To Izidóra—Matt Welch
To Jack and Neal—Nick Gillespie
PURSUING HAPPINESS, NOT POLITICS
When was the last time you read the Declaration of Independence? Go ahead and call it up; give it a quick scan—we'll wait. Focus less on the detailed bill of particulars against King George ("He has called together legislative bodies at places unusual, uncomfortable, and distant"!), disregard completely the bit about "the merciless Indian savages," and concentrate instead on the two majestic, throat-clearing paragraphs at the top. Particularly this, the most influential English-language formulation of liberty, written during the 1700s: "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness."
You don't have to be one of those guys who dresses up in knee breeches and tricornered hats on the Fourth of July to feel, lo these many years later, the refreshing blast of radical Enlightenment thought contained within those three dozen words. Here is the source code not just for the revolutionary moment being heralded but for the very notion that individual rights precede—and therefore should be explicitly protected from—government. Jefferson and the other signers based their righteous complaints of injustice on the foundational insight that we are all born not just naked but equal and free, laying more than the groundwork for the bloody business at hand. They created a self-replicating sequence that led to the assertion in 1848 by the radicals at Seneca Falls that women were part of the deal and the deliverance, as well as to what Martin Luther King called, nearly two centuries later, the "promissory note" of full civil rights for the descendants of Jefferson's slaves. The world would never be the same. And by enumerating three specific unalienables at the top of the don't-tread-on-me list, these eighteenth-century hotheads laid out some intellectual bread crumbs for those of us looking for a fresh way out of the desultory state of American affairs in this to-date-disappointing twenty-first century.
Note what Button Gwinnett, Cesar Rodney, Richard Stockton, and all the other signers did not include on the short list of worthy endeavors no government should thwart. The document says nothing about pursuing politics. It does not read, "Life, liberty, and the watching of Meet the Press." No, the men chafing and gnawing at the crown's leash elevated above all other pursuits the quest for happiness, as defined by each individual, by his own lights. It was a declaration-within-the-Declaration that existential meaning derives neither from the whims of a sovereign nor from enlistment in some grand national project or even humble civic initiative but rather from the most atomized level of being: the personal, private, idiosyncratic human heart. Liberty was both a means and a destination—a process and a goal worthier than specific policy results. Happiness was aspirational; it was all about the journey, the pursuit.
In 2011, we do not equate happiness with politics; the mere juxtaposition of the words feels obscene. And for good reason: Politics, as John Adams's great-grandson Henry famously observed, "has always been the systematic organization of hatreds." Every election cycle—and we are always in an election cycle—we are urged to remember that deep down inside we really despise the opposing gang of crooks. We hate their elite (or Podunk) ways, their socialist (or fascist) economics, their reliance on shadowy billionaires with suspect agendas. In a world where mutual gains from trade have lifted a half billion people out of poverty in just the past half decade, politics is one of the last remaining zero-sum games of I win, you lose, where the victor gets to spend everyone else's money in ways that appall the vanquished, until they switch places again after the next election. We instinctively know that our tax dollars aren't being spent efficiently; the proof is in the post office, or the permitting offices at city hall, or the neighborhood school. We roll our eyes when President Barack Obama announces a new national competitiveness initiative in his State of the Union address just five years after George W. Bush announced a new American Competitiveness Initiative in his, or when each and every president since Richard Milhous Nixon swears that this time we're gonna kick that foreign-oil habit once and for all. And yet, the political status quo keeps steering the Winnebago of state further and further into the ditch.
A growing majority of us have responded to the stale theatrics of Republican and Democratic misgovernance by making a rational choice. We ignore politics most of the time and instead pursue happiness by falling in love, starting a home business, making mashups on You Tube, going back to school, bumming around Europe for a year or three, playing fantasy baseball, or tricking out our El Caminos. Through these pursuits we eventually find almost everything that is wonderful and transformative about our modern lives: the Internet, travel, popular (and unpopular) music, the spread of freedom and prosperity around the globe. The Declaration's most famous pursuit has delivered specific outcomes that eighteenth-century minds could not have divined, though the insight was there all along: People acting peacefully, mostly left to their own devices and not empowered by the state to force others into servitude, will create riches far more meaningful and vast than the cramped business of tax-collecting, regulation-spewing, do-as-I-say-or-else governments.
As robust and infinitely varied as our private universes may be, however, they no longer provide a reliable refuge from the destructive force of politics. Today, there is only one real policy issue facing the country, and unfortunately it threatens each and every one of us, even (especially?) those of us not yet born: We are out of money. At least forty-eight of the fifty states are running shortfalls, many of them staggering. Cities, counties, and states are on the hook for an estimated half trillion dollars' worth of pension promises for which they haven't socked away any money. New Jersey can't build tunnels, California pays more in debt service than it does in funding its once-enviable universities, and the president's home state of Illinois is in receivership. The U.S. budget situation is much worse than that of Greece, a country that has been wracked with violence and instability after bondholders refused to keep propping up its fiscal fantasyland. We are one sharp turn in international market sentiment away from a crisis none of us has ever lived through.
The president himself says we're confronting "an untenable fiscal situation"; yet, in the face of a $1.5 trillion deficit and a decade-long spending binge that hiked federal outlays by 62 percent in real terms, he cannot screw up the courage to suggest more than $400 billion worth of spending cuts—over the next ten years. Meanwhile, the allegedly limited-government Republicans refuse to get anywhere near a "radical" plan from Rep. Paul Ryan to balance the budget by 2063. It is a bizarre snapshot in time, in which sizable majorities think the government is doing too much and spending too much, where bailout-supporting Democrats and Republicans alike were bounced out of office in 2010 by a new Tea Party movement centered on cutting the size and scope of government, and where even Federal Reserve Chairman Ben Bernanke, nicknamed "Helicopter Ben" for his belief that showering down fiat currency will solve all economic woes, is saying, "If current policy settings are maintained . . . the federal budget will be on an unsustainable path." Yet, still the prospect of imminent fiscal catastrophe is not focusing minds in Washington or in the fifty state capitals or in countless town halls on the need to change politics-as-usual. It is a turbulent moment, one that cannot, by definition, last much longer as is. Something has got to give.
This is another reason to reread your Declaration, especially the first ten words: "When, in the course of human events, it becomes necessary . . ." Sadly, it has become necessary to become political. We didn't want to get into politics, but politics got into us. The country is flat broke, the economy is in miserable shape, we're still fighting two wars, the Social Security "trust fund" is now in permanent deficit, and all this debt-financed bounty will get even more expensive as foreign and domestic investors lose their appetite to lend us more money. The normal course of human events may be to pursue our private happiness as we see fit, but in 2011 we are in urgent need of course correction.
The moment does not call for dumping tea into Boston Harbor, or taking up arms against the Redcoats (the Red Sox are another matter altogether), or, God forbid, canvassing your neighborhood to elect the next Christine O'Donnell or Alvin Greene. The moment calls for political engagement, to be sure, but not traditional partisan activity.
That original American source code contains something worth pondering today. What if the private pursuit of happiness is the way to address the problems that have become necessary to solve? What if we were to foist the lessons, creativity, openness, and fun of our fantabulous nongovernmental modern world onto the unwilling and unaffordable bureaucracies keeping us down? What if we were to declare independence, not from a country or government but from the two political parties that have been dividing up the spoils for far too long?
Welcome to The Declaration of Independents. We've been expecting you. Maybe you are now, or will soon be, a member of what has become over the past forty years the largest bloc of American voters: independents. You have an unfavorable opinion of Congress, and you don't think too kindly about bailing out Wall Street and car companies, letting Big Pharma write the new health-care law, or having the Federal Communications Commission regulate the Internet. Yet, this sort of thing keeps on happening. Why?
This book intends, in part, to document the fact that the two major parties are not what they say and that you are right to be angry with their false claims about core beliefs. It is a shock to tender ears, we realize, but by any meaningful yardstick, Democrats do not care about free speech, and Republicans do not care about free enterprise. They are much more concerned with convincing you that the other guy is a Nazi than they are about relaxing government's control over activities it has no business meddling in. Political independence in and of itself is a private and public virtue, with potency that only grows with each passing year. Thinking for yourself is much more work than setting your compass by the direction of the tribe, but, oh, the liberation. Suddenly the world looks a good deal more ridiculous, tawdry, and intellectually beatable. And the same technologies that have jazzed up the rest of our lives and roiled every American industry you can name have made it exponentially easier for like-minded single-issue coalitions to swarm together and wreak holy havoc on a political establishment that hates, above all else, uncertainty.
The Declaration of Independents aims to let you know that you're not crazy, that there are people out there who might not agree with you on everything but who share your distaste for twenty-first-century politics and your fear about the fiscal guillotine careening toward our necks. In fact, these people—some Democrats, some Republicans, some independents, and some part of an increasingly familiar subspecies known as libertarians—have been among us all along, laying down their own source code for life, liberty, and the pursuit. Because history is written mostly by people who love politics, we know far less than we should about the trailblazers who have made life richer and more democratic for all Americans over the past forty years, in part by prying apart the clenched fist of government.
Yet, the revolutionary actions of these cultural, technological, and business innovators—the folks who created everything from the Pill, to venti macchiatos, to Wikipedia, to you name it—suggest a bold way out of our current mess, one that embraces rather than rejects the fact that Americans are the most culturally diverse people in the world and that we have an abiding faith that the pursuit of happiness will create a world that is richer, more interesting, and goddamned breathtaking in its particulars. Eventually, those same forces and insights that democratized our lives by decentralizing power to the individual will come knocking at the front door of a seemingly immovable political status quo. First, though, we have to realize that even the most permanent-looking bureaucracy isn't remotely permanent at all.
THE END OF THE WORLD AS YOU KNOW IT
The human brain is capable of memorizing 67,890 digits of pi, composing side two of Exile on Main Street, and inventing a dog-to-human translation device called the Bowlingual. Yet, we often brilliant, always innovating bipeds find it impossible to imagine changing the trajectory of the world we think we live in by more than a few degrees at any given moment. Whatever dominates today we assume will dominate tomorrow. This is true for our private lives, this is true for commerce, and this is especially true for politics.
Tectonic shifts in the course of human events are almost never predicted ahead of time, even by the very terra changers who stomp on the cracks. When asked in August 1989, only a few months after the electrifying demonstrations in Tiananmen Square, whether the communist East Bloc would ever be democratic and free in his lifetime, Czech economist Vàclav Klaus said no. Less than five months later, he was the first finance minister of a free Czechoslovakia. Morgan Stanley trader Howie Hubler lost $9 billion on a single stock market bet in 2007, not because he didn't think the bubble of mortgage-backed derivative securities would pop but because he couldn't conceive of the price reduction exceeding 8 percent. For all but the last ten days of 2007, the famed Iowa Electronic Markets (IEM) trading system for predicting major-party presidential nominees established as its clear Republican favorite famous ex-mayor of New York Rudy Giuliani. Yet, when it came time for people to actually vote in the primaries and caucuses, Giuliani lost in more than forty states to Ron Paul, a mostly obscure obstetrician-congressman whose name never even showed up on IEM's 2008 election trading board despite his ending up with the fourth greatest number of delegates. Massive, fast-paced change, whether liberational, destructive, or just plain weird, is always and everywhere underpriced.
You may have heard of confirmation bias, whereby people choose to notice and believe whatever rumors, news stories, and quasiacademic studies confirm their basic worldview. Well, get your mind around existence bias, where the mere fact of a person's, business's, political party's, or country's existence is taken as unspoken and unchallenged proof that the same entity will exist in largely the same form tomorrow, the next day, the next month, the next decade, forever and ever, amen—this despite the fact that the Western world, and the United States in particular, stands out in the history of Homo sapiens as the most vigorous producer of constant, dynamic change. Dig up the time capsules for every decade preceding us, and you'll find retrospectively laughable anxieties about seemingly intractable threats that no longer exist.
At the dawn of the new millennium, for example, the overwhelming majority of media observers agonized over how mere mortals could cope with the advent of the new Big Brother–style corporate behemoth called AOL Time Warner. As it turned out, the company set new records for financial losses before disbanding altogether. A decade before that, the question wasn't whether the Japanese would own and operate the U.S. economy but whether the American workplace would be free of insidious group calisthenics led by Toshiro Mifune types. The graduating class of 1980 could not imagine a world without inflation and the growing communist threat, and its 1970 counterpart forecasted constant Southeast Asian war fed by an endless military draft.
In 2011, it's tempting to give in to the pessimism and existence bias of the moment. Unemployment has reached levels not seen since the 1978–1982 recession, and unlike in that era of Federal Reserve Bank–imposed austerity via heightened interest rates, the economy has not been dosed with any medicine that hints at a better tomorrow. Debts and deficits are reaching levels not seen since World War II, when, as you might recall, we were fighting a world war—against Hitler. And as bad as the current fiscal picture looks, there is rare unanimity across the discipline of economics—as well as inside the administration, from President Barack Obama on down—about one singularly unhappy fact: As the first wave of the baby boomers born between 1946 and 1964 start to retire and go on the public dole, things will only get much, much worse.
Yet there is a glowing ember of real hope in this gloomy picture, and it lies, paradoxically, right alongside our inability to detect it. The same revolutionary forces that have already upended much of American commerce and society over the past forty years, delivering us not just from yesterday's bogeymen but into a futuretastic world of nearly infinite individual choice, specialization, and autonomy, are at long last beginning to buckle the cement under the most ossified chunk of American life: politics and government. A close if idiosyncratic reading of recent U.S. history gives us a blueprint for how to speed up that process of creative destruction in the realm of public policy. Because it's not true that nobody predicted such history-altering innovations as the Internet, successful and nonviolent resistance to totalitarianism, and the home-brewing renaissance, among a thousand other happy developments in the modern world. If we listen carefully to the theoreticians and practitioners who helped midwife these giant leaps toward the decentralization of power and the democratization of mankind, they have some surprisingly consistent things to say about changing or working around restrictive regimes and—above all—altering the mind-set that tolerates and perpetuates them. As any revolutionary will testify, there are structural impediments galore to our personal and global pursuit of happiness. Before we can sweep those roadblocks away, we have to declare our independence from the forces that conspire to keep us less than free and recognize that the status quo has no inalienable right to keep on keeping on.
Nothing in twenty-first-century life seems as archaic, ubiquitous, and immovable as the Republican and Democratic parties, two nineteenth-century political groupings that divide up the spoils of a combined $6.4 trillion annually in forcibly extracted taxpayer money at the federal, state, county, and municipal levels. While rhetorically and theoretically at odds with one another at any micromoment in time, the two parties manage to create a mostly unbroken set of policies and governance structures that benefit well-connected groups at the expense of the individual. Americans have watched, with a growing sense of alarm and alienation, as first a Republican, then a Democratic, administration has flouted public opinion by bailing out banks, nationalizing the auto industry, expanding war in Central Asia, throwing yet more good money after bad to keep housing prices artificially high, and prosecuting a drug war no one outside federal government pretends is comprehensible, let alone winnable. It is easy to look upon this well-worn rut of political affairs and despair.
But what if that is existence bias talking? What if the same elements that extend the incumbents' advantage threaten to hasten their demise? Luckily, economists have a particular fondness for studying what Democrats and Republicans have become: the longestlived duopoly in American history. Remember A Beautiful Mind, the story of the madly brilliant Nobel Prize–winning economist John Forbes Nash? Nash was all about duopolies, coming up with an "equilibrium" theory explaining that two powerful competitors frequently end up locked in a stable, mutually beneficial dance of tit-for-tat strategy. Experimental economists, who love crafting duopoly simulations, tend to be less conclusive, finding that duopolists' behavior largely depends on unique circumstances. But while the Nash equilibrium and its descendants are useful in explaining how duopolies collude with one another to carve up captive markets, such formulas generally fail to address the most interesting moment of all: how customer-unfriendly collusion produces an inevitable consumer revolt and technology sweeps one or more of the dominant players into the dustbin of history.
In a widely circulated 2009 paper surveying the vast economic literature on the topic, the late Larry F. Darby presented a list of classic duopolies for discussion. Tellingly, several no longer existed, including MCI and AT&T (MCI, then known as WorldCom, became history's largest bankruptcy in 2003) and Macy's and Gimbels (Gimbels was the country's—and the world's—dominant department store chain in the 1930s; it ceased to exist in 1987). As such examples illustrate, there is nothing inherently stable about two organizations dominating a particular market in the hurly-burly of modern American life. In fact, there is plenty of reason to suspect that such arrangements are, if anything, unstable—particularly if and when technology allows captive consumers to flee.
It's worth taking a closer look at a single such case, one of the duopolies on Darby's list: Kodak and Fujifilm. Like the Democratic Party with the House of Representatives, Kodak was, for much of the twentieth century, synonymous with color photography. We even dreamed in company terms: Memories captured on film were "Kodak moments," and the Dow Jones Industrial Average listed Eastman Kodak for more than seven decades. At one point the company enjoyed an amazing 96 percent share of the U.S. market for photographic film. Such was its dominance that the federal government sued Kodak for antitrust violations not once but twice, producing out-of-court settlements in 1921 and 1954. As recently as 1994, long after Japan's Fujifilm had entered the scene, the Justice Department argued that the antitrust settlements should remain in force, since Kodak had "long dominated" the industry, still enjoyed a U.S. market share of around 75 percent, and could "greatly outsell its rivals despite charging a higher price" (careful observers and participants of capitalism may notice in that latter claim a wonderful market opportunity).
Fujifilm began competing with Kodak globally in the 1970s and seriously in the United States after the 1984 Olympics. Though always the junior partner on Kodak's home turf, the conglomerate held its own enough that the duopoly soon attracted academic studies such as "Entry, Its Deterrence, and Its Accommodation," "Vertical Restraints and Market Access," and "Advertising Collusion in Retail Markets." The underlying assumption was that you could assume the duopoly's equilibrium for the foreseeable future. Even those who noticed Kodak faltering in the late 1990s at the dawn of the digital age were still apt to say, as Fortune magazine did, "The Kodak brand remains solid gold, and its quality is not in dispute." No one could conceive of a photography world without Kodak playing its customary leading role.
This, stunningly, is no longer true. Eastman Kodak share prices tumbled from $60 in 2000 to $40 in 2001, then to $10 in 2008; by 2011, they were below the $4 mark. The Dow Jones kicked the stock off its bedrock industrial average in 2004. Kodachrome—subject not just of a hit Paul Simon song but of the 1954 antitrust settlement that the federal government was trying to maintain four decades later—vanished from stores in 2009, and developers stopped processing the stuff for good on New Year's Day 2011. The company has closed scores of plants, laid off more than 10,000 employees, and reported quarterly losses for years on end.
What happened? Technological advances gave consumers choices that Kodak's fat bureaucracy was unwilling to provide. Writing in the Wall Street Journal
in November 2006, William M. Bulkeley explained how the implications of this insight ranged far afield from the world of processing photographs:
Photography and publishing companies shouldn't be surprised when digital technology upends their industries. After all, their business success relied on forcing customers to buy things they didn't want. Photo companies made customers pay for 24 shots in a roll of film to get a handful of good pictures. Music publishers made customers buy full CDs to get a single hit song. Encyclopedia publishers made parents spend thousands of dollars on multiple volumes when all they wanted was to help their kid do one homework paper. The business models required customers to pay for detritus to get the good stuff. . . . Eastman Kodak and Fuji Photo Film had a highly profitable duopoly for 20 years before digital cameras came along. They never dreamed customers would quickly abandon film and prints.
When given real choice, especially the choice to go elsewhere, consumers will drop even the most beloved of brands for options that enhance their experience and increase their autonomy. We have all witnessed and participated in this revolutionary transfer of loyalty away from those who tell us what we should buy or think and toward those who give us tools to think and act for ourselves. No corner of the economy, of cultural life, or even of our personal lives hasn't felt the gale-force winds of this change.
Think of any customer experience that has made you wince or kick the cat. What jumps to mind? Waiting in multiple lines at the Department of Motor Vehicles. Observing the bureaucratic sloth and lowest-common-denominator performance of public schools, especially in big cities. Getting ritually humiliated going through airport security. Trying desperately to understand your doctor bills. Navigating the permitting process at your local city hall. Wasting a day at home while the gas man fails to show up. Whatever you come up with, chances are good that the culprit is either a direct government monopoly (as in the providers of K–12 education) or a heavily regulated industry or utility where the government is the largest player (as in health care).