Steve Forbes: Trump is indeed a billionaire.
Publishing magnate Steve Forbes tells the Swiss weekly DIE WELTWOCHE that being president of the United States has hurt, not helped Trump, financially. “People want to wait to see what his popularity is going to be before committing.”
Steve Forbes’ bespectacled gaze travels across the Hudson River to the glinting skyscrapers of New York City. We’re on the 10th floor of his glass and steel sanctum. The lifelong, free market apostle proudly declares “You've got the best view of America's financial hub from here!” — a window the size of an IMAX movie screen showcases the world famous Manhattan skyline. The new Forbes Media LLC headquarters was opened a few years ago, across the river in Jersey City a discrete distance from the creative destruction of Wall Street.
Arguably more recognizable than “Adam Smith”, Forbes inherited a last name and publishing empire virtually synonymous with capitalism. Forbes’ father, the legendary Malcolm Forbes, invented a type of business journalism that glorifies extreme wealth and aggressive entrepreneurial success. The flamboyant pater Forbes “exemplified a kind of gleeful capitalism”, as the New York Times wrote in his obituary, “that relished the things money could buy.”
With over 71 million visitors per month, forbes.com is one of the most read news sites in America. Licensed publishing products appear under the “Forbes” name in 32 countries, including “Forbes Life” and “Forbes Asia.” One of its most devoted fans includes the current US president, Donald J. Trump.
But at 71-years-old, the apple cheeked heir worth an estimated $430 million is also a casualty of the capitalist combat his magazines champion. Four and a half years ago, Forbes and his siblings, whose gilded childhood included yachts, private jets and escapes to his family’s Moroccan palace with film star Elizabeth Taylor, sold the majority stake of the family company. “Forbes” does not belong to Forbes anymore.
With unaffected and disarming humility, the two time Republican candidate for president, personally handles the coats of his visitors from Switzerland. We sit down to discuss the vagaries of wealth, rubbing elbows at Davos, and making the coveted Forbes 400 list.
Since 1982, your magazine has been publishing the legendary “Forbes 400” list which is the embodiment of American success. If you make it to this list, you’ve made it in America. What does it mean for you, personally, that your name is so intertwined with this great American dream?
Well, in the very first issue of “Forbes Magazine”, my grandfather who emigrated to this country from Scotland at the turn of the last century said that the purpose of business is to produce happiness not to pile up millions. Today, we call it “entrepreneurial capitalism.” We believed, human nature being what it is, it is the best system for enabling people to, as Lincoln put it, improve their luck in life for creativity, for connecting people together. We call them supply chains, now. Breaking down barriers. You may not love your neighbor, but you sure want to sell to your neighbor. And having human energies go for fruitful pursuits end up benefiting us all. It's not zero-sum.
How does this boil down to your list?
The “400”... What is amazing about it is that it's not a static list. When the first one came out in 1982, there were a lot of DuPonts, Rockefellers, Vanderbilts. None of them are there today. The turnover is rather remarkable.
What it demonstrates is the dynamism of a free economy, free people. As my father liked to say, “If you think you have arrived, you’re ready to be shown the door.” There is no such thing as permanent success. There is no aristocracy in business. The “400” turnover reflects it. We also have a global billionaires issue each year in the spring. You see the same phenomenon there, with that list, that also demonstrates how much the world economy is actually growing despite all of the problems.
We’ve seen people rising up in the most unlikely places achieving great things. Success comes from meeting the needs and wants of other people. That’s the moral basis of free markets, of capitalism. Steve Jobs was once asked “Do you do marketing surveys?” He said “No, because people don’t know what they want until I show them.” No lack of self esteem there.
The entrepreneurs are always putting something out there, and you don’t know whether it’s going to work or not. Most times it does not work.
Why do you think that there are people who are so eager to be on the list?
Most people, if they had their choice, would not be on the list because the people who read the list most assiduously are fundraisers. One individual does want to be on the list, and he's now our president.
Before [Trump] became president, we’d get reliably two phone calls a year. One in the spring, before the global billionaires issue, complaining we’ve grossly underestimated his wealth. One in the fall for the “400” issue — same message. Back in 2015, when he announced he was running for president, we did a cover story on him for the “400” issue. He is running for president and he spent hours arguing with our editors about the worth of his various properties.
Were you involved in those discussions?
I would occasionally get messages, but many were on the receiving end. Finally, our editor goes up to Trump Tower which was the same day that the Pope was visiting New York. They hear the noise on Fifth Avenue. The Pope is about to do his parade. Trump Tower has a balcony. So, Trump takes our editor out on the balcony. Because the Pope is from Argentina there are a lot of Latinos in the crowd. They spot Trump. Some cheers. Quite a few boos. He turns to our editor and says “You see? 90% approval!”
Is he really worth the $10 billion he claims?
We have him at about three and a half, four billion. We think that’s legitimate. Some people say he is worth nothing. We’ve figured at least three and half, four billion. If he wasn’t always tripling our estimate, we’d have to say he has been very successful. But we never get, in his eyes, the number quite right. [chuckles]
After leaving the presidency, he might well be worth more?
His net worth has actually gone down since he has become president. A lot of opportunities, people want to wait to see what his popularity is going to be before committing. He has been hurt more than helped by being president.
A while ago, media reported that a person called “Stormy Daniels” spanked Mr. Trump’s rear end at his request with one of your magazines. For you, personally, is that a disgrace or an honor, perhaps?
I like to think that she realizes if she wanted to improve her life she should read “Forbes”.
President Trump canceled his trip to Davos. The fight for the wall has led to the longest shutdown in history. Do you agree with the importance he gives to the border security? In his recent address to the nation, the president argued that illegal immigration drives down wages especially for low-wage earners. Do you agree with that? And do you think it is important to fight for a tight border security?
If you look at the whole situation of border security, it’s a variety of measures. There are parts of the border that are very mountainous, and fence is not going to work. A lot of rivers. So, fence — which we already have on a lot of the border, especially in California — it’s already there. But it’s become a political issue with the Democrats. If Trump is for something, they must be against it.
If Trump says the sun rises in the morning from the east and sets in the west, they will say “No. It’s the opposite.” It’s become very politicized. In terms of the economic impact, the way we’ve done immigration actually hurts in the sense of if you come here illegally, your ability to rise up is limited. We do have needs in the economy. We have a lot of job shortages, now, in this economy. Normally, you would allow immigration to fill up. That’s very difficult.
Hopefully, in the next couple of years, they will come up with a real reform. Border security would be a piece of it. But he did a tweet, the other day, about H-1B visas which are high-tech, high-skilled visas which we don't have enough of. He talked about reforming that and we want to get these smart people over here. That could be part of a settlement of this issue. High-tech loves H-1B visas.
So, you might give more H-1B visas and deal with the legalization of what we call “dreamers” — people who are under the age of 18 when they were brought here. They entered illegally, but they were minors and, therefore, should not suffer from the sins of their parents. So, giving them legal status is right. That could become part of a package. He gets his money for the wall. We get the dreamers. We get more H-1B visas, and people call it a day.
If you were on the side of the Democrats facing Donald Trump, what is important to know when you want to make a deal with this president?
He is not ideological. He’s very transactionally oriented. We did another story on him — an interview we did with him a year ago in December 2017. What comes across is he likes doing deals and, if it wasn’t for the antipathy on the part of the base of the Democratic party, Trump would be quite willing to sit down and disappoint his own supporters and come to a conclusion. The Democrats know that if they cut a deal with Donald Trump, they are taking a very real risk with the base of their party. So, he’s deal-oriented.
In other words, you don’t see a deal happening?
There’ll be an agreement at some point just because public opinion gets fatigued by it. But first, you have to go through this Kabuki dance where the Democrats show they fought him tooth and nail. And while he got money for this wall which we [Democrats] will tear down in 2020 anyway (they won't say that, but they'll do the body language for that), we'll get the dreamers, and we’ll get something else. You have to show you fought the guy. You can’t just do a deal. You have to show you fought him.
According to media reports, even the White House is divided if he should declare a state of emergency or not. What is your opinion? Is this now a state of emergency?
The challenge with the state of emergency is that a lot of Republicans fear that that will set a precedent for the Democrats to use that weapon for their agenda when they next win power. So, a lot of Republicans say “You’ve got a lot of ways to win this fight, wearing them out. Don’t use a state of emergency.”
Do you agree with that opinion?
I would not declare a state of emergency, because who knows what the courts are going to do.
Who is taking the blame in public opinion for this shutdown situation? Is it Trump, or is it the democrats?
Right now, it’s both sides but more of the Democrats in the sense people feel. We still have 400,000 people crossing illegally. Should we know who they are? A lot of it is human trafficking. That’s a huge problem. Drugs, a huge problem. But most people feel “Why can't these alleged adults resolve the thing?”
Let's talk about the documentary you published in December, “In Money We Trust”, based on your book. What is your personal view on money? Your personal relationship with money?
Money is a means of measuring value like a scale measures weight, or a ruler measures space, or a clock measures time. It makes trading with each other infinitely easier rather than going through barter, and just as a scale works best when it has a fixed weight, you have 60 minutes in an hour. You don’t float weights. You don’t float clocks — sixty minutes in an hour one day, thirty minutes the next — ridiculous.
Money should have a stable value. When it does, people prosper. What the documentary shows going back to electrum, creation of coins in Lydia 2,500 years ago: when money is trustworthy — that's why we use the word “trust” — commerce increases, people move ahead. When money is untrustworthy, not only do you have economic consequences but social consequences. Social trust is undermined.
We deal with strangers mostly through the medium of money. People don't realize when money becomes unstable it starts to rot away everything. In hyperinflation you see it immediately. A slow depreciation of money over time can have social consequences.
Do you remember the first dollar you earned?
Well, I was a kid. I was doing chores at home, pulling out weeds, to get my allowance. I remember it very vividly. First, they took out taxes. I didn’t like that. My documentary “In Money We Trust” touches on changes in the way we behave, in a positive sense. [Money] liberates us. We do not have to depend on kinship anymore. Money gives us mobility. It gives us more freedom. If I don't like the ties you sell, I can go to another tie salesman. In ancient times, you would be forced to work. You get paid with food. You can’t take food and then walk away. Money: you can walk away and do something else.
You mentioned the importance of trust. If you look at the US dollar, it has been losing value for decades now but nevertheless, there seems to be some trust by the people who are still using it. Do you, personally, still trust the dollar?
Well, the dollar is the default currency. It’s the currency of the largest economy in the world. It’s accepted anywhere in the world. 70% of our currency is outside of US borders. The euro has a lesser position as a global currency. There is enormous demand for dollars. If we have a stable dollar, as we once had, demand would be even greater, and the world would be more prosperous.
The opportunity cost of non-stable currencies has been enormous. If we had maintained our average growth rate that we had when the dollar was stable — i.e tied to gold for about 180 years, most of our history. We've maintained those growth rates in the last 40 years, GDP would be 50% larger today. The world would be a more prosperous place.
Switzerland has done the best job in the last hundred years, but even they find it hard to stay on the true path in the era of floating exchange rates.
Do you see this process of eroding value of paper currencies, do you see this coming to an end, eventually?
Yes. Nothing lasts forever. The thing to understand about gold is that it keeps its intrinsic value better than anything else. Not perfect but better than anything else for 4,000 years. You don’t use gold as money. You use it as an anchor, as a measure. Having gold-based money no more restricts the size of your economy than 12 inches in a foot [the US standard measurement system] restricts the size of a building you may wish to construct. It just means it has a stable value. There is no reason why money shouldn’t be stable. When it isn’t, you have a lot of wasted opportunity.
If you look at the last 30 years of economic performance, it is noteworthy that the American economy considerably outgrew the expectations by economists. The economy grew much stronger than people predicted in 2015, 2016. Are you happy with the economic policy of the Trump administration?
The policies of deregulation and of tax cutting were very successful. Regulations are another form of taxation. The regulations have been at the lowest pace in 50 years. It’s been a great help for small businesses. The tax cut of December 2017 — I would have liked more, but it was a very good step in the right direction and work. Where I have my doubts — very strong doubts — is in the area of trade.
“Tariff” is another word for “sales tax” or “excise tax” or “VAT.” Raising the price of products and services for your consumers and businesses is not my idea of progress. For trading abuses, we have everything from the WTO which probably has to be reformed and updated just as we did in the 1990s. We're also finally doing more effective measures against trading abuses by Chinese firms by going after specific companies, specific individuals, specific industries.
We should be working more closely with our European allies, which we're now finally doing, in dealing with these abuses. But, to me, putting on tariffs is punishing yourself. Now the other party maybe hurt more, but we're both hurt. And if you want to have hurt, leave it to “Fifty Shades of Grey.”
Do you think the Chinese are going to make concessions?
I think both sides want an agreement, now. I think you’ll see agreement on China pledging to buy more stuff, and that’s easy to monitor. There will be, I think, steps taken to make it easier to have access to the Chinese market. They say “Oh, come on in.” But then they have all sorts of barriers to keep you out. That’s easy to monitor. Then, I think we have to just be prepared on forced transfers of technology and other abuses. You take a company, and you punish them.
I think there will be an agreement, and that will be good. The challenge in this country will be getting Congress to approve of the agreement. The Democrats are controlling our House of Representatives. That’s going to be a real fight.
Who is Trump’s best economic advisor?
Probably, right now, it is Larry Kudlow who heads the National Economic Council. I've known Larry for decades. We once put together a tax cutting package for our home state of New Jersey. He’s a free trader. He’s a tax cutter. And he likes a stable dollar.
What about Peter Navarro? Is he this kind of sinister isolationist, idea-locked, that he’s portrayed as?
I think his education on trade is incomplete. He should re-read Adam Smith.
All of it — especially if he wants stable money and trade — is how you create wealth. I think Navarro is totally wrong on trade.
When looking at Fed policy or monetary policy by the Trump administration, knowing you are an advocate for sound money, you must be disappointed so far. He appointed a former investment banker to lead the Fed.
Well, the only good thing about Chairman Jerome Powell is that at least he’s not an economist. There may be some hope there. It hasn’t manifested itself yet, but the Fed still worships this idea called the “Phillips Curve” — that there is a trade-off between inflation and unemployment; that prosperity causes inflation. You got these silly things like you must be on guard the economy doesn’t overheat.
Economies are individuals. They’re not machines. If your pay goes up, I don’t feel you think you’re getting a fever and you’re overheating and you’re going to say “Take my money away. I'm getting too hot!” No. The Fed still doesn’t understand money, as most of the economic progression.
Who should Steve Mnuchin put forward to run the World Bank?
Somebody who recognizes that true source of prosperity is creating an environment where infrastructure projects will rise from private sources, and they can help out on fighting diseases, making sure we have the right technology in water, and things like that. But development is not building things. Development comes from the mind. The outgoing guy is the head of Dartmouth, but I don’t think he fully appreciated economic development is not things. It’s an attitude. It’s a mindset.
Any favorite names that come to your mind? Who would be suitable?
Are you available? I just hope they pick somebody who is a reformer and realizes the bank was originally created to help countries recover from World War II. Robert McNamara demonstrated in the sixties and seventies that you can spend all the money you want, but it’s going to breed corruption if you’re not careful, and it doesn’t lead to a sustainable development. You don’t have the right institutions, the right mindset. And if you have terrible tax rates, terrible regulations, kleptocratic governments building a railroad, it’s not going to make you a developed nation.
Let’s look at your personal history. In 1990, when your father died, you inherited a great media company. Looking back, would you have preferred to inherit just a Swiss bank account with the same value back in time.
No, because I’d have been bored. I enjoy the communications business, and it’s been fraught with challenges. I think we’ve made the best transition of any print company to the web, because we remembered what Peter Drucker said, the management guru from Vienna whose books are still read in business schools today. He said every business, every organization should remind itself: What is your purpose? What is it you're trying to do?
If you do that, if the means change, you don’t get quite as upset. Today, for example, we have over 2,500 contracted contributors for Forbes.com. We have over 110,000 submissions a year. We do a virtual magazine, every day, online. Very different from what we did before, but the goal remains the same. What my grandfather outlined in that first issue. My father said “The hardest thing to do in life is nothing.”
Your father was the embodiment of a successful New York tycoon, and he was probably one of the first celebrity marketeers. In your youth, you were in the presence of Elizabeth Taylor; you went to Morocco; and had a lifestyle that was absolutely astonishing. What was it like to grow up in that world and, then, to step in your father's shoes?
Growing up, he was a very strict disciplinarian when we were young. Amazingly, as we became teenagers — there were five of us, four boys and a girl — he knew how to let up. He would tell us, he said “You have to develop your own style of doing things. You have to live your own life. Don’t try to imitate somebody else.” I never took up motorcycling. I still feel I’m too young for that. Each of us has our own way of doing things.
How would he discipline you?
If you did something wrong, you were punished.
Either by docking the allowance, or he did give a spanking if he thought you did something grievously wrong. We knew what was right and what was wrong. Our mother was sort of the Supreme Court. We’d hope to get a sense of mercy from her. When we got older, he gave us a lot of freedom. He said “Don’t make mistakes that will destroy you. But you only learn by doing.”
Do you think there’s a lack of discipline in today’s world?
You can make a case for all sides. There’s a book coming out (“Late Bloomers”) from Rich Karlgaard who works with us, a former publisher and now our futures editor. He makes the point that for a lot of parents, they are what we call “helicopter parents.” They try to plan every minute of your day. They want to have you take special courses to prepare for what we call the SAT [Scholastic Assessment Test], a test you take before going to the university. He makes the case we’re overdoing it. There’s anarchy, and there are helicopter parents, and I think the best is in between.
Some say you were for Trump before Trump. As a successful New York personality you tried to become president. Why did Donald Trump succeed while you didn't?
He got more votes and his timing was right. If he had run for years before, he wouldn’t have won. He did look at a very serious run in year 2000. If he had, he would have lost. It was a confluence. One of the things you learn in life is what Abraham Lincoln once said. He said “Events have controlled me more than I’ve controlled events. No one is Master of the Universe.” You give it your shot, and it may not work. But you lick the wounds and move forward.
Some say you’re just too kind in the shark pool of politics to become president.
We waged a good campaign and had some good issues. I’m still an agitator today. For instance, the simple flat tax. We don’t have it here, yet, but 35 countries around the world have it, now.
During the Reagan years, you oversaw the operation of Radio Free Europe and Radio Liberty. Where do you see the role of the US today in Europe, particularly vis à vis Russia and its recent aggressions in Ukraine?
Well, the US has a role to play. We should have learned that from the 1930’s. If you withdraw from the world, vacuums will be filled in ways that are not always very pleasant. NATO needs to be revived, rejuvenated, but is still extremely necessary. Russia must know the rules of the game.
What are the rules of the game?
Leave your neighbors alone. Commerce, yes. Aggression, no. That’s the sad thing about Russia. Given their real capacities — science and mathematics — Russia should be an economic superstar. Instead, they relied too much on natural resources and did not create enough of an environment for creating new Silicon Valleys. That’s the problem with Europe, itself. They need structural changes. There’s no reason why France grows less than 1%, or Germany thinks it’s doing so well at two and a half. There’s no reason why they shouldn't be growing at 3%, 4%, 5%.
What do you think about Brexit, was it the right decision to quit the EU?
The Brexiteers made it sound like they’re going to turn Britain into a new Hong Kong or the best parts of Switzerland and Singapore and all the free market stuff we love. The Conservative government is floundering. They became labor-light spending. They didn’t do anything on taxes in terms of real substantive tax cuts. Didn’t put in a flat tax. It’s been ninety years since the British knew how to manage their currency properly. Fine with Brexiteers brexiting, but they made a hash of it.
Again, these are structural problems. One of the things that EU should learn is that you cannot create a political union without the consent of the governed, where people feel that they’re being force-fed. They should just focus on creating a true, free trade area. If you need cross-border regulation, well, we’ve been doing that for 150 years starting with conventions in the 1800’s on postal services across lines, telegraph services, telephone services across borders — getting a commonality to facilitate buying and selling and enriching the world. We have plenty of precedent. Get back to basics and maybe Brussels and bureaucracy. Maybe as a gesture of goodwill send the bureaucracy to North Korea for five years.
Fox News host Tucker Carlson recently gave a long monologue blaming the GOP for defending capitalism. He said that capitalism was a tool and not a means on itself. What do you think about this?
Whether you call it capitalism, free markets, free enterprise, whatever name you want to give to it, it’s an environment within the rule of law. You have the freedom to create and challenge existing structures or create whole new entities. And people come from the most unlikely sources, backgrounds, and doing things. It means enabling us to move ahead, and it means basic respect for the individual. All the criticisms of capitalism actually apply to socialism and tyranny.
Capitalism is humane. You may not love your neighbor, but you sure want to sell to your neighbor. You want to figure out that I may not like you, but I want to sell you something. So, I have to figure out how do I make this appealing to you? I have to understand what makes you tick. It’s called marketing. People working together.
We think it’s the most mundane thing in the world to say “We want to put the best team together to get this project done.” That’s fairly new in human affairs. [Before capitalism] you never trusted anyone outside your family, outside of your community, outside of your ethnic group or religion. It’s fairly narrow. Free markets break those barriers down.
Do you think there should be any red lines for capitalism? For example, you have several US states that have legalized marijuana. Is this a deal with the devil?
James Madison, the father of our Constitution, put it very well and I’m paraphrasing. He said “If we are angels, we’d not need government, we’d not need laws.” Manifestly, we’re not angels. But you have to have rules of the game, rules of the road, going 500 kilometers an hour inside a school zone or something like that. In terms of substances, if you reach a certain age there should be rules on what you can imbibe so you can make your own decisions.
On marijuana, it’s amazing that people who wage anti-smoking campaigns in the US are often the very same people saying legalize pot. That doesn’t do a lot for your lungs the last I looked. The law has to be a teacher. But, again, since human nature being what it is, capitalism is not perfect because people are not perfect. You have to have a sense of the values and rules — no pedophilia, no trafficking with the kids, minors. Those are society saying those are values, and we’re not going to tolerate abusing 11-year-olds.
The World Economic Forum in Davos was perceived as the ultimate capitalist organization in its early days. There’s very little left of this spirit today. Now, even President Trump is canceling his visit. President Macron and Prime Minister May are not going. Do you think the World Economic Forum has reached its peak?
Everyone says that it’s too big, too crowded, but yet everyone goes there. When somebody doesn’t go there it is news. One understands Macron. He’s got some problems at home, and Trump has some challenges here. Davos has been around for so long that what you might call the ruin-factors are all gone. The idea you can gather people in the middle of winter several hours from Zurich would have seemed utterly preposterous unless you’re an avid skier. Here you have it being done, and we don't think anything. And everyone says “We're the next Davos. We're the Davos of this, the Davos of that.” It's become a noun, not just the city gathering.
What do you, personally, like best in Davos? What attracts you to the summit?
Bringing people that you might not run into during the course of the year. They have very interesting programs, but it’s the interaction with people between the events that often things get done, talks take place. If you want to see somebody in a setting that gives everyone face perfectly well, I'm going to Davos. You are, too. I hate you. You hate me. But we’re there. Why don’t we sit down and discuss something? And it is cheaper than the UN. It’s only four days, and then it’s done.
One last question about your personal business. In 2014, you sold the majority stake in your company. Why did you do it and what does it mean to you that “Forbes” isn't owned by Forbes anymore?
Well, the partners have left us alone, in terms of editorial. They want us to succeed. I have three brothers and a sister. Interests diverge. So, I’m still here. The three are not here. One other is in Asia. Times change, but the ethos of the enterprise has not. Our first issue laid it out very nicely.
How do you make sure it continues after you?
There’s no way you can control things from the grave. You’re doing the best you can while you’re around. But the Pharaohs in Egypt should have learned that.
This is the extended version of an interview that was first published in German translation in the print edition of Die Weltwoche on January 24th .