In praise of American complexity
In the Republican presidential campaign this year, one of the main battle lines has formed around a philosophical question: complexity vs. simplicity.
There is a growing movement on the right in America that demands simplicity above all else. Whatever the arguments against a flat tax, for example, its merits are obvious: it is simple, plain and easy to understand.
Herman Cain, the one-time presidential front-runner ran exclusively on this idea, championing his now-famous “9-9-9” plan and declaring that “simplicity is genius.”
Cain derided former Massachusetts governor Mitt Romney for introducing a 59-point plan for fixing the economy. “[Romney’s] only response had to be, ‘well, you know not everything can be solved simplistically’ — yes it can,” Cain insisted.
Indeed, the virtues of simplicity seem as obvious as something out of Poor Richard’s Almanack.
Americans often liken the national budget to the no-nonsense decision-making that every family confronts around the dinner table.
Melissa Ortiz, the founder of a new tea party group called Able Americans, told Mother Jones magazine, “If you raise [the national debt ceiling], it’s just like getting a new credit card,” she said, arguing that families have to live within their budgets and the government should too.
That view was echoed Time columnist Fareed Zakaria, the widely respected pundit, who declared point-blank in an October essay that “Complexity equals corruption.”
Romney has also drawn fire for changing his mind on some major issues, reflecting the notion held by many conservatives that there are hard and fast correct answers to every question.
The attractions of simplicity and consistency are understandable, especially to a people who have always loved plain-speaking. We prefer bumper stickers to treatises, catch-phrases to tomes.
The problem, of course, is that we live in an incredibly complicated society, with more than 300 million citizens, a never-changing palette of challenges, and a political system that works well precisely because it is so complex.
What’s more, we are now blessed by the fact that we live in a wildly intricate global economy, one that affords more humans on the earth a better standard of living than at any previous time in history.
In order to make this immensely byzantine clockwork society function, we have developed a sweeping matrix of laws, regulations, bureaucracies, rituals and institutions.
The truth is that we love the benefits of this muddled global architecture. It has meant fewer wars, more open trade, gradually expanding human rights, and more economic opportunity for more individuals.
But it also offends our sensibilities.
We don’t like the fact that the Federal Reserve’s Vatican-like machinations probably saved the United States’ financial sector from ruin.
We grumble about the fact that a series of interlocking and shadowy political decisions certainly saved the now-prospering US auto industry from unraveling, saving an entire region of the country from a full-blown depression.
We mutter darkly about our complicated tax scheme, even though it allows millions of us to send our kids to college, buy homes, and find health insurance, while shifting most of the costs to those Americans who can most readily bear the burden.
Our political system — with its bickering lawmakers, feuding politicians, and 24/7 cable TV coverage — is infuriating. But it is also more transparent, fair and accessible than at any previous time in our history.
Our economy is, for better and for worse, one vast foreign entanglement, binding our fates permanently to the fates of all the world’s people.
Perhaps understandably, we declare ourselves shocked — shocked! — when this wondrously complex human society shows its warts, its flaws and, yes, its corruptions.
From the Occupiers who flame against Wall Street to the tea partiers who roar against the White House, there is a general conviction that because the system is flawed and shady and grudging and grubbing, it must be beyond salvage.
The fact that politicians and businessmen are so often carted off to jail is viewed as a blight, a sign of decline and corruption.
Surely, there is a simpler, purer, cleaner America to be had?
Surely we can abolish the Fed or take up the gold standard or embrace a flat tax or purge the judiciary or get rid of big banks? Surely we can make Congress part-time or squeeze all the money out of our politics or take an anti-tax pledge?
I’m skeptical.
I think it’s time to question the romance of the frontier. It’s time to kick the tires on the notion that we can talk honestly about America in a catch-phrase or in a homily.
It’s time to push back against the idea that running a society as fascinatingly complex as ours is as simple as managing a family’s business. Or that there are right and wrong answers that stay right and wrong even as circumstances change.
It’s time to embrace the notion that we live in a mature, modern global society, where ideas zing and movements pop and products and technology change almost daily, while cultural and political attitudes shift at breathtaking speed.
It’s a society where we accept that self-interest will shape a lot of our individual decisions, which means that a certain amount of regulation and oversight is needed to protect the larger good.
It’s a society where gradual, common-sense reforms almost always accomplish far more civic benefit than sweeping, visionary ideas.
(Ironically, those reforms often add even more layers of complexity, more regulations, more rules. Which may seem like a vice until they begin to produce tangible benefits, like cleaner air and water, or more protections for our civil liberties.)
So whatever you think of the specifics of Romney’s 59-point plan, and his well-documented changes of heart, he is at least attempting to wrestle with the fascinating, confusing and (yes) occasionally distressing muddle that is modern America.
As always, your comments welcome.
Tags: analysis, election12, politics
For those who yearn for a simplified world, I offer the following. Make everything legal.
Can’t get simpler than that.
i know that brian is just summarizing some kind of right-wing conventional wisdom about this, not actually advocating for it, but every time i hear this line of “argument” it makes me want to tear my hair out.
there’s nothing complicated about progressive tax rates. i mean, sure, i guess a flat tax is ever-so-slightly simpler yet, but the difference is utterly trivial. to calculate the tax you owe under a progressive tax regime, you figure out your taxable income, and then you look in a table (or ask your computer) for what you owe. it’s dead easy.
the complexity in the tax code comes not from its progressiveness, but from the tangled web of deductions and exemptions and write-offs and all that stuff. if you want to make things simpler, attack there. the rates don’t make a damn bit of difference.
another thing that really ruffles my feathers:
again, i know brian isn’t endorsing the view portrayed here, but: no no no no no! the federal government is nothing like a nuclear family when it comes to economics. it’s one of the worst analogies in politics. the intuition you get from household economics often goes wildly astray if you try to apply it to the federal government.
whenever you hear someone trying to make an argument via this analogy, be warned, you’re probably about to get served a bs sandwich.
What it all boils down to is simple solutions for simpletons.
First there is no such thing as the average American family. Never was. Never will be.
Very often common sense is uncommonly trite. A person you uses the phrase to describe their level of intelligence is a person who is satisfied with a grade one point above failure. Not only are they admitting to not being book smart, they aren’t even street smart. They revel in being mediocre.
I think the problem goes way, way back to a hate for the English who were considered to be better educated than the “average American.” In reaction, the “average American” looked down upon anyone who tried to “Act English.”
Forgot to edit. Should read: “A person who uses” and not “A person you uses.”
The trouble with the analogy to the family budget is that they are wrong about the way they run their own finances. People say a family wouldn’t take on all that debt but most people at times in their lives take on many times the debt load that the government takes on and think little of it.
The problem isn’t that people want things to be simple, it is that they don’t want to think about what they are saying, much less what someone smarter than they are has to say.
And the Occupiers aren’t claiming simplicity, just the opposite.
Nor are there that many businessmen and politicians being carted off to jail.
Yeah the family analogy does not work at all. The average mortgage is often two or three times a families yearly income.
Also agree there is nothing complex about a progressive income tax. Maybe if we just called a progressive income tax a flat tax which it is, you have three or four flat rates.
There is a feeling that rich people don’t pay taxes due to a myriad of accounting ticks and loopholes etc, thus people think if we just had a flat tax the rich would not be able to pull their tricks. This is how the flat tax is sold and it is not correct.
According to a poll released just this week: 52% of voters feel Obama should be voted out of office; 43% think he deserves a second term. In spite of all the GOP Primary bashing everyone seems to be overlooking whats happening. There is no question the GOP candidate will be Mitt. He has benefited a great deal from the process. He has been in a position to see what resonates with the voters and what does not. Brian’s example of Cain’s tax plan is a good one. Cain’s plan was not a winner but the concept of changing the current method of taxing was a hit. My guess is Mitt will use what he has learned and easily defeat Obama.
i agree with knuck and mervel that part of the problem with the government-family budget analogy is that people often don’t follow through on it very well, e.g. not realizing that almost all households carry some amount of debt.
but i want to stress that the problems with the analogy run far deeper than that. for example, the federal government can print its own money. and for practical purposes, the government is immortal. families are, obviously, nothing like that. when families get into an economic pinch, it’s much easier for them to cut back on spending than to increase their revenues, but the reverse is true for governments. and let’s not even get started on factoring in population growth, or differences b/t micro- and macroeconomics, or….
that aside, i also want to say that i don’t mean to hijack the thread away from the main thrust of brian’s post, which is right on!
I must admit I dont really get this love of simplicity for simplicity’s sake. People like a flat tax because it is conceptually simple even though it costs them a lot more money. As Hermit points out – your computer doesnt care whether your tax rate is flat or curvy or multi-dimensional. You put your W2 numbers in, and it does the rest.
And yet there are lots of people who think that flat is good and fair even if its a whole lot worse for them and worse for the country.
People love simplicity because they don’t want to think very hard about their opinions. They like the idea that their “gut” is infallible.
We live in a talking point society that is filled with media and messages. Complex messages and ideas don’t fit into 30 seconds or fit into flashy adds that people remember.
Also the US public is woefully ignorant of economics. Even if we disagree on economic principles at least if we have some knowledge of the field we can agree on what we are disagreeing about.
For example the idea that cutting the deficit is going to grow the economy in the short run, that somehow if we reduce government spending unemployment will go down and things will be better is simply impossible. Sure we can disagree about the long term size of the deficit and how damaging it is or not, some of us feel that in the long run it is a bad thing and others feel that it is not a problem, but you can’t get around the math that if you reduce government spending right now holding everything else equal, GDP goes down, right now.
But somehow a whole bunch of people really believe that cutting government spending is going to immediately help the economy.
What is with the spelling of “American” in the title? Spell check?
“Sure we can disagree about the long term size of the deficit and how damaging it is or not, some of us feel that in the long run it is a bad thing and others feel that it is not a problem, but you can’t get around the math that if you reduce government spending right now holding everything else equal, GDP goes down, right now.”
True. But, “holding everything else equal” why would you ever do that?
Spelling corrected. Thanks.
Brian, NCPR
…”holding everything else equal” why would you ever do that?
When compromise is a dirty word with half of our representatives, everything tends to be stuck right where it is.
One way to simplify things is to wait a week. Read “news” when it isn’t. The manure crusts over and there are fewer flies to obscure the residue. Fresh manure is too strong for the plants anyway. I am not referring to an earlier issue of regulatory suspension “benefiting” farmers.
This illustrates why will never see a “one-world” government.
It’s not one world.
Also part of complexity is our federalist system. We have 50 domestic experiments going on all at once in the US from cutting taxes, to implementing universal health care to setting income tax rates to not having any income taxes.
What drives me crazy is this idea that the Federal Government is this all powerful entity that controls our lives and the President is the most powerful person in the world. Neither are true. The federal government is one part of our system in the US and the executive branch is but 1/3 of that particular system. Most of what happens in our lives on a day to day basis is not impacted by policy decisions of the federal government.
The biggest problem with the family budget vs. the federal budget is bankruptcy. Individuals and families can file for bankruptcy. The federal government can’t. But if it ever did, everyone would be bankrupt.
Uh, Pete, if you could print money legally, would you ever declare bankruptcy?
And how do you figure that if the nation declared bankruptcy it would bankrupt us all? Mess up the economy, certainly; bankrupt some, probably; but bankrupt us all– no.
The biggest problem with the family budget vs. the federal budget analogy is that it may actually be a bad thing for the nation to be without a deficit. Remember the discussion back when Clinton came in with a budget surplus, and there was serious discussion about what would happen if the U.S. wiped out its deficit entirely? (Of course, the concern didn’t last long!)
But you would be hard pressed to find any problems arising from a family paying off all their debts.
Walker,
Your money and mine depends upon the “full faith and credit” of the United States of America. Yes, the government prints the money (yours and mine) and it is backed by the full faith and credit of the USA. Without that, it is just paper and coins.
Speaking of complexity and simplicity, Listening to the news this morning, I once again heard some politician say, “The American people.”
It should be a federal offense for any politician to use that phrase.
First of all, Americans are a very diverse group. There is no consenses about anything. Politicians claim a landslide victory if they get over 51% of the vote and they make that claim in spite of the fact that many who cloud vote don’t vote.
Let’s face it. Our politicians are clueless. Much of this is due to them being among the top 5% and some even belong to the 1%. They live in a different world and so don’t know much about “the American people.”
I don’t claim to know what the American people think. Hell, I’m not always all that certain about what I think. I’ve been known to flip alot on issues but I haven’t done much flopping back to where I flipped from. I do know people change and I think that is a good thing. If you still have the same opinions you had when you were ten, I can only guess you haven’t lived much and certainly haven’t thought much.
The American people. I can’t say I know the American people even though I am one and have know quite a few. Each and everyone is different in some ways and alike in others. I kind of like it that way. I know they are American people because they look human, walk and talk like humans, and live here.
I guess politicians are American people too for the reasons stated above but I really hate it when they claim to know me when most of them haven’t even met me to ask for my vote.
American people? North American, Central American, or South American?
“…”holding everything else equal” why would you ever do that?
When compromise is a dirty word with half of our representatives, everything tends to be stuck right where it is.”
Walker, I am talking about all the other factors that really affect GDP. You can’t really hold them equal.
“The biggest problem with the family budget vs. the federal budget analogy is that it may actually be a bad thing for the nation to be without a deficit.”
How do you figure? I can’t remember these discussions you describe, why would this be bad?
“There is no consensus about anything.”
Sure there is plenty of consensus. And there certainly is an “American People
Paul, I can’t lay my hand on articles discussing the issue, but my recollection is that debt was so built in to the way the economy operates that it would create serious issues if the national debt were completely erased.
Beyond that is the argument that if the government ran a surplus, it would necessarily lead to deflation. Just as government debt expands the money supply, a government surplus would shrink it. Real world examples occurred in the Panic of 1837 and the Great Deflation after the Civil War. The Great Depression saw a deflationary period brought on by a contraction in the money supply.
“Melissa Ortiz, the founder of a new tea party group called Able Americans, told Mother Jones magazine, “If you raise [the national debt ceiling], it’s just like getting a new credit card,” she said, arguing that families have to live within their budgets and the government should too.”
No, it isn’t. For one thing credit card typically carry about a 20%+ (sometimes over 30% in the case of department store credit cares), while federal treasuries have about a 2% interest rate. That’s a huge difference in debt service costs.
“That view was echoed Time columnist Fareed Zakaria, the widely respected pundit, who declared point-blank in an October essay that “Complexity equals corruption.””
A “widely respected pundit?” i have never heard of such an oxymoron.
Pete Kein says:
“Let’s face it. Our politicians are clueless. Much of this is due to them being among the top 5% and some even belong to the 1%. They live in a different world and so don’t know much about “the American people.””
Truer words have never been written.
Peter Hahn says:
December 18, 2011 at 5:07 pm
“I must admit I dont really get this love of simplicity for simplicity’s sake. People like a flat tax because it is conceptually simple even though it costs them a lot more money.”
I really dont think the flat tax is that popular amongs voters. If it was it would be the law now, but it isnt.
Scratchy,
I bet that if you had a 15 trillion dollar balance on your card they would give you a rate lower than 20%.
“I really dont think the flat tax is that popular amongs voters. If it was it would be the law now, but it isnt.”
This may be true. But we have many many flat taxes now that are the norm. For example I wish I could pay a lower rate when I gas up my Honda than the guy gassing up his Bentley but we both pay the same tax rate.
Great idea, Paul! Probably wouldn’t be workable as a tax on gasoline, but we could certainly institute a graduated luxury tax on automobiles based on purchase price. We could do the same with private planes, and all manner of other luxury goods. Let’s do it!
From what I see it looks like the Fed Gov already operates pretty much the same as your “average” family as far as finances are concerned. Many families already have way more debt than they should, CCs maxed, car loans, mortgage payments. And yet they continue to spend never looking farther ahead than,” how much is it a month?” All while living paycheck to paycheck and hoping the checks they write make it through the bank without bouncing. And the reason the idea of Simple solutions get so much traction has a lot to do with the education level attained by many in this country. Just look at the High School drop out rate , it’s astonishing.
Yes, it would be good for the job market as well. We will need a bunch of tax lawyers and accountants and a bunch of bureaucrats to work on this project.
Tom I agree, the only difference is that the “family” doesn’t have the option to print more money like the government has.
No, there are many, many more differences. It’s not just that a family can’t print it’s own money.
It’s that “money” is a concept defined by nations — and on a global scale, the value and meaning of money for decades has been set in large measure by US monetary policy.
Families aren’t just small fish versions of big fish nations.
Families are the small fish that swim inside the “money ocean” created by nations.
–Brian, NCPR
Brian, yes I should have said that it was just one difference.
I think that new “down grade” discussion in Europe is a good one. Neither France nor England thinks that they should be the first one downgraded to the same status as the lowly USA.
Wealth cannot be created by simply printing paper and calling it money, in our gut we all know that. So in that sense there is a limit to what a government can do just as there is a limit to what a family can do fiscally. So in that sense you can work the analogy.
Mervel is correct. What he says is really what is at the heart of today’s ongoing debate.
Brian is right the world is a complex place with complex problems that often require complex solutions.
If you look closely at Mitt Romeny’s “complex” 59 point plan one thing he proposes is to eliminate tax on dividends, capital gains, and interest for taxpayers with adjusted gross incomes of under $200,000 per year. Personally I think this will have a profound effect on job creation. One proposal backed by the current president (and encouraged by his friend Warren Buffet) aims to raise these rates. We need to bring more people at lower incomes into the markets. This is part of the reason why we see income not keeping pace over the last several decades. If you only base your income on your paycheck you cannot expect to keep pace with the changing world and the changing markets.
Mevel, Paul, what we all know in our gut is often wrong. We have been off of the silver and gold standards for more than forty years, and a whole lot of money has been created in that time. I don’t think we could stop expanding the money supply even if we stopped deficit spending without causing economic chaos.
And Paul, getting rid of taxes on dividends, capital and interest would greatly speed up the transfer of wealth from the middle classes to the top one percent– it would result in very little additional investment by middle class families who are already squeezed to the point where they have little additional disposable income to put into investments, but the wealthy are already heavily invested in the markets, and a tax break would just make their investments grow at faster rates. And the poor– what are you going to do about them?
I agree what we know in our gut is often wrong.
But logically if printing money could make any country wealthy than we now have the secret to end poverty and all of our economic problems. Mexico or Haiti could just print more money and they would create wealth. We could simply print more money and hand it out, why not give everyone in the US one million dollars? But we all know that is not true, I don’t know if we know it in our gut or not, but we all know it.
Our currency has value because markets and individuals have confidence that the dollar has value, that it will be accepted in a transaction. This all has to do with a countries productivity and government accountability and restraint. If people believed that the US government had plans to massively increase the money supply to devalue our debt through inflation, they would not loan us money we would be like Greece or what may be happening to Italy. If you lend money you want some level of confidence that the money you are paid back with has the same value.
Deficit spending works as long as people are willing to loan you money. We need to look no farther than Europe to see the folly in thinking you can run large deficits without consequence.
So the family analogy is not totally crazy, it is not totally accurate either. Consumers use credit all of the time and for good reasons, to buy a home to buy a car to start a business. The problem comes when lenders lose confidence in the ability of the family to pay the debt back or the family literally cannot pay the debt back. This can happen to a country with the important caveat that a country can just devalue its currency and pay the lenders back with worthless currency, but this is like going bankrupt for a family, it solves the short term problem but has huge long term negatives.
Well, again, it’s different from a family declaring bankruptcy, mostly because laws limit the circumstances under which one can declare bankruptcy, while a certain amount of monetary expansion is taken as the norm. Also, bankruptcy is a fairly drastic step for an individual to take, while governments have to get pretty heavy-handed with the printing presses before anyone gets too excited.
Mervel says: “…a country can devalue its currency and pay the lenders back with worthless currency, but this is like going bankrupt for a family, it solves the short term problem but has huge long term negatives.” Again, you make it sound like an all-or-nothing proposition. It’s not– it’s all a matter of degree.
Could we get a little bit real when it comes to “job creation.”
In the private sector, there are only two ways jobs are created. A job is created when someone needs to hire someone to do something. The bottom line in the need to hire is greed. When someone or some business believes hiring someone will result in the increase of their bottom line, they will hire. If on the other hand they think they can increase their bottom line by letting someone go or not hiring in the first place, that is what they will do.
Business is not in the business of hiring people so that people have a job.