JUNE 30, 20 19 FORBES.COM
13FA
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T(^) &
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O M M E N T
What Experts Miss About Power
FACT & COMMENT
By Steve Forbes, Editor-in-Chief
“With all thy getting, get understanding”
Historians and pundits routinely overlook the
fundamental importance of monetary policy
and taxation in the rise and fall of great pow-
ers. They churn out countless books on strat-
egy, growing or declining economic strength,
weapons systems, diplomatic machinations
and the like. But rarely do they examine the
critical role of money and taxes in the fate of
nations. Proposed appointments to the Fed-
eral Reserve and the Treasury Department,
for instance, never prompt the media to elicit
comments from national security experts.
Keep this basic truth about money and
taxes in mind as the White House focuses on the necessity
of rebuilding our rundown military and countering the ag-
gressive, anti-American thrusts of Russia, China and Iran.
If the U.S. is to constructively play a keep-the-world-stable
role, it must have a sound dollar and a sensible, low-tax-rate
system. These beget the innovation and economic muscle nec-
essary for such responsibilities. They generate the benign con-
ditions for expanding prosperity around the world. Our robust
success would spawn policy imitations everywhere.
History has demonstrated this time and time again.
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and the relentless rise of taxation.
AheeZg]%ZlfZeeli^\dh>nkhi^%ebm^kZeerng]^kpZm^k%ln-
cessfully broke away from the powerful Spanish Habsburg
monarchy to become a globe-girdling empire, as well as the
financial capital of the world, based on its twin polices of rock-
solid money and low taxes. When Amsterdam fell into the trap
of raising taxes, its relative prosperity and influence waned.
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[nm]b]bm[^mm^k'Ma^Bg]nlmkbZeK^ohenmbhgZg]ablmhkrÌleZk^lm ^fibk^_heehp^]%^o^gZ_m^k>geZg]aZ]ehlmma^,\hehgb^lpa^g
it temporarily forgot the principle of low taxa-
tion.
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don but followed its example when it came
to money and taxes and achieved the high-
est long-term growth rates in history—until it
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average annual expansion then declined more
than 25%.
Whenever we have strayed from the true path
of power and prosperity, we and the world have
paid the price, most dramatically with the Great
Depression and the terrible inflation that took
ieZ\^]nkbgma^*20)lZg]ma^^Zker*21)l'Bg[hmai^kbh]lN'L' power and prestige sank, and the world suffered. We almost lost \bobebsZmbhgbgma^*2,)lZg]^Zker*2-)l'AZk]Zlbmblmh[^eb^o^% bgma^*20)lma^lhhg&mh&]b^Lhob^mNgbhgpZll^^gmh[^ma^Zl- cendant power. P^ lmkZr^] ZZbg hg ma^ fhg^r khgm bg ma^ ^Zker +)))l%
pa^g p^ ]^eb[^kZm^er e^m ma^ ]heeZk p^Zd^g' P^ lahne]gÌm ng-
]^k^lmbfZm^ma^]ZfZ^ma^+))1Ç)2^\hghfb\\kblbl]b]mhma^ reputation of free markets in China and in Russia and among “thinkers” and pontificators everywhere. Beijing and Moscow concluded that we were in a terminal decline punctuated by in- m^kfbmm^gmkZeeb^l'>\hghfblml]^\eZk^]maZmp^p^k^]hhf^]mh Él^\neZklmZgZmbhg'Ê=bk^lZ[hnm\ZibmZeblfÌlÖZplZ[hng]^]' Government errors were the villains, but free markets got the blame. Those who doubt the pivotal importance of taxation and monetary policy should read The Magic Formula (Canyon FZie^ In[eblabg% *,"% pkbmm^g [r hg^ h phke]Ìl hk^fhlm
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bornly stay oblivious to this formula is a mystery worthy of
the talents of Sherlock Holmes.
Working: Researching, Interviewing, Writing
BY ROBERT A. CARO (KNOPF, $25)
CZf^l;hlp^eeÌlThe Life of Samuel Johnson is generally con-
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;hlp^ee li^gm r^Zkl [r ChaglhgÌl lb]^% mZdbg ohenfbghnl daily notes of the great man. But Boswell, wherever he is now, lahne]gÌm[^lbmmbghkerbghgableZnk^el'Kh[^km<ZkhÌlfhg- umental works on the life of Robert Moses, the man who built virtually all of the bridges, causeways, highways, parks and ieZrkhng]lh+)ma&\^gmnkrG^pRhkd<bmrZg]bml^gobkhgl%
not to mention numerous impressive housing projects, and on
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bghgma^Õ_maZg]ÕgZeohenf^"%Zk^^o^kr[bmZlbfik^llbo^ ZlpaZm;hlp^eeZ\ab^o^]'>o^gfhk^lh%Z\mnZeer' H_ \hnkl^% <Zkh ]b]gÌm^m mh li^g] abl ]Zrl laZ]hpbg`
his subjects, as Boswell did Johnson, but you would think
he had. He conducted countless interviews with just about any-
one who might shed light on his subjects. In many cases Caro