Saturday, December 17, 2016

From the Archives: Steve Forbes makes the moral case for free markets and free people

Publisher's note: This article was originally published on on January 9, 2013. The publishing platform was discontinued July 1, 2016, and its web site went dark on or about July 10, 2016. I am republishing this piece in an effort to preserve it and all my other contributions to since April 6, 2010. It is reposted here without most of the internal links that were in the original.

Steve Forbes makes the moral case for free markets and free people

Speaking at the Heritage Foundation on Wednesday, January 9, two-time presidential candidate Steve Forbes made the ethical case for free enterprise in summarizing his most recent book, Freedom Manifesto (coauthored by Elizabeth Ames), which has as its subtitle “Why Free Markets Are Moral and Big Government Isn’t.”

Forbes, chairman and editor in chief of Forbes Media, began by invoking Alexis de Tocqueville’s warning about “soft tyranny” – when, Forbes said, “government takes more and more responsibility away from you and makes you more passive and dependent.”

When people like himself express fears about “big government,” he said, they are not talking about the kind of government James Madison wrote about in the Federalist. They are not expressing a desire for what the “other side” tries to portray as a desire for “anarchy.” Rather, Forbes said, they are trying to make a cogent case for keeping government limited to a few things that it can do well and properly, leaving to the private sector and to individuals the overwhelming rest of things.

'Deeper sense of humanity'

Forbes defended free markets as being “moral because they meet the needs of other people.” Free markets, he said, promote both opportunity and a “deeper sense of humanity” by stimulating creativity and innovation, in the arts and philanthropy as well as in commerce and industry.

Steve Forbes at Heritage Foundation
Commerce, he said, “is a profoundly creative exercise” that produces “extraordinary circles of cooperation around the world.” He cited Leonard Read’s widely-distributed essay of the 1950s, “I, Pencil,” which explains how thousands of individuals divided by thousands of miles contribute to the making of a single pencil.

Markets, Forbes explained, “are about transactions” – not, as Hollywood stereotypes might portray it, as about “taking” but about “trade.” Commerce, he continued, “breaks down barriers between people. It channels their energies toward constructive ends.”

Because commerce is about people interacting with each other, he scoffed at the notion that economics is “the dismal science.” It isn’t dismal, Forbes said, because “it’s about people, and people are always fascinating.” Contrary to old definitions of economics as being about studying scarce resources, he said, it’s quite the opposite: “It’s about creating resources” and making useful things out of things that were not useful.

Luxuries no more

He gave examples of how products once reserved to the very rich are now commonplace. A century ago, he said, “the automobile was a plaything for the very rich” and it cost about $150,000 in today’s dollars. When Henry Ford and his engineers created the mobile assembly line, that changed, and the automobile became a product nearly anyone could afford.

Similarly, he said, 30 years ago, a cell phone cost about $3,000 and “it was the size of a shoebox.” With innovation and new technology, the cell phone became ubiquitous – even in poor, Third-World countries.

Looking further back, Forbes noted that “200 years ago, famines were common in Europe. People then didn’t even make $1,000 a year in today’s dollars.” Agricultural technology and the division of labor has, since then, eliminated famine in Europe and the rest of the industrialized world, even as the number of farmers has declined to a tiny fraction of the population.

Although free markets have an undeserved reputation of being unstable, Forbes said, they instead allow for the improvements that are built upon failure. Steve Jobs, he pointed out, was fired by the very company he created, only to come back and make it even bigger and better. He quoted Bill Gates as saying that “success is a poor teacher.” Free markets allow failure to teach and serendipity to guide innovation.

Money as 'liberator'

Citing Alexander Hamilton’s view that “money is a liberator” because creating things in a commercial environment is blind to race, class, and ethnic differences, he pointed out as well that “money is just a facilitator” for people making transactions with “each other in a common endeavor” – even people who never meet each other and may not even know about the others’ existence.

Forbes concluded his remarks by reiterating that “free markets are about people creating” – creating products and services that meet the needs and wants of other people. Free markets, he said, look to the future while governments look to the past.

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