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Will we really miss Forbes magazine?

Steve Forbes Forbes magazine How Capitalism Will Save Us
“Everyone is entitled to my opinion.”

The New York Times has an excellent piece on the declining fortunes at Forbes magazine, which, like Business Week and Fortune, are suffering the slings and arrows of a declining subscription base, advertiser flight, and unsuccessfully struggling to translate themselves into an online presence. While most people think of Forbes as a kind of hobby magazine published by the rich kids of Malcom Forbes, the magazine, in fact, is their source of wealth, their core business (like making cars is the core business of the Ford family). But, despite their woes, Forbes still sits on the top of the revenue heap, raking in $328 million in advertising revenue as opposed to Fortune ($276 million) and Business Week ($236 million).

We’ve already seen the premature collapse of Portfolio magazine (but that, if you look at the way they burned their investment seed, was eminently predictable), and we’re bound to see the business journalism landscape change dramatically with more than one of the “blue chip” properties going under. Forbes seems unlikely to buy the farm, but if the recession continues apace, we may lose most of the standard-carriers, including Fortune and Business Week. However, of all the magazines, newspapers, and Web sites out there, is Forbes really going to be missed if it goes under?

I have a saying:

Magazines are the last refuge of an undisciplined mind.

They seem to offer real knowledge, the illusion that you’re actually spending your time fruitfully learning new facts and viewpoints, but all they can ever do is scratch your itch. Magazine writing is all surface — portentious, ostentatious surface, but surface all the same. If you really want to learn any subject, especially business, economics, or investing, you need to immerse yourself in that subject.

If all you know about economics is what you’ve learned at the feet of sages like Fortune, Forbes, or CNN, then, well, you know nothing about economics. Sorry.

To be in business involves significant investment . . . of time. Whether you have nothing in the bank and no investor who will talk to you or you’re flush with millions that some angel has rained on you, you’re going to lose most or all of your day in your startup or business. Leaving precious little time for Grey’s Anatomy or the latest novel by Jane Austen (and she publishes about two dozen a year, it seems).

Although your business eats up all your time, part of running a business is staying current in your field — a news item buried on page C3 of the Los Angeles Times may point you at just the opportunity you need to pursue or a short column in PC World may tell you that another competitor has already locked up your industry (and, therefore, you’re wasting your time).

So, given this dual constraint (you have no time but you have to be up on every piece of business news or innovation that impacts your business), what do you read to stay current? Where do you get relevant business, economic, and industry news without wasting your time?

For my money, given this dual constraint, Forbes consistently ranks near the bottom of my time-wasters. Too often, the editors choose quirky subjects and put eccentric political and economic spins on them. An article on a developer in China ends up devolving into a totally unrelated flameout on the excesses of American government in the regulation of business. (The point being, I guess, that American government is becoming more like Chinese government? I’m not sure.)

More importantly, as a person trained in research and critical thinking, I find Forbes constantly selling me a bill of goods through distortions and lies. You see, I don’t mind viewpoints, especially those that are different from mine (I’m really a connoisseur of alternative viewpoints), what I mind is being deceived.

Let me give you an example. In the last issue I received, there’s a screed about business regulation. In this piece, they claim that business regulation costs American business $1.5 trillion dollars a year. Since U.S. GDP was 13.8 trillion dollars last year, the number sounds suspiciously high.

Where did this number come from? Well, we’re not really told. But think about it for a second. Does the cost of business regulation include things like nuclear waste storage? (Would you rather nuclear power plants send their spent radioactive materials to the local town dump?) Does it include speeding tickets for truckers? Does it include safety belts in cars? Does it include tort litigation for defective products?

And once you get past the problem of what counts as a business regulation, how do you then fix a cost? For instance, where on the value chain is the cost calculated? What the supplier pays? What the business pays? What the consumer pays? If, for instance, safety belts are a “cost” of regulation (which they are), how do you calculate that cost? How much it costs to manufacture a seat belt? By what the auto company pays to install them? What the consumer pays? Or all three? If you rack up the cost of a seat belt (or any other “regulation”) for every player on the value chain (supplier, manufacturer, consumer), you can total up an impressively monstrous number pretty quickly. A number, for instance, as big as $1.5 trillion. But anyone with a rudimentary understanding about how value-add is costed across a supply chain (cost gets passed on with a premium to the next link in the chain), will appreciate the problem of determining the “cost” of business regulation.

(I’m not even going to get into the problem of trying to determine a cost for all this business regulation without full access to the general and special ledgers of all American businesses public and private. I have just finished going through all the public filings from the last three years of a Fortune 500 public corporation and I’ll be damned if I saw anything that I could pull out of their financials or their notes as a “cost” of business regulation. I applaud whoever came up with that $1.5 trillion dollar figure for their incredible x-ray vision.)

And what about business regulations that businesses themselves lobby for? I’ve been involved in more than one consulting job where we’ve actively lobbied government for laws and regulations that would make our company more competitive than others. For instance, lumber yards that manufacture formaldehyde-free plywood benefit from regulations limiting indoor-environment formaldehyde emissions. Yes, it costs them more to make plywood without formaldehyde, but they were already doing that in response to market demand. So guess who hired a lobby firm to go all-out in persuading the legislature and the governor of California to get draconian about formaldehyde emissions? How much of that $1.5 trillion dollars are business regulation that businesses themselves lobbied for?

Finally, what’s the cost of not having a this or that regulation? If, for instance, we relaxed all the rules on toxic waste and allowed people to dump it anywhere, we’d save billions of dollars (I made that up, but Forbes makes up their numbers, too — they just don’t tell you). But how much would it cost in morbidity and death? In lowered standards of living? Property values going down?

What sounds, therefore, like a $1.5 trillion “cost” will be less if you offset it by the direct business “cost” that regulation compliance obviates, such as litigation, damages, productivity, insurance, and other costs of doing business (including loss of competitive advantage). Then factor in the other “costs” that society does not have to pay because of business regulations, you’ll probably end up converting the $1.5 trillion cost of business regulation into a net gain. From an accountant’s point-of-view, that makes no sense, but that, in essence, is why regulatory agencies from the federal level on down do cost-benefit analyses.

So when Forbes magazine declares this $1.5 trillion to be a “tax” on business, we’ve really left the bounds of common sense. They have, in the most blatant way possible, simply lied to their readers.

I could go on for another thirty paragraphs just deconstructing this one claim. And I could do this eight or nine times on every editorial page in the magazine. That’s a lot of lies.

It’s this sense that I’m constantly being sold a political viewpoint — one part mainstream business conservative and one part Steven Forbes fantasy — that ultimately undercuts the value of the reporting, which, I may add, can be considerably high in its quality. I want to be informed, but my sense is that the magazine is constantly misinforming me (like that $1.5 trillion “cost” of business regulation) to sell me on a viewpoint. I don’t mind the viewpoint, no matter how eccentric, I mind being lied to.

So, what do I have time for? I am a religious reader of the Financial Times (conservative) and the New York Times (liberal). Both are valuable “skim the surface” sources that occasionally provide deeply informative, immersive readings. The New York Times, in fact, scores very high on film industry and financial industry reporting. They have a few people on staff who really do understand how those businesses work.

Top on my list of magazines to read are the Harvard Business Review and Strategy + Business; these are the only two magazines that break, in my mind, the “undisciplined” rule. They are magazines for people who take business seriously and need in-depth, immersive reading.

The best, least biased business news magazine is Business Week, which I always find time for. But like both the newspapers mentioned above, they do little but scratch the surface. Entrepreneur, Wired, Inc., and Fast Company (and the blog, Tech Crunch) deserve a skim-through for potential ideas and breakthroughs, but, again, they’re trying to cover an uncoverable field in an often superficial way.

But Forbes? Occasionally they get off a good piece, but they spend too much of their time trying to bend facts and manipulate numbers to entice you to the Steve Forbes club of political and economic thinking. I have no problem reading liberal and conservative magazines and newspapers as long as I learn something. If the whole point of the magazine is simply to sell me on liberalism or conservatism, I have no use for it. As far as politics are concerned, I’ve already been sold many many many moons ago. I don’t need to be resold on what I already believe or sold a new bill of goods. What I want now is good, solid reporting and information.

“Wait,” you say, “what about Fortune?” Its business articles are frequently worth reading and free of the political strong sell. They are the only major magazine with (at least some) reporters that really understand some of the industries or business models they cover. But, like Forbes, it devotes too much real estate to covering “the rich life.” You know, the twenty-thousand dollar kayaks, fifty-thousand dollar watches, and one hundred and fifty thousand dollar golf weekends. It’s fun, I guess. But I’m too busy running a business to indulge in spending-spree wet dreams. So I get impatient with them because they frequently drop their high standards to go rolling around in rich porn.

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