November 16, 2009

It's the Wild West, Stupid.

It doesn't have a nice acronym like Keep It Simple Stupid, and it's derivative of the Clinton War Room's It's the Economy stupid, but it it really is the Wild West, stupid.

One of the things about the left that frustrates those of us in the right is their inability to apply learnings to their belief system. Instead of learning from the evidence, they contort the reality of the evidence to fit their belief system. The biggest single example of this pretzel-logic taken to inane lengths is the fundamental disbelief in the concept of individual liberty. At every turn throughout American history, indeed world history, the greatest advancements in human achievement have come inextricably linked to freedom. Rather than a laundry list of socialism's abundant failures, take a look at it from the reverse angle.

When the Internet bubble burst, it wasn't a collapse of innovation; it was a collapse of over-valuation. The Internet and all of the innovations associated with it exploded with the Moore's-Law-like speed, or greater. Compare today's internet to Compuserve circa 1987. Twenty two years and it's like Boeing versus the Wright Brothers. And why did and does the Internet continue to quickly expand in what it can and does do? Because it's the Wild West. It's not regulated. The government isn't involved to distort nature. Yes, the capitalist economy is the ultimate human version of natural selection - survival of the fittest. Actually it goes natural selection one better - the best and brightest don't just survive - they thrive. In a Wild West environment, experimenters are free to try out their ideas, some more risky than others, but all with the possible potential for big payoffs, and catastrophic failure. But the advances just keep on coming.

Imagine explaining Youtube, illegal file sharing, ultra high download speeds, NetFlicks or any of a million other innovative ideas brought to life, to someone in 1987. They'd get it but they probably wouldn't believe it was possible with their 486 and 28.8k modem, because it wasn't possible back then.

That Wild West environment, that sense of free-for-all of innovation ALWAYS, ALWAYS delivers improvement. Competition is primal, and it pays off for society if allowed to flourish. Somebody forgot to tell that to the gurus in Washington. Yes, there's a downside to the free-for-all approach, which is why capitalism isn't pure capitalism anywhere in the world. It's why the government does get the opportunity to play referee.

[Reading Note: Apply Jesse Jackson intonation to the following paragraph]

But it should only be to play referee. Not participate. Not dictate, Not debate, or castrate. But simply adjudicate, and only where it's needed.

People think that the government is needed to protect the people from themselves, forgetting that protection from government gets harder with every invasive law that gets passed. If you allow a government the opportunity to tell you you can't idle your car for more than three minutes because it's causing an environmental disaster, how long before they change it to one minute? Amazingly enough not that long.

If you allow the government the opportunity to decide and regulate but do not limit their power to no more than that, they will inevitably go further than they should. The other recent bubble, the housing bubble was not a result of deregulation but a result of government trying to do social engineering with the powers they'd given themselves that no one spoke up to contest.

Is that worth peace of mind? Is there happiness to be found in subjugation because the consequences of the alternative are worse? I guess for some the answer to that is yes. But show them the full picture of a slightly regulated Wild West versus an autocracy and I think the Wild West would get a fair bit more than 54% of the popular vote. What's worse - a recession or no freedom? Besides, governments can't stop recessions any more than they can stop a tsunami or a hurricane.

Recessions are bad, but they are capitalism's influenza virus. Unlike people, the economy needs to be subject to periods of weakness from time to time to clear out the inefficiencies and reallocate the resources (capital or labor) to better suited purposes. Yes they are upsetting and come with often frightening changes. That's why the government is there with a safety net to get people through those difficult transitions. But it isn't there to keep the deadwood afloat. It sounds harsh, but it's always for the best. The economy will roar out of the back end if left predominantly to it's own devices, because it can.

But what about jobs going offshore the liberals cry? Stop creating artificial minimum wages and those jobs will return, guaranteed. If you can make a pair of running shoes in China for 50 cents and in America for 50 cents, they'll be made here, because there's no (or smaller) shipping cost with the American labor. And with no minimum wage laws, people would be willing to come here legally to do the jobs that Americans don't want to do, because that labor will be needed. It would go a long way to fixing the government's current account situation too.

Of course that's more than a little extreme. But hey, the country has tried extreme before (think November 2008) and on blind faith. Come to think of it, perhaps an incremental approach might be wiser. Wiser still, the government should remember that innovation requires the liberty of the Wild West.  If it doesn't remember soon, things really could turn out like the O.K. Corral vision of the Wild West.

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