In case you are wondering, yes that is the same Steve Forbes (Malcolm Stevenson Forbes Jr.) who ran in the GOP primaries of 1996 and 2000. Of course he is also well-known as the editor and chief of the eponymously named Forbes magazine. As you might anticipate, the Forbes presentation was replete with economics and politics given the title of his presentation "Obama and the Economy". Forbes is a strong proponent of limited government so the theme of his presentation was fully expected.
Mr. Forbes anticipates a strengthening of the economy though not to the levels of 2007. Weak income growth will continue. He decried the stimulus plans since they are merely government use of resources that might be otherwise allocated in another manner desired by the market. For him the sequester was not a bad outcome since it diminished the resources going through the Washington "sausage factory". He is concerned that the GOP may try to shut down the government if they cannot push through their, albeit limited, spending reductions.
In regards to social programs he wants legislation to change the non-marketable securities in the Social Security trust funds into marketable ones. In this fashion, even if the government shuts down, they could sell these securities in the open market to raise cash for retirees. Editorial comment: it is true that the Social Security trust fund is nothing more than a bunch of IOUs that sit in an office in Maryland. The IOUs represent money that was used for other spending instead of their intended use. Those IOUs have no market value since they are not marketable securities. In order to make them marketable, the Treasury would have to initiate this conversion and I am not sure how the market would receive this avalanche of new debt obligations.
With the Affordable Care Act (Obamacare) right around the corner, Mr. Forbes weighed in. He suggested that our problems with health care are largely due to the absence of a market pricing mechanism. The person receiving medical care does not pay for the service but rather an insurance company. For example, he suggested that patients never ask hospitals what things cost. If they did, the hospital might think they are lunatics or uninsured. Why is it that demand for health care is viewed poorly yet in other industries demand is viewed favorably? His health care reforms include nationwide shopping for insurance to increase competition. Another problem he sees in the health care industry is the Certificate of Need or CON. The CON exists in order to regulate the creation, expansion or acquisition of health care facilities. Originally it was thought this would prevent overcapacity. The result has been higher prices. If you wanted to open a new MRI facility you might be challenged. That new MRI facility means more health care competition.
The upcoming leadership change at the Fed has him concerned. He views both front-runners (Yellen, Summers) as poor choices since both embrace "Pre-Copernican" economics. This draws a metaphor on the astronomical knowledge before Copernicus regarding planetary rotation about the Earth instead of the Sun. Either choice will continue undermining the currency of the United States. This tends to introduce bad pricing information and leads to misdirected investment (speculative bubbles).
Mr. Forbes drew a nice parallel between standard weights and measures and currencies. Economies are built on standard weights and measures. Everyone agrees on the definition of a pound or kilogram when it comes to weights. Similarly, we can agree on measures such as feet or meters. When we go to a grocery store, we understand we are buying a pound of something. If we purchase a house, we understand square footage. Our currency, on the other hand, has a floating definition. In order to standardize the definition of our currency he advocates making it as good as gold.
The end of his presentation railed on excessive regulation, which he described as another form of taxation. There are so many rules today that it is easy to break one of them and it is up to bureaucrats to interpret these violations. Finally, he left us with this quote,
Liberty is eternal if we have the vigilance to protect it