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Unending Organizations & The Freedom Manifesto with Steve Forbes

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Gary Pinkerton begins the show on the topic of organization and its natural existence. This was a consequence of the need to survive. He also looks at programs and costs of war and what happens to those programs after wars end.

Later in the interview segment of the show, Jason Hartman hosts Steve Forbes, Editor-In-Chief at Forbes Media. They discuss why the government gets larger even though they are a very inefficient, ineffective organization. Forbes dives into history illustrating why free markets work for people and why big governments function to meet their own needs. They discuss Forbes’ book The Freedom Manifesto.

Announcer 0:04
Welcome to the heroic investing show. As first responders we risk our lives every day our financial security is under attack. Our pensions are in a state of emergency. A single on duty incident can alter or erase our earning potential instantly and forever. We are the heroes of society. We are self reliant, and we need to take care of our own financial future. The heroic investing show is our toolkit of business and investing tactics on our mission to financial freedom.

Gary Pinkerton 0:39
Hello, and welcome to Episode 147 of the heroic investing show. This is a podcast for first responders, members of the military, veterans, and anyone really looking to improve their financial future and gain some freedom with their time. We teach America’s heroes how to build passive income, build their startup business and safely grow wealth through real estate and other alternative investments. And we include, of course, first responders EMTs, in that firefighters, police officers all in that group of America’s heroes, we help people put protections and systems in place to enable them to build a life where they can focus on their passion, that service or product that they’re uniquely gifted to share with the world. Everyone has one. Most of us though, are not in a position to master that skill, Master that gift and be able to share it with others. So it’s our goal here on the growth investing show, to help you put in place some passive income, and help provide resources for you individuals that can shine the light for you. And then just tools and ideas about how you can start to focus on that unique gift, that unique genius that you bring to the world. My name is Gary Pinkerton. And I’m co hosting this show with Jason Hartman. And we hope that you find value with it. And today is Jason’s turn, he’s going to talk with Mr. Steve Forbes. And so many of you know, Steve from the Forbes magazine, and certainly also when he was running for president a few years ago. And they start off talking about his book freedom Manifesto. And it’s really a compilation of most of his thoughts. But the tagline to that book is that free markets are moral. And big government is not me, I’m pretty interesting. But he goes back to something that really strikes a chord with me, which is that our country was founded. Our founding fathers put together a country where people have the ability for life, liberty, and should have been property, but its pursuit of happiness. And the intent there is that, you know, you pursue happiness, as Pat Donahoe talks about, on the Caribbean well show, especially this year, what he’s focusing on this concept right now, you pursue happiness, and you achieve happiness, by having the freedom to exert yourself to be able to share your gifts, your unique genius with the world and be compensated for it. So you’re doing something you love. And you know, if you get good at it, and everyone else who loves it, too, and then make your world they enrich your world for you. So, you know, see, Forbes is talking a lot about this. And he’s talking about how big governments across the globe have all throughout history, stifled that ability, we started off in our country. And if you if you read, you know, some of the documents in the history about the Continental Congress, you know, they were working to create a country that was unlike England, it was it was unlike a country that had gotten huge, a huge empire that was taxing the people to keep getting bigger and bigger and grow the government bigger. And there were some essential things in there that they were trying to make sure that there was no central government, no central bank, for example. And that the government serves at the pleasure of the people and all of those things. And we’ve lost a lot of that. And that really is one of the things that inspires me. So I’m not a huge fan of everything that Steve Forbes writes or says. But this his book free a manifesto really kind of speaks to some of the stuff that I saw while I was still getting more and more senior in the government the last few years, you know, at the Pentagon, Jason Steve talked a little bit about this in this interview. But I saw and I learned that an organization, a government organization, for example, during sequestration, during times when we had shut down the government, any new organization once formed, and this is, you know, I had bosses who told me that the biggest risk about hiring permanent employees or starting a new branch or a new business or bringing on more people, making your part of the government bigger is that it’s very hard to turn back the clock on that it’s very hard because any organization Once created is now its most primal purpose is preservation. I know that sounds crazy. But unless something is a very short, little working group that has an end, if you create a new branch, if you bring on new people to do something, you know, a new Directorate or whatever, then that thing’s first and primary position. Underlying position is how do we do a good job? How do we Excel, how do we stay in existence. And we saw that during sequestration, we’ve seen it every time we try to bring, you know, the army back to garrison, when we come back from wars, you know, everyone digs into we created a new base, you know, in this county or in this, you know, area and the representatives and the senators, and the local people, you know, fights to hold on to that thing. And so that feeds into the organization’s desire not to get smaller again, is, you know, the army is really this an interesting test case that for throughout history, or maybe I shouldn’t say test case, maybe I should say example. I mean, it is an organization that has had the ability to get big when needed and get small again, afterwards, other services haven’t done it, because we’ve not really expanded or ballooned, as much as the army does, when we go to war. Navy and Marine Corps get a little bigger, but not much. And they’re able to just through attrition, kind of bring that back down. That army, you know, grows factor five or six, it seems every time we get into big wars. And that’s just unsustainable in peacetime. So we do need to bring it back down. And we come up with this challenge all the time, but the army has been able to do it for a couple hundred years. It’s hard. And it’s becoming harder when we have lots of lobbyists and bigger government, who haven’t come down very much from Iraq and Afghanistan, and it’s hurting us, you know, we have the largest defense budget we’ve ever had. And most of its going towards people. So this is not my goal to talk about that my goal is to introduce, you know, see Forbes and his ideas. But I did see often that any organization created in the government has, you know, as its primal basic primary need to be able to self sustain, you know, to remain in existence, it’s survival. And that means that government always gets bigger and bigger and bigger and bigger, right, and it takes somebody with a lot of fortitude, to try to rein that stuff back end, you know, Donald Trump said he was going to go and drain the swamp, and for every new law that came into place, you know, to others would have to be taken out. And he’s, you know, more than any other president has stuck with what he said he was going to do for quite a while, he’s very challenged to try to do that. And he really hasn’t drained the swamp, nor made the government in the small, in fact, it’s gotten bigger. So he may have reduced some of the laws, but the government’s gotten bigger. And that takes away from productivity, you know, see, Forbes biggest, most important point in this book is that money siphoned out of the productive people into an overseen government for handouts as entitlements and things prevents the prospering that we saw early in America and that we see come out of every kind of a recession, because when you come out of a recession, we come out of a depression, the government is actually out there stimulating these small businesses. And so they’re taking this money they’ve taken from them originally. And they put it back into them, these, they’re kind of loosening the reins on the individuals that are out there producing in a democracy and a republic. So that, you know, the free markets are actually kind of stimulated in those periods. But then we turn in times like today, where we’re having a lot of larger economic improvements, then you start raining back and we start taxing higher, we start adding taxes. And those taxes come in the forms of, you know, required health care, and many other things that are stifling business. So many will say that the things that the President Trump right now are doing with respect to tariffs. And these wars that were kind of gotten in on economic wars, are also stifling small business. So these are changing times. These are interesting times, but I believe what Jason Hartman says, it’s an amazing time to be alive. And these are awesome times. So all of these challenges are overcome, including climate change, you know, we can handle this stuff. You know, humans have proven the ability to do so. So I really hope that you enjoy and appreciate this discussion, we’ll see Forbes and maybe take a look at some of his works books. And then I would also, you know, if you like these topics, you know, he’s got a lot of referrals on his side of people to, to go watch to go pay attention to, if you’re like me, and think that there’s not a lot of difference between Republicans and Democrats, people who are living within the status quo of a government that has just grown and grown and grown and grown. I think it is incumbent upon us to try to get America centered back to a smaller government, more freedom for individuals to create and share. That’s how the apples happen. That’s how, like your fried chicken gets created in McDonald’s. And I’m not saying bad food, I’m saying people who can create amazing things and serve hundreds of thousands of people. That’s how those things happen when you when you loosen up the rains, and let people create which is really been the fundamentals of America. So I’m feeling kind of patriotic after that big dissertation. I hope you enjoyed the introduction, and I really invite you to join me and let’s listen with Jason Hartman and Steve Forbes.

Jason Hartman 9:54
It’s my pleasure to welcome a name that you are all very familiar with, and it is Mr. Steve Forbes. doesn’t really need an introduction. But his body of work is so comprehensive as a presidential candidate, the author of numerous books, and of course, Forbes magazine. Steve, welcome. How are you?

Steve Forbes 10:11
Good to be with you again. Thank you.

Jason Hartman 10:12
Well, likewise, I’d like to talk to you about your latest work first, maybe the freedom Manifesto, why free markets are moral. And I completely agree. The first chapter Steve starts out with the FedEx versus the post office. And of course, we all just heard that the post office is cutting Saturday delivery, what a mismanaged disaster it is. But tell us about the book.

Steve Forbes 10:36
Well, the book was written because of the perplexing question, confusing question as to why government gets bigger and bigger when we know it doesn’t work very well. Since the 1980s. With Milton Friedman and others, we know that it’s highly inefficient outside of a certain area. And yet it gets bigger. And one of the reasons we discovered why it gets Biggers because it occupies the high moral ground. People acknowledge government may be inefficient, but it’s hard. It’s in the right place. It takes care of people in need, takes care of the kids that helps deal with free markets when they go off the rails and the like. And so it just gets bigger. And wouldn’t this book, which I co authored with Elizabeth Ames, we found out that contrary to myth, free markets are actually moral because they meet the needs and wants of people, while big government is not moral because it meets its own needs. And you saw that in that Chicago School strike a few months ago, one of the worst school systems in the country. It was all about pay and benefits, not about the kids. You saw it in the GM bankruptcy where the government to force a settlement that favored the union’s political supporters of theirs, tore up the contract law did things you’d expect in the third world. So free markets, encourage all the things that we want and encourages creativity, innovation, meritocracy, just compare apples, Solyndra and big government is about meeting its own needs. And that’s what people have got to realize.

Jason Hartman 12:05
People do have to realize that government always looks out for itself first, and looks for ways to expand its power, and to keep its entrenched alliances and motivations. And, you know, it’s just an issue of pandering. I mean, it’s a constant pandering. Is that why government occupies the high moral ground in most people’s minds? Of course, it’s misleading, but maybe talk a little bit.

Steve Forbes 12:29
Yeah. Government always takes a crisis. And if you oppose a government program, you always get hit with What do you have against helping children? What What do you have against the elderly? And so you always get portrayed if you oppose a government program is being heartless being a cold calculating accountant in free markets actually, are the ones that enable people to get ahead and enable people to earn more, have more, and this government that holds us back but government gets bigger by taking our resources and then pretending to help us

Jason Hartman 13:06
well, in anybody listening to this has to do is just ask themselves. I mean, what is their personal experience with government versus free enterprise? I mean, would you rather walk into the Department of Motor Vehicles or the Apple Store, the post office or FedEx, who’s more helpful? It’s obvious,

Steve Forbes 13:22
yes, because government answers to its own political constituencies, its own bureaucracy. Whereas in the free markets, if you do that, you don’t stay in business very long. You must be attentive to your customers, you must be on the cutting edge, or the world will pass you by unless you get bailed out by government. There were one of the interesting things we recount in this book is the story of a British historian, fellow named Parkinson’s. In the 1950s. He was doing a history of the British Navy. And notice after world war one when Britain had the largest Navy in the world by far, they’d won the war. So they downsize the Navy mothballed ships discharge, sailors laid off dock workers and knit the government agency running the Navy got bigger as the Navy got smaller. And he postulated that organizations unless it’s in a free market, organizations inevitably get bigger just because they want to get bigger and that the work they have to do has nothing to do with the size of the bureaucracy.

Jason Hartman 14:22
Well, it reminds me very well looking at bill Bennett’s book decks of leading cultural indicators where he had this very telling graph, and it compared teaching staff and public schools versus administrative staff back into I think, the 60s or 70s, up to the 90s and the equation Steve has completely flipped where the there’s so top heavy with administrators and all the money I mean, it’s just they constantly complaining, oh, we need more funding. We need more funding. When they keep getting more funding and they keep misusing that funding.

Steve Forbes 14:55
Well, if you don’t stop them, they will get bigger and bigger. More bloated. And as you point out in terms of higher education, thanks to government subsidies, for tuitions extensively to help the kids, what happens is that you get more administrative bloat, you look at the number of administrators versus professors and the numbers become completely skewed. And the kids instead of getting something that catapults them ahead in the world, come out of higher ed with a burden with debt sort of a mortgage without a house, right?

Jason Hartman 15:28
Yeah, yeah. And that debt, by the way, is not dischargeable in bankruptcy. So they they literally indentured servants for life, to that student loan debt. And that is very scary. But what what it seems to be when you look at the left and the right in the political debate, is that the left always appeals to instant gratification, oh, we’re gonna have more government, you know, loan guarantees for college. And all they do is create the Basic Law of inflation as you have, you know, a large supply of dollars chasing a limited supply of goods and services. And so of course, tuition prices go up. And and you see these colleges abusing the system. My mother went to oddly, it’s kind of odd. My mother went to Berkeley in the 60s, and got a degree in social welfare. Yet Steve has never voted for a Democrat.

Steve Forbes 16:17
markable woman

Jason Hartman 16:18
Yeah, exactly. But but as a social worker out of out of college for a couple of years, he just saw that government didn’t work, you know, at all. And you know, she worked her way through school back then you could do it. But nowadays, I don’t think it’s possible for a kid to go to a decent college and pay their way through, she didn’t get a student loan, she didn’t have her parents paid for it.

Steve Forbes 16:41
Well, you had scholarships, and you took jobs to help pay your way through. And colleges knew there wasn’t an open a faucet or an ATM for more and more cash. So they watch the expenses a little more carefully. And you could get a good education. And by the way, you didn’t have these things where you have today, where you get six years, before you get a degree, and I think you’re gonna see a huge change. thanks to technology, thanks to the web, you can get if it’s just knowledge you’re interested in, you can get a virtual university education for $1,000 a year going online.

Jason Hartman 17:20
Yeah, it’s it’s amazing. And you can actually get it for free at the Khan Academy. I don’t know if you’re familiar with that. But

Steve Forbes 17:27
yes, we we’ve written on this. And so it’s a huge possibilities out there. But if government was in charge, you believe we know cell phones, if government been in charge of cell phones, you know, the first 130 years ago, as big as a shoe box and close $3,995 if government had been in charge saying everyone wants to have a cell phone, I guarantee you they’d be just as big as a brick today. And cost $9,995 and government would be railing against greedy cell phone makers.

Jason Hartman 17:57
You are so right. Well, I don’t want to spend all the time on the freedom Manifesto, which is a fantastic work. But the last chapter, yeah, I love the title of it, by the way is entitled The spirit of Reagan or Obama, address that for a moment, if you would,

Steve Forbes 18:11
well, free markets are about optimism. You don’t invest in the future, where you’re the last one to be paid off, if you didn’t have faith in the future didn’t have faith that you could put together a team to achieve great things. And both Reagan and Obama came in times of crisis came into office in times of crisis. And Reagan, while acknowledging the severity of the crisis had a basic optimism that the American people would pull through as they’ve always done before. Whereas Obama was sort of a pessimistic, we must put childish things aside, did not convey the faith in the basic the uniqueness of America and the American people. And you see it in the way he governs. It’s about conflict 1% versus the 99% elderly versus the young labor versus management all about conflict class conflict and the like to generate government power, whereas Reagan was a more optimistic and benign view of the future because he had faith that for all the flaws of human nature, and free markets are sensible rules of the road. People do great things.

Jason Hartman 19:18
There is no question about that. And history has borne that out so many times. There’s just no example in the world or at any time when a larger government has created more freedom, you know, and of course, I’d say that it there’s a lot of detail to that. We don’t want to live in Somalia. I remember when I saw you speak at the Nixon library several years ago for a young entrepreneurs organization event. You said, I think you said something to the effect of look, we need government because we’re not all angels. Okay, you know, we need we need some rule of law. Of course, anarchy is no fun, but we’re on that continuum and that billion Shades of Grey, does one come down.

Steve Forbes 19:59
Well, I think I think then Madison, more than 200 years ago made that famous observation. He said, If we were angels, we would not need law we’d not need governments but manifestly we are not angels. So we do need laws, we do need government. But he also pointed out that this is why the founders put in divided government checks and balances, because they fear that a government that was strong enough to provide the law and order and protect us from invaders could also end up suppressing people inside the country. And so they wanted divided powers. So government has certain functions are safety, dealing with immediate disasters and basic things like that enforcing contracts, the when it goes beyond that, and trying to run an economy like, what are the government’s trying to do with health care, the financial industry, the energy industry, we should learn from your opponent, not to mention the Soviet Union, those things will lead to less freedom, less opportunity, tyranny, and more miserable life.

Jason Hartman 20:57
No question about that. On your Twitter feed. There were two interesting tweets just yesterday, that I that I wanted to ask you about one of them, since most of our listeners, by the way are real estate investors are certainly investors to say the least. But what about asset inflation, how it leads to quote, the wealth, illusion, unquote, and how the government is just blowing along with the Fed, of course, is blowing up bubble after bubble, whether it be the stock market, the housing market, and it seems like here we go again, on both counts. And then also there was another tweet about explaining the housing boom, in the last 30 years, I just wanted to get your perspective on those,

Steve Forbes 21:36
well, when government undermines the value of the dollar, you get misdirected investment. And we saw this in the 70s, oil went from $3 to $40. a barrel Reagan comes in the inflation stops or crashes to $10. And then average is a little over $20 a barrel from the mid 1980s to the early part of the last decade. So when the dollar is undermined, people go for hard assets to protect what they have, instead of investing for the future farmland has doubled in recent years, there is another bubble that is created now and get another bubble in the bond market. And so it’s like changing the minutes in an hour. Imagine what life would be like if you didn’t have 60 minutes an hour, but it changed each day. He would be would be a lot more confusing and a lot less opportunity to get a higher standard of living. So when government undermines money, bad things happen. And we’re seeing that today, government gets all the money and wants deficit without tears, while small businesses, unincorporated businesses, their credit lines are drying up. They’re getting less credit today than they did two years ago. And on housing. Government always does these programs extensively to help us in housing, the Community Reinvestment Act saying put the standards aside for lower income people. And Fannie and Freddie got bigger and bigger and bigger FHA Federal Housing Administration getting more bloated is going to need a bailout soon, and ends up just blowing up the housing market. And we have less homeownership percentage of the population, then do What does another country so government says it’s here to help Watch out

Jason Hartman 23:18
very well. But as, as Reagan used to often say, so your prediction of the future, I mean, we’ve got $16 trillion hanging over our head, plus another entitlement time bomb of anywhere between 60 and 100, and $20 trillion. inflationary for the future,

Steve Forbes 23:36
it means trouble. And when when government undermines currency, you can’t predict what kind of disaster you’re going to get, but, you know, on toward bad things are going to happen. And we had that in 2008 2009, we never would have had that economic crisis, we never would have had the housing bubble. The Federal Reserve hadn’t printed so much money and the government made such catastrophic errors in regulation. So in the future, it is, you know, you know, the pain, that government debt, right now it is deficit without tears, but you start to get real interest rates, again, that’s going to cost the government hundreds of billions of dollars, and where’s that money going to come from? So I can’t tell you exactly the bad thing that’s going to happen. But the patient had better watch out, as they say on the airplane, tighten the seatbelt turbulence ahead,

Jason Hartman 24:29
no question about it. So what are your other thoughts on if we didn’t cover them on the economy and you know, any tips for investors

Steve Forbes 24:38
that you might have? Well, the investors are in a tough place right now. Because you know, the Fed is mucking around with the dollar. So you do need some hard assets like gold as an insurance policy. But you don’t want to go too far into it because these things burst. We saw it with housing a sure thing and then exploded. We saw in the 70s, oil crashes of 70%, when the the the inflation ended, so you got to be just very careful and for your retirement fund, unless you’re about to do it. The advice there is don’t let emotions be your enemy. If your contribute, whether it’s monthly, quarterly, weekly, whatever you do small amount, do it consistently. Because even though the markets are turbulent today, in real terms, they’re still lower than they were 14 years ago, 12 years ago, the thing they will keep in mind is America always comes back. And if you keep putting in steadily, you’ll do just fine trying to time the market, you will get killed. And early 2009 when things look especially bleak, a lot of people pulled out of the market. And since then the market has doubled. So stay in it, ride the storms, don’t let your emotions get in the way. And you’ll do just fine.

Jason Hartman 26:01
What do you say to someone who thinks this recovery is real? I think it’s fake. I think it’s just an inflation induced recovery. So it’s maybe maybe you’d call it a nominal dollar recovery, rather than a real dollar recovery. The problem is with this stuff, is there always time lags, the government creates a bunch of money out of thin air, and everybody feels prosperous for a little while. And then suddenly they realize, oh, everything just got more expensive. So maybe I’m not as prosperous as I thought. And it’s these constant cycles of catch up. And I mean, I mean, certainly you don’t think this is a real recovery?

Steve Forbes 26:36
Well, it’s a very weak recovery. And what is astonishing is after every sharp downturn in the past, we’ve always had a sharp upturn. And then the question became, could you sustain it? Well, you always got that sharp snapback. We didn’t get that sharp snap back this time. So we’re like the car on the superhighway. We should be going 7075 miles hour today. Now we’ve gotten it from 20 to 30. But we’re going to go back to a 10 or 15 miles an hour. So yeah, the this is not NASCAR time. Sadly.

Jason Hartman 27:07
Yeah. It’s just a slow plodding. Recovery is a recovery at all maybe. Right. Yeah. Steve, what’s going on at Forbes magazine?

Steve Forbes 27:15
Well, Forbes magazine, actually, for the first part of this year is doing rather well in advertising, circulation paid is holding up. real excitement is on forbes.com or live in January, we had over 45 million unique visitors. So we’re adjusting to the new age and knock on wood. So far, so good.

Jason Hartman 27:37
And you’ve been adjusting to the new age for a long time. I mean, I think you were one of the first big publishers to really recognize the power of the internet, while everybody was trying to figure out what to do. I mean, I remember when I met you, you know, about 12 years ago, and the investor crews in Russia and Scandinavia, I was talking with some of your people at the dinner table about how Forbes is publishing for the web. And so it’s a different businesses in it,

Steve Forbes 28:01
it very much is both on the content creation side, we now have almost 1000 contracted contributors for forbes.com making one or two submissions every week, every month or so. And on the marketing side, we’re doing things very differently than we were doing five or 10 years ago. So yeah, the world is changing. What you have to keep in mind is what Peter Drucker, the great management guru, once said, he said, businesses should remind themselves what is their what is their purpose? What are they trying to do? And if you do that, then you don’t get quite as hung up on the means to achieve what you’re trying to do. And you’re better able to adjust to changing times and circumstances. Yeah,

Jason Hartman 28:48
fantastic advice. I think he also said the one constant is changed. I may not be attributing that correctly, but I think it was Drucker. Yeah. And we need to get used to a lot of change, especially in the future. So as you said, fasten your seat belts. Well, anything else you’d like people to know in closing

Steve Forbes 29:04
just even though we’re in for some very stormy weather, don’t lose faith in the future. Ronald Reagan never did. We will find a way out of this. We always do. Don’t despair.

Jason Hartman 29:16
Fantastic. Well, Steve Forbes, thank you so much for joining us today.

Steve Forbes 29:20
Thank you.

Jason Hartman 29:22
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