Steve Forbes, chair and editor-in-chief of Forbes Media, was the keynote speaker at the “Bacon + Eggonomics” breakfast Friday in Little Rock, where he discussed what he believes Arkansas has done — and should continue to do — to be a business-friendly state.
“Most governments — I’ll be blunt — don’t know how to create conditions for growth,” Forbes said during a question and answer session. “The formula is very simple: stable currency, low tax rates and sensible regulation. Instead, they continue to go in the opposite direction. So not to sound chauvinistic, but the trend in the world to look at is, what direction do we go? The blunt truth is, if we get it right, the rest of the world will have a chance to get it right.”
The event was hosted by Economics Arkansas, a private nonprofit that trains teachers how to incorporate principles of economics and personal finance into the classroom curriculum.
Forbes was joined by Mitch Bettis, publisher and president of Arkansas Business Publishing Group, who asked if Forbes had suggestions or strategies that a small business owner should be thinking about to overcome financial hurdles.
“Obviously, each business is different, and within an area, you find very real differences in characteristics of the small businesses,” Forbes said. “But what you mentioned about small business is also the traditional environment, which is being attacked by regulation.”
Forbes said that at one point, in a traditional environment, the local bank was the biggest source of startup capital — something regulations have dampened.
“You have to have a provable a mile-high to do anything now, in terms of lending,” he added. “Entrepreneurs are already finding ways to try to get around it. But the U.S. not only has more small businesses than anyone else, but also we create more new large companies every generation than any other country in the world.”
Forbes said Arkansas is moving in the right direction when it comes to income taxes, and should keep doing so while looking at what other states and countries have done. He gave an example of how Ireland went from being one of the poorest countries in western Europe to one of the most dynamic economies by actively pursuing foreign investment and legislating business-friendly tax policies, such as tax cuts and tax holidays.
In Forbes’ view, one of the things that has held Arkansas back is “enormous” regulation and high tax rates, particularly when compared to other states in the region, such as Tennessee, Florida and Texas, which don’t tax individual income.
He said Arkansas is starting to understand which regulations stand in the way of growth. The state has cut individual income and corporate tax rates three times since Gov. Sarah Huckabee Sanders took office in January 2023.
“I think the attitude, and especially on the tax side, is absolutely critical when you have neighboring states that offer more enticements than what you’ve had in the past,” he said.
Forbes said one sign of success is when a business reaches a certain size and is painted as a villain.
“Walmart has gone through that a couple of times,” he said. “They started small, became huge — a villain. Then Amazon came along. Then Walmart was sort of David versus Goliath again. So when you achieve success, you get attacked by certain quarters, and you know you’re doing something right.”
Forbes said every organization should ask itself three things: What is its purpose? What is it trying to do? And what is its mission?
Those questions should be asked so that even if circumstances change, entrepreneurs are able to navigate a new environment.
When asked how Arkansas should be thinking about financial literacy to drive economic development, Forbes said the state should continue driving education reform and financial competency in education. He said to keep driving programs that offer kids hands-on experiences.
“The actual experience, even if it’s $100, you learn from experience,” he said. “You learn from when you make mistakes. You learn from the actual experience of doing something.”
Additionally, he emphasized the importance of remembering that economics is, at its core, people interacting with each other.
“When you hear markets — it’s people. So when they say, ‘Oh, the markets are bad’, you’re saying people are doing decisions you don’t like,” Forbes said. “So yeah, we all praise education, but it is absolutely essential. And again, people see Arkansas has got some unique things going on the education side, what the economists call the trend line. The trend line is positive. It starts to build and build and go in ways that you couldn’t even think of before.”
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