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.

Simplicity works

Think of a business model. Think of the laws of physics. Think of your favorite song (it's probably not an 18 minute jazz opus). Think of the concept of hard work pays off. Think of effective corporate slogans and logos (for example Nike, what's their slogan, and their logo?). The fact of the matter is simplicity, simply, works. It just does. It's the KISS principle - Keep It Simple Stupid (either that or Gene Simmons).

You might argue that physics has some complex underlying math, but the principles of physics are pretty simple. For example the concept of inertia can be simplified down to objects in motion unless acted upon by an outside force, will remain in motion, and objects at rest will similarly remain at rest. It can be further simplified to a statement an 8 year old can understand: Things like to do what they are already doing.

So if simplicity works, why do people including government officials (elected or otherwise) assume that the government has to be so complex? Not meaning to go all libertarian on you, could the United States government not go miles towards easing economic problems by simply easing up on the complexities they have imposed on American business? The tax code is over 67,000 pages long. Does that seem reasonable to anyone other than a bureaucrat or a lawyer? I can't begin to imagine how many pages of federal laws there are.

Why not have fewer laws? Why not get rid of burdensome impositions of Sarbanes Oxley, and mark-to-market accounting? Why not go further and clean up laws that were written decades ago and are no longer relevant?

Why not simplify existing laws so that they are easier to understand? It would require fewer lawyers of America, freeing up talent to go after engineering, medical, teaching and business degrees? It's easy to pick on lawyers, but this is a critique aimed at the profession, not the individuals.

How about dramatically simplifying the tax code? We know the tax code is where the government can use it's powers to drive specific behaviors, for example child tax credits, or charitable donations. And yes, it can be leveraged as a tool to get votes by either party. But the tax code and things like the Alternative Minimum Tax are way too complex. Why not impose a flat tax? Or scrap the income tax altogether? Could America afford to give up the government revenue? Of course not.

The GNP of the United States in 2007 (pre-recession hit) was $13.84 trillion. If you scrapped income tax and put a value added tax on all goods and services you could still come up with the $2.57 trillion in government revenue from 2007. True, the tax rate would have to be 18.5% on every transaction. But it's not as bad as it seems, according to the site Homeland Stupidity.

Between federal, state and local governments in the United States, about 40% of Americans’ income goes to taxes and various statutory fees. And that’s why you’re having so much trouble getting ahead. Federal income taxes are only a small portion of the taxes we pay. We also pay federal payroll taxes for Social Security and Medicare, state income taxes, state and local sales taxes, property taxes, death taxes and excise taxes. . . .

So the government could cut the total average tax burden by 50% and still generate the same revenue. Seems simple enough. And while we are at it why not simplify things by ridding the government of a few unnecessary departments? Strip it down to the core responsibilities. That might help make up the rest of that revenue gap to government spending.

Why should we want so much simplicity? Because simple works. Simple is beautiful. It makes things run more efficiently. It gives you more freedom as an individual. I'd say more but I don't want to complicate the argument for simplicity.

The irony is that people on the left who want freedom often only see it from their own perspective. It's fine for me but put businesses in a straight jacket. Make them make my car green. Make them pay $70 per hour for labor. But make them sell me that car super cheaply because everyone deserves transportation - it's my right as a liberal American, and it's also the right of that illegal immigrant over there. See, they've already started complicating things. Simple - let GM make the cars it wants to make, and you buy the car you want to buy. If you don't like a big SUV and that's all GM makes, buy somewhere else. They lost your business because they didn't diversify their product line to your tastes. And if no one wants to sell you a hybrid and you can't buy one because your one of only 6 people in the nation who want one, well then take the bus. Simple.

Of course, all of this may have to wait for at least 2012 - some people are currently quite busy trying to really impress us all with how smart and enlightened they are and show us how complex and Byzantine they can make things and how we will all benefit from their superior intellect. So 2012 it is.