To understand why Americans chose to unite under Barack Obama and shed their ‘red’ and ‘blue’ identities,  one must look at where our deepest contemporary fissure began: the Vietnam War.  It’s hard for our younger generation to imagine how the struggle over Vietnam divided this country.  Nixon articulated the division well by describing the Silent Majority: the group of Americans who did not protest Vietnam or engage in progressive politics during the 1960s and 1970s.  This majority witnessed the cultural turmoil of the 60s and 70s via traditional media (radio, TV and newspaper) and from Vietnam.  They saw the most sensational aspects: anti-war demonstrations, civil rights marches, student uprisings, Black Panthers, the Weather Underground, Charles Manson, Roman Polanski.  The far left defined the cultural political environment with their actions and the Silent Majority responded en mass during the 1970s: first unorganized and indignant, and then organized and confident.  The Silent Majority was a predecessor to the socially conservative coalition that delivered five elections to conservatives over the last 30 years.  This coalition had three main subgroups, nationalists, traditionalists and libertarians, each of which existed in American politics since (at least) the New Deal.

• Nationalists believe that their countrymen deserve more than other people.  Historically, nationalists were rabidly anti-communist.  When the USSR fell, the neo-con doctrine of using American military power to impose its economic interests on other nations became more apparent and nationalism became a less significant issue for most Americans.  9/11 brought it back with a vengeance.  These hawkish ‘patriots’ are distributed throughout socioeconomic brackets and are well represented among urban intellectuals (the neo-con variety), as well as more traditionally ‘conservative’ populations in inland America.  The ’security mom’ subgroup of suburbanite parents who were unconcerned about national security before 9/11  bolstered the nationalist coalition significantly.
• Traditionalists could also be called Christian Conservatives.  Their ideology has developed from an unspecific anger at the Federal government for imposing ‘liberal’ programs on small towns.  Forced school integration, evolution, sex education, abortion, gay rights, media culture and other issues were used by Republicans to whip traditionalists into a culture war frenzy and united Christians together to fight liberal social objectives.  Unfortunately for this grouping, the Republican party could do little to advance their objectives.  Abortion remains legal in America, despite much conflict schools have changed little about their curricula, our culture has become more accepting of gays and the ‘culture war’ has fizzled.  In short, traditionalists put a lot of effort into getting their Republican candidates elected and have little to show for it.
• Libertarians have been a force in US politics since the anti-federalists fought the ratification of the Constitution.  These people (and this author considers himself some type of libertarian) believe that government should be as small and as inexpensive as possible.  Libertarians found friends among the traditionalists who disliked how the government was imposing ‘liberal’ values on their communities and were a natural ally of any American who wanted lower taxes.  The guns rights debate both attracted more people to libertarianism and redefined libertarianism as a populist opinion.

Each of these groups became more active during the Vietnam era as a response to liberal cultural progress.  The nationalists grew more anti-communist so they could spar with the anti-war left.  The traditionalists tried harder to insulate their communities from outside progressives.  The libertarians fractured: the moderates rallied behind Republican tax cuts while the small government core became dejected and isolated as neither party offered a real small government program.

This coalition solidified under Reagan and it proved to be much more useful than the Democrat’s hodgepodge of interest groups: labor, leftists, minorities, college educated ‘liberals’ and others.  Due to the stability of the Republican coalition of the 80s, the Democrats responded by embracing more centrist policies and rhetoric.  In response to this centrist threat, the Republicans created the ‘culture war’ of the 1990s, a political crow bar that forced Americans apart and into either ‘red’ or ‘blue’ values communities.  This was done to obscure the centrist nature of the post Reagan Democrats and the increasing similarities between the two parties.

The culture war was a red herring because there was little anyone in the political sphere could do to influence the primary culture war issues (abortion, gun rights, federal education guidelines, gay rights.)  Abortion is a judicial issue that will be resolved through slow progress via judicial channels.  Abortion in cases of rape and incest will not be criminalized and late-term abortions will not be mandated legal.  Gun rights is another red herring: the issue is deeply entrenched in complex state and community rights issues.  Guns will never be illegal to own in less dense areas and assault weapons will always be restricted.  Our federal education system is broken but the debate surrounding schools has been one of content, not structure.  The content debate has not prevented evolution from being taught to another generation of students, nor have this new generation been taught about the amazing diversity of world religions and worldviews.  Watch the film Philadelphia and you’ll be shocked at how much more tolerant our society is of homosexuals than we were just 15 years ago.  There is little politicians can do to stop our mainstream culture from continuing on it’s increasingly tolerant trajectory.

Despite these relatively simple facts, the ‘culture war’ propelled a generation of cultural conservatives into office, George W Bush being the most prominent.  These men and women were savvy politicians but were also incompetent leaders.  Their obvious and undeniable failures left America fractured and angry with it’s political class.  During Bush’s second term pop-political science authors were writing books about a second civil war.  More astute political observers noticed the growing and unsatiated demand for a truly centrist leader.  Enter Barack Obama and the emerging purple America coalition.

As the national media floods the airwaves with talk of placing new regulations on the financial sector, it’s worth thinking about what regulation is, how much regulation invades our lives, and what principles should be applied to regulation in general.

Regulation is government manipulation of the market for the purpose of achieving a certain set of goals.  Since the market is a decentralized, interconnected, natural force much like the weather and regulation is an imperfect, man-made structure meant to channel that force, you can imagine how difficult it is to create effective regulation.  Indeed, the history of mankind is rife with disastrous regulations that, when applied, have unintended consequences that often produce precisely the result they tried to prevent.

One of the most famous examples of these unintended consequences, also known as ‘blow back,’ comes from the Bible’s book of Exodus.  Pharaoh heard that a nice Jewish boy was going to screw things up so he made a regulation: all male Israelite babies were to be thrown into the Nile.  Of course, it was his action that inspired one Jewish mother to place her baby in a basket and float it down the river.  That baby grew up to be Moses and he screwed up everything for Pharaoh.  We might all be speaking Egyptian right now if the Pharaoh hadn’t created that ill conceived regulation.  On the other end of the holy text spectrum is the Tao, which is literally 80+ case studies in blow back.  The Tao states, basically, that if you act you’ll create unintended consequences and screw screw up the balance of things.  This was today’s Daily Tao quote:

“When they lose their sense of awe,
people turn to religion.
When they no longer trust themselves,
they begin to depend upon authority.

Therefore the Master steps back
so that people won’t be confused.
He teaches without a teaching,
so that people will have nothing to learn.”

The Master doesn’t step in with regulation when people lose their sense of awe or no longer trust themselves, he steps back.  Why?  Because he knows that constructed actions (like regulation) create complexity and blow back.  Complexity is bad simply because it separates us from the natural world and fosters inequality.

This election cycles most recent and unexpected celebrity was Joe the Plumber.  Recently it was revealed that Joe is not a licensed plumber. To many, that fact is the last in a string of populist falsehoods about McCain’s everyman American narrative, but, to me, it was a reminder of how deeply our economy is regulated by government forces.  To be a licensed plumber in the state of Indiana (Go Hoosers!) requires:

• four years in an approved apprenticeship program
• four years (6,400 hours) plumbing work experience
• four years plumbing work under the direction of a licensed plumbing contractor

On top of all that, you’ve also got to fork over a few hundred dollars to the government so they can administer a test to officially ‘license’ you.  No wonder Joe is aggravated at the government: he needs to spend 12 years plumbing (how long is medical school?) before he can get a license from them.

Plumbing is just one of the hundreds of jobs local, state and federal governments have decided they need to regulate.  This certification process does two things: it allows the government to regulate how people earn a living and it creates a higher barrier of entry so older plumbers can take advantage of younger, uncertified ones.  Of course, regulation benefits the regulatory class as well as the government and those who have already been ‘certified.’  Lawyers, accountants and bureaucrats all ‘help’ people navigate the world of government regulation.  They benefit from the government regulations that hinder the economic freedom of the people. More regulation means more lawyers and higher transaction costs.  No government means no lawyers. In the grand scheme of things, I think this country has ventured way too far into the more regulation, more lawyers part of the spectrum.

Regulation is essential, but we must remember regulations are like buildings: you need to build a strong foundation built on principles (like gravity) or else the thing simply won’t stand.  Right now we have thousands and thousands of regulations, we have massive government systems like Fannie, Freddie and the Federal Reserve.  We spend billions on social programs that act as regulations and billions more on enforcement of said regulations.  We’re regulated up the wazoo and the new regulations they want to push are simply building on the foundations (and maybe the top) of huge regulatory institutions and arms.

If the federal government is serious about cleaning up the financial sector, they need to start their regulations at the ground level.  That might mean making all financial derivatives illegal.  It might mean making over-the-counter degree derivatives illegal, but it MUST mean making a principled stand against a practice.  The regulations must destroy the root of the problem or more will grow in its place.  I seriously doubt they have the balls to do the job properly since everyone is talking about a bail out and no one is talking about posting bail.

You’ve probably received a number of politically charged emails in the last fews days that purport to reveal questionable practices by one campaign or the other.  Today I got this email.  The highlights are as follows:

Here is a quick look into 3 former Fannie Mae executives who have brought down Wall Street.

It’s easy to get distracted by the political theater of the day and forget what government is supposed to be doing.  Government organizes people.  At it’s simplest, government organizes it’s citizens to fight an external enemy and create an internal peace.  Governments also tend to take money from one group of people and use it to create outcomes that the market won’t.  The actual application of government power is conducted through the use of information technology (IT).  Indeed, if one views IT as a continuum (language at the beginning, then writing, printing press, internet, etc), then IT is the foundation of government.  Of course it is: how else can one person communicate a message (information) to another?

If government and IT are so linked, why does the Federal Government act like a pre-internet organization?  Unlike nearly every business in America, they have not been thinking about how they can modify their products and services for the internet age.  GE has a comprehensive website that explains nearly every aspect of their business but the Federal Government doesn’t… and the federal government is the one that’s supposed to be transparent!

The fact that the Federal Government doesn’t have a serious web strategy is a joke that costs tax payers billions of dollars and allows for corruption to continue unnoticed.  Why is the census data locked into a government made PDF instead of analyzable through (and integrated with) third party products like Google Earth, Microsoft Excel or Wikipedia?  Why do thousands of office workers commute to Federal office buildings when they could work remotely?  Why can I do banking online but not my taxes?  Why can I get a college degree online but not a free, public high school one?

It’s really quite amazing how much the government could reduce the cost of governance, increase the quality of services and  engage with it’s citizens if it used just a little of the internet’s potential.  Our elected legislators can have an online home with a profile, a blog (if they want), video and transcripts of all their speeches, their legislative work, all their votes, a listing of all their donors, etc.  Our federal agencies can reduce their size and increase their transparency by using more open source products, more online collaborative workflow and a paperless office.  Our judiciary can post every case online: evidence, testimony, outcome, classifications.  All this data can be freed and integrated with third party applications that allow us all to manipulate it: finding hidden causations and correlations, exposing inefficiency, etc.

The time has come for the government to create a web strategy.  If they don’t, someone else will.  I know a guy who just bought the URL govenant.com and he’s convinced that there is money to be made in online governance tools.

According to Neilsen, 220 million Americans already have internet access.  Let’s stop pretending we can’t, or shouldn’t, change the way government interacts with it’s citizens by using the internet in a sensible way.  Obama has already started.

John McCain he has proven he will do whatever it takes to win.

We has one final card in the deck: Declare war against the media.

The Couric interview of Palin is nothing short of amazing.  It revealled the logic behind her selection for VP.  The Republicans thoguht that since beautiful women sell everything to Americans; they might be able to sell a president.  Couric made Palin look foolish simply by reading, line for line, questions any mediocre journalist would ask.  This was a sad day for America. There will be much denial on the part of conservatives who invested in the McCain-Pailin ticket, but as the interview sinks in, many conservaticve media commentators will have to turn on the McCain-Palin ticket to save their own respectability.  Palin was so bad that one gets the sense Palin was angry she had to defend Rick Davis and answer questions she wasn’t prepared for.  She knows the Republicans used her.  She couldn’t perform.  Very, very few people could have in this situation.

As the final wave of media personalities flee McCain, his only move is to talk to the American people directly and say: “The media has lied to you.  They hate me because I will defeat them and they will try to convince you I’m not worth of being president.  They’re wrong: just like they were wrong about Iraq, the state of the economy and your level of intelligence.  Don’t listen to them now.  Let’s take our country back.”

Unfortunately for McCain, he cannot escape his own decisions.  He cannot escape Rick Davis, Sarah Palin or his 26 years in the Senate.  Obama has enough money to remind Americans McCain supported the invasion of Iraq and deregulation on Wall Street.  Sarah Palin has taken care of herself.

The game isn’t over.  Republicans are going to engineer a situation in which McCain saves the bail out plan  that has been temporarily put in jeopardy by a gang of Republicans who are waiting for McCain’s signal.   The media won’t buy this silly ploy and neither will the American people.  If McCain is really desperate, he’ll skip the debate, effectively declaring war on the press as they broadcast Obama waiting for an opponent who does not come.

McCain’s plan might have worked if there were only a few days left to the election, but with 40 days left, there’ll be more than enough time to sort through the wreckage.