Malcom Forbes, President and Editor, Forbes Magazine
January 24, 1978
Where we're at and where we're headed
I hope you're impressed with all those presidencies that I have. All you need is 100% of the stock and you can be president of anything you incorporate. I was a very good parent-picker. My father founded the business, and I'm not sure he'd be so pleased with how it's been going since his demise in '54. All I can say is it's bigger if it isn't better.
I should preface these remarks by saying that I used to be in politics with mixed results, 25 and more years ago, and I was happy to get asked to speak anywhere, and seldom did. Now I get asked because I don't charge a fee and I pay my own expenses, so I seldom accept. But when the invitation was for a Landon Lecture, it was very compelling because my earliest active experience in a campaign was in Governor Landon's efforts in 1936. I tacked up more sunflowers than Kansas has certainly right now all over the state of New Jersey, and behind me faithfully trailed a bunch of fellow classmates (I think it was probably 7th or 8th grade) tearing them down. So we had a standoff.
But, Governor, it's a great honor to be here. I met Governor Landon during that campaign. I remember he had probably the only red-headed national campaign manager in existence. Am I right, Governor? Anyhow, my son, Steve came out with me. We never fly in the same plane; he wants to be sure to enjoy his inheritance. He had to leave earlier and get here later. He gets the second choice when there are choices. He's fascinated with politics and he can tell you your vote Governor, if you should want to be reminded, almost county by county. He wanted to meet Governor Landon, and when we arrived, the chairman of the lecture series said, wasn't it nice that my son came. And I said, "Yes, but it's disillusioning to know that it wasn't to hear his father, it was to meet Governor Landon." He's heard me too often, I guess.
I just thought that I would talk with reasonable brevity on the premise that you might have some questions a little bit on where we're at, and then not so much on where we're going but on where you're going, which is probably of more interest to you than where I've been. In terms of what's happening, I would say that you're in a very advantageous position. You're not in the position, as some have been accused, of knowing nothing and not even suspecting anything. At this point in your careers, you probably know a lot and suspect even more. And I want to suggest that you enjoy it, because you'll never again be so sure of what you think you know in the days ahead. The difference between learning to pass a course and spending the rest of your life unlearning what it took to pass is something that you'll enjoy in the days ahead.
As for the world that you look at around you, of course, it's not without its challenges. But if you look at the big basics, you've got a pretty good piece of apple pie that is waiting out there, for the first time in a very long time, in relation to a fundamental called war and peace. We have much more of the latter than the former, which some of your colleagues didn't enjoy ten years ago. You know, after World War II, we had Berlin, and now that troublespot seems to have subsided. We had Korea and, heck, our biggest problem there is finding out who got what from Korea. It used to be how much we were going to give Korea. That's a different kettle of fish. And in Vietnam, which tore the campuses asunder just prior to your time, we ended up getting out of something that every military strategist told us we should never have gotten into. I remember in college being told that a war in Asia was something that we would never do; it was a ridiculous thing to do. In Vietnam we tried blockades, air power, the whole bit. Vietnam is behind us, and now the fighting is between the idiots of the ideology that we were so concerned with; the bitterness, the Cambodians and the Vietnamese in the North and the South, the bloodshed are none of our doing. Southeast Asia isn't a set of dominoes, which is, incidentally, exactly the assertion that was made by those opposed to the war at its outset. I wasn't among them, but your counterparts a decade ago were. It turned out, as with so many wars, that things are not that simple. But that war is over for us now.
In the Mideast, while peace isn't going to come easily, war doesn't now exist. And at the moment and for the foreseeable year or two, which in that area is a long way down the road, war isn't a possibility, because one side doesn't have the means to wage it. Unfortunately, at the moment, the one that has the means to wage it and to win it, again, is suffering, as we all do, from the success of too much strength. It does make one a little more intransigent than does the possibility of having to meet halfway on the issues at issue. But as far as war and peace are concerned, you step into a scene that is vastly happier and peace is probably less in jeopardy than it's ever been.
As for the economy, sure it's mixed, but by most criteria it's never been so good. The fact is that last year an additional 4.5 million people were at work in America,fortunately, most of them in private business. Whatever aspect of the economy you look at that's down well, everything is relative, it's far better than it was. At least, contrary to the thirties, farmers have tractors, if unpaid for, to protest in. There is a basic standard of living in this country for everybody, and the numbers, sitting where you're sitting, are vastly greater than they ever were. It doesn't mean the end product is going to be any more improved than it ever was, and you'll be just as disappointed or cause as many problems as your predecessors and the rest of us have. I always get a kick out of people who say the young are the hope of the future, cause I can remember when people said that to us and look around and see what we've done with it.
The economy is, overall, good. The problems exist, but as with so many of them, they're pretty exciting kinds of problems. There isn't too much question of ever ending bloodshed, but look at the other problems. The energy one is so basic, it's a main ingredient in our inflation problem, along with the deficit. It has created, in this country, a dependence that we never had before. We are responding by importing more oil than we ever did, because we have a lot of graduate economists down in Washington advising on how to solve the problem. If there is anything that Washington doesn't need, it's experts from the scholastic world, because they do manage to come to most of the wrong conclusions. The only thing worse in Washington is a businessman. He thinks you can run the government the way you can run a business. The trouble is, in government you can't fire anybody. And you don't go broke, you just make everybody else go broke.
Energy is a challenge, but it's easily solvable, I think. Just remove all the price restrictions. The fat cats, the oil companies, those big villains, they'll raise the prices, of course. You'll say, gee, what are the poor people that need their cars to get around going to do. Well, there'll be rebates for them. Everybody will be sore at the oil companies instead of Carter, which will be a change. The oil companies will get blamed for the increase in prices and those profits they don't put back into getting alternative energy resources can just be taxed away. They become the tax collector which is all, today, many businesses are.
I don't understand why energy price increases aren't permitted, because the whole program is aimed at making the energy we use more expensive so we'll use less of it. After all, we're subsidizing the price you pay for gas now by paying three times as much per gallon, be it natural or liquid, to bring it in from Europe and from the Mideast. It's a silly thing we're doing. But when the price goes up, all these alternative sources of energy will come on stream. Right now they are a little more expensive than the still subsidized price of oil, than the price fixed price of oil and natural gas. In this country, as soon as something gets a little high, somebody's got alternatives, and in terms of energy there are multiple ones. They are as yet still just a bit more expensive than oil. So there's a problem with challenges and solutions.
The stock market well, it has always been a problem, and today it's a bigger one than ever. It just goes down. It used to be that you bought stocks on the premise that they might go up. Well, now if you're feeling philanthropic, you buy stocks. Actually, you know, it's gotten to the point where they would be a very wise thing to buy. They are so underpriced even if for a lot of valid reasons; it's ridiculous. But if you have any money and some sense, which is probably a contradiction in terms, you couldn't do any better, I think, than buy common stocks. I made that same remark last April and now look, they are 100 points cheaper.
As for inflation, that's another problem you face. It isn't something vague out there, it isn't only the cant of the economists. You don't have to take home economics to understand that inflation is just a euphemism for a tax. All you're doing is paying the most regressive tax in the world for the luxury of an unbalanced budget. The buck, there are just more of them around than are being earned. What we always forget when we're in the "give me" line and every single segment of the population is in the "give me" line in one form or another is its relationship to inflation. We all think a tax loophole is the deduction the other guy gets. We all have our hands out where our needs are concerned and are perfectly willing to sacrifice the other fellow's need of a handout. The government doesn't make money, it prints money, and there is a difference. When you print more than you take out of your pocket, you have inflation, and that's what we're doing. Inflation is simply a tax; you're paying the tax.
People who say inflation is going to destroy us, we ought to balance the budget and so forth and so on, they're not that wide of the mark. What they mean is, taxation's going to destroy us. Don't fool yourself for one minute. Inflation is nothing more than a regressive tax that everybody pays, and it hits hardest those on fixed incomes. But, after all, most of the population is used to being taken one way or another, and this way you're being taken by something that you think you can't do anything about. You can, but because it is called inflation, it seems to confuse people. Anyway, it's a problem that's solvable, dealable with; we just have to want to be dealt with less in terms of our own interests and that's a very hard thing to expect of any of us.
As for our other problem, Mr. Carter, he's probably no bigger a problem than most we've had in the job. Some people have said they can't make up their minds where his place in history is going to be, whether none of you will get this reference, except somebody who had to memorize it to pass a history course he may be like Millard Fillmore, a one-term president. By the time we've all paid to educate him. . . . If you think it's costly to educate you, for God's sake, look what it's costing to educate the president. But, anyhow, I think there's hope for Mr. Carter and he can learn, too.
I see the other day he said that he still has hopes of balancing his budget. Well now, that's the first concrete indication I've had that he is unbalanced. I had faith that the man had no faith in the contradictory promises he made during the election. Any more, that is, than other politicians believe what they say; they couldn't be that dumb. But then, they don't get elected, so Carter is probably no bigger a problem than most presidents have been and I think he has the promise of coming to grips with his job. I hope it's not too soon, because imagine the problem that we'd have if all the things he'd asked for had been passed, for heaven's sake. This economy would be in real trouble. So people who accuse him of being ineffective because he doesn't get things passed, they're hitting him where his assets are, I think.
Some of the things he's against, he should be. And the fact that he, I think, basically would like to get toward a balanced budget, that's good. But as we were talking earlier, it's a delight the way a savvy politician can handle his words. You may recall he said he was going to knock $5 to $7 billion from the defense spending bill. Well, he didn't, but he proudly pointed out that if Mr. Ford had been elected, it would be $5 to $7 billion higher than it is, so he saved that much. That's a pretty good way to save, just with words, verbally. It's the kind of semantics that makes people electable in this country.
So these problems we have aren't all that bad, and they will change as faces change. You won't run out of problems. But I'd like to get to the point of where you're going, not where we're going. We're, a lot of us here, we're where we're at. So where we're going now is either downhill, and deep down, or maybe some of us, like the Governor here, will go up. But the rest of you, I just want to suggest that you, Number one, I've kind of divided it into three areas, in rehashing this scene. One, that you get going, whatever it is you're going to do; for heaven's sake, don't spend the rest of your life in assorted graduate schools and in planning your career. Get to it, whatever it is that you want a career in. If you want to teach, of course, get your Ph.D. But other than that career, don't think it's going to open doors. It's not, you know. It's an initiation fee in a fraternity; okay, but it takes three years. Time, at this point in your life, is what you think you have the most of, and for Governor Landon it's probably true, but for thee and me, time is a quickly vanishing commodity. If you want a definition of a long time, think back to when you were sixteen and waiting for your driver's license at seventeen: that year was interminable. According to my wife and other ladies, nine months is a heck of a long time when you're pregnant. As for a short time, ask any Congressman how short two years is and he'll tell you it's a blink between elections. The only other definition I've heard of a shorter time span that's on target is the one when the light changes and the guy in back of you honks his horn.
The point is, it's a short run, so get into it. As for your own priorities, just sort them out. The only problem most of us have is, we like this, and we like that, and we end up somewhat aimless. If it's money you want, there's money to be had. There's the printing press route, either in politics or in counterfeiting, and there's not all that much difference. And there is money to be earned, there is money to be made, but you're going to sacrifice an awful lot if you want a lot of it unless you're just lucky, sitting there and up spouts an oil well. That doesn't always happen, but it's there to be had if that's what you want. If it's glory, well the glory road's a rough one, too. It's to be had, as you've seen. Public life is full of the glory seekers and those of us who didn't get the prize, though the highest divorce rate in the world, next to students who move out of each other's rooms, is down in Washington. There is no home life; you can't travel the glory road and have it.
If it's independence you want, fine, do as I did and inherit enough money to be independent. Or be willing to forego money and glory and forget what you're doing 40 hours a week and relish your independence on weekends. But independence is a multifaceted thing. It depends on your own definition. One thing I would urge is don't delude yourself about the simple life. It isn't that long ago that most of your predecessors in these chairs were all concerned about the simple life. I remember being invited to debate with the late Mr. Schumacher, the author of "Small Is Beautiful." The idea that you can flee life by returning to a simpler way is really too simple for the educated group who is often the greatest advocate of that copout. Think of what's defined as the simple life. If we were leading the kind of life that existed in simpler, earlier days when there was no industrial age or even when there was no modern power problem, half of you wouldn't be here. The life span was vastly shorter. Now there may be lots of times in your life when you wish it were much shorter, but most of the time you'd like to live longer and the happy fact is people are doing just that. It's not a result of the simple life, growing our own potatoes and tomatoes, it's probably because we don't do that that we live longer. The fact of the matter is that having one machine dig enough coal instead of 10,000 people, we're all ahead. There's enough leisure time for you and millions of others to have an education, to open your eyes to more that should be done. But if you have to make all the ingredients of your own bread, you have no time to develop any mental breadth. The simple life that can be an affordable way of life, is one in which you have enough money to insulate yourself from life around you and feel you've returned to the simplicities. Now I've got news for you. That return to the simplicities is at the expense of everybody else who's busy doing something that they may not enjoy, like, or what have you.
The other point I would like to make in the way of advice is on the subject of morality. That's not to be confused with morals. My attitude is not what I would call provincial; I don't wear blinders. I think morals are your personal business, not the business of law. But morality is the set of values you bring to your judgment of the actions of others. You must realize by now that there are no simple equations, and if you don't know it now, you will as you progress. It's not so easy to make a judgment of the actions of others. We passed a law that says no American corporation overseas shall bribe anybody or the executives will go to jail. It's a bigger crime than price-fixing now; they go to jail, the fine's enormous. We are imposing our morality on others. Well, as I say in the current issue of Forbes, I'm glad we can afford it, because obviously we are going to lose a lot of orders in the other 220 countries around the world where it is called a commission. Here we think nothing of paying a salesman a commission. Over there the buyer is the salesman, and if he doesn't get his commission he goes to the guy who gives it. Our attempt to legislate our morality for countries where that isn't their way of doing business and isn't their system is an imposition. I don't think we have the right to do it. We have the right to legislate on morality within this country.
All I'm saying to you is these questions are not simply answered, and I think most of you by now realize those aren't simple judgments to make. We can discuss South Africa, we can discuss any one of the many things that seem to be issues of morality, and the one quality I would urge you to bring is a sense of judgment and equity and forget the simplicities. All they do is complicate life. If you go for a simple solution, there are none. That doesn't mean they shouldn't be worked toward.
All right, the final thing I'd like to say is this; recently I was at a dinner in New York, a small dinner, it was small because they were raising money and the attendance wasn't enormous, and Mr. McMillan, who had been Prime Minister of Britain for some years, said, when he was young, everybody believed in progress. Progress was something that was immutable. Something that always went on. He said after two world wars, three depressions and the disintegration of the British empire, all the values that they had had since childhood, the illusion of progress, had collapsed. I say to you that the illusion of progress hasn't collapsed. It depends on what your concept and my concept of progress is. We used to think that the number of telephones in America was a measure of our value and our worth; the number of bathtubs. Well I think that most kids would say there are too damn many bathtubs, and most people that are working would say there are too many phones in this country. We don't measure our worth anymore by such things. And that's a great advance attributable to the generation that just preceded you and, I think, set your standards. It isn't quantity now, it's quality. While foreigners and particularly the Japanese were developing smaller engines and better made, smaller cars, General Motors' great claim to fame in the last fifteen years, the contributions of our greatest industrial company was a vinyl top and opera window. How far out of touch for people who spend millions finding out what colors you like. They didn't find out what problem they were dealing with because they were of the quantity generation.
So I would say to you, the concept has changed. But just one basic thing . . . it's not a plug for business and it's not because we write about business. I suppose we are far more critical of business than its loudest intellectual critics. And we're critical when they don't make a buck, because that is the greatest sabotage that can be done to the freedoms we all have, to have a free enterprise system that's broke. Because there is no freedom without the wherewithal, and we know it. Freedom is a very expensive commodity. We have it because every one of you and everybody else in this country is free to earn a buck and, no matter how you do it, you get to keep some of that dollar. It's called incentive, and if you stop and think about it, all the tax take, all that sort of thing, all the gifts, all the endowments, they come from profit. Some have it to a greater extent than others, but the greatest saboteur of this country, of our sense of freedoms, of our power in the world for, basically, the things we believe are right is to be unable to afford it. That strength comes, and our resources are developed, channeled and re-aimed, as we're doing now with many of them, because somebody has an incentive to dig it out, to get at it, to get to it. Somebody enjoys taking one store and making it two; there are others who are very happy with one store and having it the best. But everybody here under our system can make and keep a buck and the idea of denegating profit and making it a dirty word is stupid on any rational analysis. It's out of that that comes the ability, the time and the sense to be concerned with the quality of life. Thank you very much.