Why Don't We Have More Billionaires?

IF GOVERNMENTS, MOST ESPECIALLY the US’s, had pursued sensible monetary, fiscal and regulatory policies over the past 40 years, the number of global billionaires would be 20,000—ten times the 2,043 listed in this issue.

- Steve Forbes

Wealth creation flourishes best in benign environments. Since the 1970s, bad policies have too often been the rule.

Money is the most misunderstood topic today. It is still holy writ among economists that manipulating the supply and cost of money can guide economies, the way a steering wheel does a car.

In reality, the only question about the central banks’ monetary activities is how much damage they will do. A prime example, of course, is the Federal Reserve, whose antics since the 2008–09 economic crisis have suffocated the US economy.

Money is not wealth. It facilitates the buying and selling of products and services. It measures their value the way a clock measures time. A gold standard, which the US abandoned in 1971, keeps currencies stable better than any other system. Stable money facilitates productive investing, without which we have no wealth creation.

Taxes are a burden. High rates hinder economic growth. When Europe imposed supersales taxes called value added taxes (VAT) in the late 1960s and 1970s, coupled with sky-high income taxes, growth rates plummeted.

Critical question: Will the US make Europe’s mistake by imposing a quasi-VAT of 20 percent, called the border adjustment tax? Incredibly, many Establishment Republicans are pushing this anti-working-families exaction. Economy-crushing regulations have spread like weeds. Fortunately, the Trump Administration seems serious about waging war on these tax equivalents.

Stable money, low taxes, commonsense rules. So simple. Yet, politically, so hard to achieve.

Death of an American Giant