Gauging Billionaires // A conversation with Steve Forbes

Malcolm Stevenson Forbes Jr. (born July 18, 1947) is the publisher and editor-in-chief of Forbes. The business magazine is well known for its lists and rankings, including of the richest Americans (the Forbes 400); America’s Wealthiest Celebrities; the world’s top companies (the Forbes Global 2000); its list of the World’s Most Powerful People; and the World’s Billionaires. He is the son of longtime Forbes publisher Malcolm Forbes and the grandson of that publication’s founder, B.C. Forbes. Steve Forbes is an adviser at the Forbes School of Business & Technology and was a candidate in the 1996 and 2000 Republican presidential primaries.

It’s not every day that I get to interview the publisher and editor of a magazine; I feel a certain kinship. You are now based in Jersey City, but you used to be in Manhattan. Do you miss the city at all?

We’re right next to a PATH station, so it’s easy to get back and forth. We have the city right nearby without being in it. 

Jersey City still has a certain flavor of the city. 

It’s an unofficial borough, as is Hoboken. 

Is your expertise primarily in economics and business?

It’s in economics, business and history. My grandfather liked to say that you’ll learn more about the prospects of a company by looking at the head knocker—that’s what he called the CEO in those days—than you will at the balance sheet. People are the key. People are endlessly fascinating. Whether they’re operating in business or elsewhere, people never lose interest in other people. 

Your publication focuses not only on the general economy but on the wealth of individuals. Is that something that existed before you came along, or is it something you started?

We’ve always been focused on people. We’ve been compared to a drama critic. We love it when something is done right, and we hate it when something is done wrong. From the very first issue of Forbes, my grandfather said that the purpose of business is to produce happiness, not to pile up money. So we believe in entrepreneurship as we call it today, entrepreneurial capitalism. But it’s been in our genetics from the get-go back in 1917. 

I like your grandfather’s statement that it’s about happiness. Was he referring to the happiness that the wealth produces?

It’s really all about doing things that enable us to move ahead, whether that’s starting a business, growing a business or enabling people to improve their lives, as Lincoln put it. We see free markets as the best way to enable people to improve their lot in life. We don’t think that business is zero sum. We believe that one person’s success—coming out with a new product or something like that—benefits society as a whole. 

No system is perfect, because people are imperfect. But there has never been a system over the last few hundred years that has enabled humankind to move ahead in the way that entrepreneurial capitalism has done. If you compare the standard of living in 1800 with the way it is today, it’s phenomenal. There has never been a comparable period in history in terms of standard of living and lifespans. Today, only a fraction of the world’s population is in dire poverty, whereas a couple of centuries ago that was the lot of most people. If policymakers don’t make mistakes and create an environment enabling people to get ahead and be creative, then we move ahead. 

I believe it was economist Tom Sowell who asked what the difference is between us today and the people in the Stone Age. After all, we have the same appetites as they did and the same resources. The answer is knowledge. We know more. Knowledge comes from experimentation, exploration and creation. The reason governments can’t run economies is that they can’t see the future because they don’t know what people are creating. If you have a free market, then it’s not just inventions; it’s parlaying these inventions and turning the luxuries of today into the abundancies of tomorrow. A classic case, of course, is the automobile. 

A hundred and twenty years ago, the typical car cost about $110,000 in today’s dollars; it was really a toy for the rich. Then along came Henry Ford and invented the moving assembly line, turning a toy for the rich into something every working person can afford. We see it today with handheld devices that house supercomputers. This type of power would have needed a big house 50 years ago, but today we can hold it in our hands. Turning scarcity into abundance is what allows us to have a higher standard of living. We see entrepreneurs as heroes. 

Let’s discuss your magazine for a moment. It seems that aside from being one of the most prestigious business magazines, it also creates competition among people of wealth, as they would like to be part of the select group listed by your publication. 

We try to find people who are doing things. The amazing thing about our list is how much turnover there is. As my father liked to say, “If you think you’ve arrived, be ready to be shown the door.” The people on our list today are very different from what you would have found ten, 20 or 30 years ago because of the changing nature of the global economy. We see it as aspirational. A lot of people don’t want to be on the list. Some want to be on it. 

We once had a fellow call up in high dudgeon about being on the Forbes 400 Richest List. He didn’t dispute our estimate of his wealth, but what got him so angry was that he was in the midst of a divorce, and didn’t want his wife to know how much he had. We did a better job of uncovering it than his wife did. Different people have different reactions. We have other lists as well. 

Which is the most popular?

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