Simplify Government. 1/10

note: this was originally written in 2014 in book format. With the crisis of 2020, i feel that it is more important than ever that we consider these ideas. I am re-editing it as a series of 10 medium articles.

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OUR COUNTRY STARTED OUT WITH A SIMPLE DOCUMENT. The Constitution of the United States, written in 1787, is a mere 4,435 words long — and set out the absolute bare minimum requirements for the world’s first modern democracy: separation of powers between the President, Congress, the Senate, and the Judicial system; and a procedure for adding amendments. Over the next 200 years, 27 of these were added — most of them a single sentence in length.

But while the legal backbone of our country is still very succinct, the reality of our political, legal and economic system is anything but. Our tax code is 73,954 pages long. At twenty pages per day, it would require 10 years of nonstop reading for an individual to parse it in its entirety. Obama’s health care bill was 1,018 pages, Clinton’s 1,342. It’s safe to assume that the majority of our lawmakers only have a summary understanding of the very laws they are promoting.

In 2010, the US Defense budget was 533 Billion Dollars. An additional $160 Billion was spent on “Oversea Contingency Operations” for the “War on Terror”, another $70 Billion for Homeland Security, and $108 Billion by The Office of Veteran Affairs. All told, $870 Billion Dollars was spent on defense in 2010 — while all individual income taxes totaled just $898 Billion dollars. In other words, 97% of all individual income taxes went to the military — and this at a time when the US was not at war. The fact that the budgetary process is so complex has allowed an absurdity like this to go virtually unnoticed.

Social Security was started by FDR in 1935, as a simple program to provide retirement benefits for lower income workers. Today it is an accounting and financial nightmare — on one hand making the budget look far better than it should (by including social security receipts in the plus column) — and on the other hand, taking into account the future liabilities of an increasingly aging population — being itself a problem of huge proportions.

Our medical system has evolved into an equally complex and dysfunctional monster. The average insurance plan is completely opaque — with some parts covered by the government, some parts not, and generally a form of Russian roulette on the part of the patient. Lose your job and get seriously ill — nobody will cover you; choose the wrong healthcare plan and you might get stuck with a bill that will bankrupt you. Despite spending 5.1% of the entire US GDP on health benefits (triple the percentage as under Carter), the state of the union on healthcare has never been worse.

The picture I am painting is of a system that has evolved into an unwieldy, out-of-control mess of complexity. What started out so simply, is, finally, after 200 years, a nightmare of exceptions, compromises, accounting double standards and off-balance sheet items. Both political parties are equally responsible — adding complexity on top of complexity to grab fine slices of special interest votes and political dollars.

This situation is especially disturbing considering that in 2009 the United States came very close to a financial meltdown. The banking system, with the implicit guarantee of the US Government, was brought to its knees by activities in subprime mortgage collateralized bond obligations, a new, highly complex financial product that didn’t even exist 10 years earlier. The solution to this problem: a 451 Page TARP bill, that lawmakers supposedly had a weekend to read and approve!

The purpose of this book is to address this situation head-on and argue that our fundamental problem is that the Government has become to complex. We need to dramatically simplify it, starting from simple principals we should all be able to agree on. Government needs to be re-thought and re-invented in the same way that Google re-invented search and Apple re-invented the smart phone. We need a better, cleaner, smarter User Interface for our country.

This is no simple task. Neither was the formation of the US Government in the first place. In both cases, the key was to start with the correct idea. In 1776, that idea was a simple representative, democratic government, bound by the Constitution of the United States. In 2014, we need a similar radical re-think of where we are going, and use that idea to move towards execution. Form follows function.

The emergence of Simplicity as a driving goal.

One of the great lessons of technology in the 21st century has been that simplicity itself is the ultimate design goal for any advanced system. Up until about the year 2,000 it was generally believed that more was always better: you wanted more knobs and dials on your stereo system, blender, and dishwasher, more features in your word processor, more places to click on your Internet “portal”.

It took 200 years of technological innovation for human beings to realize that machines shouldn’t be complex — they should be simple. People laughed at Charlie Chaplin getting caught in the gears of a factory (Modern Times, 1936), but they still admired all those moving parts. From Jules Verne to the Cockpit of a 747, to the first ENNIAC computer, the fact that humans could build these amazingly complex machines was viewed as a great accomplishment.

Visionaries like Stanley Kubrick and Gene Roddenberry started imaging a slicker, simpler future back in the late 1960s — but that was just “science fiction”. Steve Jobs pioneered the idea of simple clean design in computers, but as of 1997 it appeared that he had lost the war to Microsoft — and its bloated Microsoft Office / Windows “Suites”.

And then we turned the corner.

In 1999, Google launched a bare bones search product that did away with all the prior clutter of Yahoo, Excite, or Lycos — the three giant “Internet Portals”. With no forums, movie listings, chat rooms, financial discussion areas, horoscopes or games this ultra-utilitarian service seemed like more of a toy than a serious content offering.

But it was a very useful toy. It got people to the content they were looking for simply, quickly, and with no banner ads. It was almost like they had reduced the Internet to a single text entry box with a button labeled “Search”. Like the HAL computer in “2001 A Space Odyssey”, the power was what the service could do — and the user interface was as simple as possible.

Five years later, in 2005, a new service called Facebook emerged with, again, a very plain-vanilla social product. Like Google, it was not the first in its field. An earlier mainstream success, MySpace, that not only offered to “connect you” but also tried to introduce you to new music, offered you ways of adding glitter to your “MySpace page”, and even showcased “Viral MySpace Videos” as part of their core offering. Facebook initially did far less, but with a much more simple, consistent UI.

In 2007, Apple released the first iPhone — another radical experiment in simplification. In a market that belonged to Nokia, Motorola and a few other players, Steve Jobs dared dream up a simplified smart phone — one without a keyboard, with a clean, minimal OS, with small little apps that you could buy for a dollar each in the “app store”. Steve Ballmer at Microsoft made fun of it. Seven years later, Apple has a market cap of 500 Billion dollars, more than any other company in the world.

Also in 2007, a small startup called Dropbox funded with a hundred thousand dollars created an ultra-simple cloud storage system. Drag your files to a “Dropbox” folder on your laptop and they automatically sync (and are backed up) to the cloud. Today, Dropbox has 175 million users and is widely used in all kinds of business applications. Like all the previous examples, it wasn’t the first product in its category, it was just the simplest.

In 2008, Spotify launched a revolutionary music service based on the simple idea that you should be able to listen to any song, anywhere, for free. Pick songs, organize them in playlists, stream them from your phone or your computer. Amazingly simple idea, and completely compelling.

In 2010, Uber launched its first mobile app allowing anybody in San Francisco to get a town car in minutes. The app consists of a map showing the location of the cars and a button to order one, now. Once your order is in progress, you can track the arrival of your ride on your mobile device. Cab companies — with their antiquated dispatch systems — cannot compete. It is only a matter of time before Uber and its competitors put them all out of business.

In 2011, Nest Labs produced a simple, well designed thermostat that you can control via the Internet, and that learns from your living habits. The company was sold to Google 4 years later for 3 Billion dollars.

In 2013, Amazon expanded its e-commerce platform to groceries with Amazon Fresh, a simple online website. There is nothing high tech about the look and feel of Amazon Fresh — the magic is just that it works, and your groceries actually get delivered to you before dawn on your doorstep.

Also in 2013, a startup called Tinder, funded by Interactive Corp (IAC), created a new kind of dating app that dispensed of long profiles and just used a “yes / no” swiping system to match people in the same geography. One year later, there are 10 Million daily Tinder users.

The point of these canonical examples (and there are much more), is that since the beginning of this new century, Simplicity has systematically won over Complexity. Give people a simple, easy to use way to tap into technology and they will embrace it completely — the results will vastly exceed any preconceived expectations.

Smart companies in the Silicon Valley from Apple to Amazon to thousands of startups are using this new knowledge as a key weapon. As Joni Ive, the head designer for Apple noted — this goes far beyond “removing clutter”. It’s about finding the absolute essence of a product; the absence of clutter is merely a consequence.

The purpose of this book is to apply the same rigorous design methodology to the idea of Government. If our country itself was a product, what would it look like? All things equal would you create another version of Microsoft Word with six toolbars, or would you create the next iPhone? If Government was designed as opposed to just being improvised post-election, what would it be?

Incentives

Not only do we understand the importance of simplicity in technology today, we also understand incentives and gamification far better than ever. As Charlie Munger famously said, “all my life I have underestimated the power of incentives”.

Certainly, anybody who has ever employed a sales force knows that it all boils down to the sales commission plan. Build an achievable commission structure and sales people will hit their goals. Incentive businesses to relocate into your country or state and they will eventually move. Except for local services business like McDonalds, but they will put drive through ordering personnel in India.. Take a look at the entire country Ireland, or the Research Triangle Park in North Carolina. The idea that either one would be a tech hub back in 1980 would have been laughable.

The great work of Kahnman and Tversky has illuminated why people do the things they do. Give people a clear incentive, and their behavior will change. Even small incentives matter. Give people a little virtual badge if they are the first to “check in” to a new restaurant on Foursquare and they will display that badge with pride. Reward people with stars and points in games and online fitness programs and they ascend to higher and higher levels.

We now have solid evidence of how incentives work in the real world. Anybody still advocating socialism can take a good look at Francois Holland’s France to get some hard data on what happens when you do. Without an incentive to start companies, people don’t start companies; without an incentive to work people don’t work; without an incentive to not abuse the medical system people will abuse it to the maximum extent they can.

In Italy any company with more than ten employees has to comply with extensive rules and additional taxes. Guess what? No ten plus person company has started in Italy in ten years. incentives matter.

On the flip side, anybody wondering if low capital gains taxes are good for business need look no further than Ireland, Germany or Singapore. Low, and more importantly predictably low, corporate taxes create jobs — full stop. Again, the realization here is that its not just about being “pro business” it’s about having simple rules and clear incentives to follow them. Corporate taxes and business taxes are a highly regressive form of taxiation. They are necessarily passed onto consumers. Rich and poor pay the same amount. Corporate taxes should be zero. If they are, countries with zero business taxes are more competitive in the world, create more jobs, and charge less for their products and services. Competition assures that.

Combined with Simplicity, the Use of Incentives should be the major design direction for how to build the next United States of America. Do we need more engineers? We should incentivize people to get engineering skills. Do we want more healthy people that require less medical assistance? Incentivize people to get healthy and fit. Do we want a cleaner environment? Incentivize solar energy and energy conservation.

Direct, easy-to-understand incentives work best. Pay people cash, as opposed to some obscure form of tax rebate. Give people [recognized achievement] badges that show them and others they have clearly hit the desired goal. If it works for video games, sales contests, fitness programs and elementary schools it will work for the nation at large.

This series of articles.

With all this in mind, this series of articles is an attempt to take a completely fresh look at the largest and most successful organization on the planet: the US Government. I am not a politician or an economist — which I view are two positive things. I am just a technologist and a businessman who calls the shots as I see them. I was raised in France by two American parents.

I realize that politicians on both sides of the aisle will view this book as “utopian” or, dare I say it, “simplistic”, but I think that above all, at this stage we need a clear idea of where we need to go, as opposed to just a way to win the next election.

If we are going to cut through the clutter our country finds itself in we need something dramatic and absolute, not just a few more laws added to the mix. It’s not about creating a system that is “fair” it’s about creating returning to the simplicity that made this country great.

The US Government, with its 127 million workers, its arcane accounting systems, antiquated voting machines, 73,000 page tax code and 22 Trillion dollar total debt is like an obsolete IBM Mainframe that we need to take out to the junk heap and replace with a a simple iPad. It won’t be easy, but we did it once before, when we built this government in the first place back in 1776.

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