Rich People Things, with Chris Lehmann: Forbes-ismus; A Primer

Well, the good news is that Steve Forbes seems to have wearied of playing Edward Gibbon in his recent attempt to mine the ancient past for management tips. The far less good news is that the visionary publishing scion is still thinking great thoughts about the way things ought to be-and he still has an eponymous magazine, which conveniently doubles as a platform for repurposed book content. And yes, the still worse news is that the indefatigable Will Durant of Gramercy Square has released another book (again instigated with a long-suffering collaborator) called How Capitalism Will Save Us: Why Free People and Free Markets Are the Best Answer in Today's Economy-and he has once more shoveled it indiscriminately on to Forbes.com for the edification of its well-heeled self-regarding reader base, and to the mortification, no doubt, of the poor editors and writers marooned on the island of a publishing empire that Forbes' dad Malcolm built.

Of course, the cartelized delivery system for new Steve-branded intellectual content is its own de facto refutation of the one true faith of the free market. If contemporary capitalism, as Forbes and Elizabeth Ames argue, is indeed "the best way to unleash the creativity, inventiveness, and energy of people and mobilize them to meet the wants and needs of others" why is it necessary to publicize the claim by commandeering a magazine's nepotistic ownership structure? It's a bit like Michael Bloomberg contending he was a self-made railsplitter before being summoned, Cincinnatus-like, to Gracie Mansion—or like Silvio Berlusconi claiming he's entitled to wave his ya-yas hither and yon thanks to the simple first principles of natural selection.

But such formal objections are the least of the difficulties for the militantly counter-empirical line of argument of How Capitalism Will Save Us. There is, of course, the standard litany of culture complaint that launches nearly every declaration of conservative grievance these days. The universities, Forbes and Ames lament, are all but official annexes of the Lenin Mausoleum, places "where Marx occupies iconic stature and free-market thinkers are seldom taught"-leading one to surmise that Benjamin Bernanke, Timothy Geithner, Richard Rubin et al must have been schooled Samizdat style by flashlight between potato harvests in collective farms. The liberal entertainment complex, meanwhile, incubates all sorts of fictional business villainy as plot and character devices, "ranging from films like Erin Brockovich to TV shows like Dirty Sexy Money." You know, because, nothing is greater anathema to global entertainment firms than making money. One certainly appreciates the morale benefits of summoning the specter of culture oppression in any good right-wing manifesto-it has the same call-and-response power that Gary Glitter's "Rock and Roll (Part 1)" does at most major sporting events. But here at the end of the new millennial oughts, the litany has roughly the same amount of ideational content that the grunting, fuzz-laden Glitter anthem does.

Never mind, though-this roll call of institutional perfidy is but the window-dressing for Forbes and Ames' main, heroic assertion: "Capitalism's bad Rap"-a force so sinister and world-disfiguring that it must be capitalized-"has helped shape a lot of bad economic policy. People who believe it look to government to 'create jobs,' whereas the most powerful job-creating machine has always been the private sector. They believe the best way to raise revenues for government is to raise taxes on the so-called rich and on 'profit-hungry' corporations."

Just look at the two main domestic-policy concerns of our day: the flailing economy and health care. What's bollixed them up, you ask? Why, government, naturally: The government-sponsored "mortgage behemoths" Fannie Mae and Freddie Mac played a "central role" in the subprime mortgage meltdown; while Medicare and Medicaid have had a "mammoth impact" in "shaping today's dysfunctional health-care market."

There's about a universe or two worth of unexplained causation in these sharp-elbowed claims. For one thing, the Fannie and Freddie "behemoths" only played a "central role" in the subprime debacle because unregulated lenders seized the reins of the mortgage market firmly in hand and drove it straight to the bottom. As trillions in new mortgages extended to unqualified lenders got securitized in the heedless brave new market for risk, Fannie and Freddie were left holding a good deal of the lousy scrip, for the simple reason that they were tasked by (yes) the government to secure lower interest mortgages on reasonable terms. They were central perpetrators in exactly the same sense that Poland started the Second World War.

For another, the mortgage crisis plainly could not have unfolded the way it did without the economic policy consequences of a far worse idea: free-market fundamentalism. The 1999 Gramm-Leach-Bliley law repealing Glass-Steagall restrictions on commercial bankers operating in the investment sector created the great clearinghouses of the mortgage melee like AIG and Citicorp, while the Commodity Futures Modernization Act of the following year laid out the "dark market" architecture that made all those obscenely illiquid mortgage-backed derivatives possible. The libel about Medicare and Medicaid driving up health care costs to a "dysfunctional" level, meanwhile, is now so universally acknowledged as false that even GOP congressional leaders aren't bothering to use it.

But of course, it gets worse. Because in Forbes and Ames' hectic reveries, if the government is axiomatically evil, then of course anything that unshackles the inherent virtue and might of the market is axiomatically-no, gloriously-liberating.

The turmoil of the past few years by no means mitigates the explosion of prosperity that has taken place since the early 1980s, when President Ronald Reagan enacted promarket reforms to free the economy from the Carter-Nixon stagnation of the 1970s. Those reforms—lowering tax rates and loosening regulations—unleashed job-creating capital. The result: a roaring economy that produced a flood of innovations—from personal computers and cellular phones to the Internet.

Indeed, we may one day look back on the period of 1982 to 2007 as an economic golden age. Many conveniences we take for granted today—from automatic teller machines and DVD players to home computers and CAT scans—did not exist or were not widely used as recently as the 1970s and early '80s.

Yes, that's right: You may be jobless, foreclosed upon, in personal debt on a scale that would consume several lifetimes, but just behold the many gadgets that tax cuts have made for you! It's true, alas, that these newfangled and magical "automatic teller machines" (one suspects that Forbes' relationship to these paycheck-to-paycheck life aids is roughly akin to John McCain's affinity for single home-ownership) are not making with as much dosh-but how could they ever have even been imaginable in that gray, dictatorial Nixon-Carter era of wage-and-price-controls and taxy malaise? It's amazing that anyone back then could stir out of their welfare stupors long enough to claim their earned-income tax credits.

Oh, and about those gadgets? Even though it's long-established that the Internet was researched and developed by the Defense department, it's less well known that the inventor of the CAT scan was a longtime employee of the federal government's National Institute of Standards and Technology. And while no one inventor is responsible for the DVD, many international firms developed its underlying technology, with generous government R and D grants. (A process that is still going on, by the way, in further refinements of the technology.) It's true that no government hand shaped cell phones-but then again, that may well be the reason that, one way or another, they will kill us all.

History has all too clearly shown that tax cuts, far from spontaneously bringing capital-intensive R and D to a magical tipping point that produces a "flood of new inventions," will instead ratchet up unproductive activities like S and L speculation and mortgage securitization that actually drain the economy of its productive power. One wouldn't think this elementary point-that the biggest productive spurts in our nation's economic history have arisen out of mixed development sectors (like the Cold War military-industrial complex that ponied up for the Internet)-would need explaining, least of all to self-styled economic historians.

But then again, that's probably the other reason why one has a magazine named for oneself: The whole point of being Steve Forbes is never having anything explained to you. Perhaps, after all, it is capitalism after a fashion-only the crony kind.

Previously: Escape from Superstition Mountain

Chris Lehmann is open to offers of a capitalist nature.