IDA conference update: Forbes warns regulators may thwart risk-taking

(June 14, 2004) Billionaire and editor-in-chief of Forbes magazine Steve Forbes warns that governments and regulators in the post-Enron environment must be cautious not to stifle entrepreneurial and investment risk-taking.

During his luncheon address to the 88th annual IDA conference in Mont Tremblant, Quebec, Forbes expressed his concerns that in the effort to right the wrongs of the past, regulators may go too far.

“We have to understand the difference between risk-taking and real criminality, like in the Enron case,” Forbes said. “Sometimes ideas don’t work out. Things can go wrong, but that’s different than actual criminal intent.”

Forbes used most of his speaking time to deliver an upbeat message about the U.S. economy — one he says seems lost on most people. “This expansion is real,” Forbes proclaimed in reference to the U.S. economic recovery that began last summer.

While acknowledging caveats like the war on terrorism and unpredictable circumstances like severe acute respiratory syndrome (SARS), Forbes says the U.S. economy is poised to grow by 3% to 4% for years to come. “There’s no reason to believe this expansion won’t last as long as the expansion of the 1990s,” he said.

Forbes highlighted technology as one of the drivers of the expansion, stressing that people should not be fixated on the fact there was a technology bubble which eventually burst. “It’s not the fault of the technology. It continues to evolve and is driving improved productivity,” noted Forbes.

As an example, Forbes pointed to his own magazine’s Web site, Forbes.com, which for years lost money but is now profitable. “A few years ago no one was convinced information sites could make any money,” he said.

Forbes says many people just can’t seem to accept that the economy has been improving and instead are occupied “climbing walls of worry.” But he believes the real improvement in the economy will be recognized in time to help George W. Bush get re-elected in this fall’s U.S. presidential elections.

On Iraq, Forbes acknowledged that while the Democratic campaign of John Kerry has been effective at criticizing Bush’s Iraq policy, it has so far been unable to put forth any viable alternative. He predicted that lack of an alternative, in combination with a strong economy, will lead to a second Bush term come November.

Forbes failed twice to win the Republican nomination for president in the 1996 and 2000 races.

Filed by Darin Diehl, Advisor.ca, darin.diehl@advisor.rogers.com