legislative process. what is your current opinion of congress and some of the debate they are having or not having about economic matter? >> will take the tax thing. most people now recognize as good to simplify the thing and what really stunned me is the

sense in both commission when the president that with the deficit a couple years ago. democrats signed on to 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 there needs to be fundamental reform. so i think after the election was going to be the surprise next year is there's going to be a lot of ability to get this done because i'm a democrat, not the majority, but certainly the minority realize these things have to be done. so i'm in that sense optimistic and i think romney will win the election. i think he will push these things democrats support. one of the things we have not is in terms of entitlements, there's this attitude that we must raise the retirement age to 85 and shoot grandma so she doesn't take any more medicare or something like that. they're very positive reforms.

i mentioned the cell phones. i can't link it to the same creativity and health care are you create more health care, cheaper health care and a safety net is said of the crazy system we have today? government is friendly aquaculture. but we don't be starving. in terms of food, so with that agriculture produce the food. companies processed the food, everyone from casinos and restaurants and supermarkets and grocery stores of food. people have problems from food banks to food stamps to do with it. why can't we do the same thing in health care? said people get basics and get real free markets. i live in new jersey. you've really got me going on this. in new jersey, with crazy regulations. i can buy perfectly good health insurance policy in pennsylvania and half the price in new jersey, even less than

wisconsin. but it's illegal for me to do it. i can buy a car in the states, but not the insurance. want to open up nationwide shopping, get hundreds of companies competing. they'll change how health care is delivered, but either patient in charge of come up with ways of getting more availability and health insurance. there's exciting ways to do for people with chronic conditions. so that's what we need and that's the spirit. government will kill creativity, kill abundance. for markets will bring creativity in ways we can imagine. what steve jobs said about marketing, do you do surveys? know because people don't know what they want until we show them. that's what entrepreneurship is. not just saying a lot more peanut butter and jelly sandwich. the showing you things you didn't only needed. today's luxuries become tomorrow's necessities. today's things that are expensive and scarce become abundant tomorrow. so any high-tech and today,

tomorrow becomes cheap and available like cell phones, tvs, flatscreen tvs, 15 dozen years ago, 500 bikes today. constant creativity, people doing new things. >> lets very quickly go back to what you talked about. would you do want to pay more taxes because the simpson/bowles plan included taxes? to pay enough taxes today? >> i certainly pay enough. one of the things we plan out of the boat according to steve moore of "the wall street journal," the top 10% of income earners in this country pay more income tax proportionally than the top 10% than any other industrialized country. there's not a shortage of tax pain. the key thing is how do you get a system that encourages more creativity to the government and the collecting more. surveys have shown, research has

shown countries have low tax rates systems, low tax burden, end up collecting more revenue than those that have high tax rates or raising their tax burden. again, people have more free markets and the government will get its abundant cut as well. the key thing is how do you get the free markets going quite heavy get our freedom and free markets? how do you get them going? it would be fine sponsor remembers what it's world is, not the cover or have today, but by madison and others. >> we've been talking with steve forbes about his new book, "freedom manifesto: why free markets are moral and big government isn't" also out on the market is "how capitalism will save us." what's your enthusiasm level but then that romney campaign? >> he would be a good president precisely because he knows what it takes to get real things