New Jersey business-publishing heir, flat-tax advocate and sometime GOP presidential hopeful Steve Forbes was in town plugging his book, How Capitalism Will Save Us, before the World Affairs Council, which let me ask him a few questions:
How can you, as an independent publisher, compete with Big Media, with Murdoch and Bloomberg? There is no 'big' anymore. That's an old mindset, pre-Web. The only 'big one' is Google. Accept the reality that, in the digital age, you can't corral information.
How do you get paid for giving info away? You not only have to create your own content. You have to create little communities. You have to learn to get content from outsiders, bloggers and the like. Editing now involves culling a lot of outside content. It's done in nanoseconds. It's a different mindset. You have to be multiplatform.
Two weeks ago we had an online conference to bring people physically together. We had 1,500 financial
planners there. For certain financial advertisers, 1,500 planners is gold. They know they're not wasting their message.
We're doing sort of a mini version of what P&G used to do in the 50s, the original soap operas. Which means a proliferation of content but also you have to work hard and have value added. The Web is a relentless commoditizer.
So those who learn to tap into the membrane of various communities are going to do just fine.
Free Internet's not going away? Most people today look on information on the Web the way people do bread and butter at a restaurtant. It's supposed to be free. People don't want to see it on the bill. We'll see if these experiments in micropricing, pay after the first 10 articles, there may be something to that. It wont be one size fits all.
Obama raised a lot of money on Wall Street, but he called bankers 'fat cats' the other day. Is he moving left or right? He's trying to appease the center where the Democrats are in trouble. They've lost a lot of support among independents. They've woken up to the fact they own the economy now. Saying 'it's George Bush's fault' doesn't cut it anymore.
Is the economy recovering? We're going to get some economic growth next year. But looking to (the next election) in 2012, it's not going to be very strong. They've got to strengthen the dollar. If not it's going to be inflation, like in the 1970s. Bernanke doesn't get it: when you debase your currency you will have misallocation of capital. You will hurt normal productive investment. A weak dollar means weak recovery. An unsustainable recovery. Bill Clinton understood it: a weak dollar's poison.
Why aren't banks lending? It's fine to rant and rave at bankers. But regulators are still telling banks, 'tighten
up your lending standards.' Bernanke doesn't realize that by keeping rates so low there's no incentive at all for a bank to lend. The regulators won't jump on your backs for buying government bonds instead. So why take a risk with a loan?
Should we break up the biggest banks? The problem is not their size per se. It's the doctrine of 'too big to fail'. These entities have got what amounts to guarantees of their debt from the federal government. They can lend risk free. A smaller bank is taking a risk. That means the smaller bank's cost of capital is bigger.
We did right to let Lehman fail? No, they should have saved Lehman (instead of) AIG.
Once they dealt with the immediate panic, they compounded it by forcing banks to mark to market accounting, which Congress thank goodness forced them to get rid of in March.
But investors want mark-to-market, so banks can't hide bad investments. It made the banks write off perfectly good (bonds and loans) because of the illiquid market. (Congress is) still doing nothing substantive about the credit-rating agencies' cartel the SEC has created. Nothing about transparency on credit-default swaps. Things that are substantive they're not moving on. They're turning banking into a utility. You're not allowed to fail.
Who's your GOP candidate for President? We're still in the looking stage. You won't run? I'm an agitator now.
Who'll win the 2010 elections? The Republicans could take the House. They have some opportunities in the Senate, in Delaware, where Mike Castle's running. And in Connecticut and Illinois.
Can Obama govern with a GOP or deadlocked Congress? It helped Clinton to have a Republican Congress.
What to do about healthcare? They should start over, starting with Medicare. Instead of turning it all into a public utility, let the private sector compete. What should be done - but this crowd won't do - is allow people to buy insurance across state lines. A policy that would cost me $15,000 in New Jersey I can get in Pennsylvania for $7,000.
PA Insurance Commissioner Joel Ario says if we allow interstate insurance, it'll become prohibitively expensive, for example, to ensure autism, as long as any state makes that optional. But companies would specialize if we had an open market. Heriditary diseases, chronic diseases, an open market would find faster ways of treating it.
You really think the market can solve chronic illness? Well, you can deal with people who fall through the cracks in the system without upending the system. (Like) food stamps. You can have programs for people who can't get it any other way.