I cannot remember a US Presidential campaign in which the debates between the candidates and their running mates have drawn so much attention both from the public and the commentariat. Watching the three debates to date I was reminded how free with and of the facts the candidates wage their campaigns. This hardly comes as a revelation but then I began to ponder what if the tapestry of rules governing public statements by corporate executives also applied to politicians? This could take media "Fact Checks" to a whole other level.

To remind those of us who did not spend their formative years practicing securities law US Federal law imposes strict constraints on what how and when the executives of a public company may disclose information. The Securities Exchange Act of 1934 and the rules promulgated by the SEC thereunder set forth the basic (but hardly the exclusive) disclosure and anti-fraud provisions of US law. Under these rules it is illegal "to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made in the light of the circumstances under which they were made not misleading."

Having lived by this standard for my 10+ years as the CEO of a public company I fully support the objective of creating and maintaining fair and transparent public capital markets and punishing those who seek to lie to their shareholders or trade on inside information. In addition the corporate scandals of the past 20 years such as Enron and WorldCom have led to the piling on of additional rules including Sarbanes-Oxley and Reg. FD which among many other things govern the timing when disclosures may be made and require the CEO and CFO of public companies to make quarterly certifications as to the integrity of the financial statements and the quality of corporate controls. Again I have no issue with these provisions.

What I do find perplexing is that similar anti-fraud rules do not apply to the public statements written and oral of candidates for political office. When Governor Romney said in the second presidential debate that President Obama has doubled the deficit he was clearly making "an untrue statement of a material fact" a point which has been brought repeatedly to the attention of the Romney campaign. However President Obama was also guilty of a least an omission of a material fact when he claimed that he had cut taxes by $3600 since he failed to mention that this amount was cumulative over four years and not likely to be realized in full unless the Bush tax cuts and the payroll tax reduction were extended in their entirety.

I could cite numerous other examples as the candidates have themselves about the other but I would not presume to judge the "he said; she said" debate. Rather I merely point out that it seems strange to me that we choose to elect the most powerful man on earth through a process in which an unlimited amount of money can be spent to distort obfuscate and downright lie. Either we as a nation are saying that public capital markets deserve to be protected from untruths and half truths because they are important to us but the US Presidency does not merit such protections or we naively believe that a billion dollars of free speech by each candidate can permit the truth and the best candidate to prevail in a protracted and dizzying war of tit for tat.

More likely we know the electoral system is badly broken but we lack the political will for the Constitutional reforms necessary to reform it. So what might those reforms look like? Would we want candidates and their campaign managers to be liable for up to 25 years imprisonment and $5 million in fines as they would be under the US securities laws? I think not. The solution and any penalties should fit the crime.

US Presidential campaigns are too long too costly and too free of fact. First I would limit all political campaigns to a duration not to exceed 25% of the term of office being sought – thus Presidential campaigns could last up to one year and contests for the House of Representatives could run for only six months. This might help candidates actually work on the significant policy challenges they were elected to tackle and not merely begin running for the next election on the first day of their current term.

Second I would require the federal funding of all elections for national office and cap the amount at (say) 25% of that spent in 2012. To be effective campaign spending by third parties would also need to be limited. So for example no individual company labor union or other entity should be permitted to contribute or otherwise spend money directly or indirectly individually or as part of any group in excess of $100 during the shortened election campaign.

Finally I would require candidates to produce and file a written policy paper setting forth their position on all major issues much as corporate executives must file annual and quarterly reports proxy statements and prospectuses. Candidates would be free to conduct the same rallies debates and town hall meetings as today; however if they materially departed from previously filed positions they would be obligated to amend or supplement their disclosure documents. This is very much the way in which public company disclosure works today with press releases and webcasts to update more formal disclosure documents.

The recommendations outlined above raise obvious Constitutional issues starting with the freedom of speech. However even the rights under the First Amendment much loved in American jurisprudence are not without limit. Citizens can be stopped from disclosing sensitive national security information such as troop movements or restrained from yelling “fire” in the proverbial theatre. Moreover no corporate executive expects to be able to exaggerate company revenues or make knowingly false promises without fear of punishment. A non-partisan body would need to be created with SEC-like powers to enforce these rules – – perhaps a Federal Election Commission with real teeth.

All of these proposals would require a fundamental overhaul of the current US election system including a range of Constitutional amendments to make them possible. Others can undoubtedly improve on the mechanics of my suggestions – — I intend them as a provocative straw man rather than a complete legislative agenda. However I have yet to meet the voter or even the candidate who believes we are well served by the current system. We deserve better.

Over the long Columbus Day weekend in the US I participated in a conference held on beautiful Nantucket Island named appropriately enough The Nantucket Project (www.nantucketproject.com). Now you might well be thinking why does the world need yet another "thought leadership" conference on top of the World Economic Forum (Davos) the Bohemian Grove (California) the Allen & Co. Conference (Sun Valley) the Aspen Ideas Festival SXSW (Austin) DLD (Munich) Bilderberg (originally The Netherlands) All Things D (California) Le Web (Paris) and TED (everywhere) to name but a few.

The truth is that many great panel discussions have been held and many great keynote presentations given but we seem no closer to solving our great societal environmental political or economic problems. Nonetheless it was with my usual sense of optimism that I jumped on the short flight to this postcard-pretty summer resort for the East Coast establishment. I was not disappointed. The Nantucket Project now in its second year is the creation of a small group of civicly-minded Island families led by Tom Scott (founder of Nantucket Nectars) who seek to "bring together leaders from a wide range of disciplines to explore the most relevant cutting-edge ideas and examine the implications they have for culture society and business."

This year’s participants included Sen. John Kerry Peter Thiel (PayPal Founders Fund) Eric Schmidt (Google) Stephen Wolfram (Wolfram Alpha) Toby Cosgrove (Cleveland Clinic) David Gergen (CNN) Chris Matthews (CNBC) Larry Lessig (Harvard) and Jonathan Zittrain (Harvard). I moderated several sessions including a lively panel on the Future of Finance in the Age of Radical Transparency featuring Bob Diamond (former CEO Barclays) Eddie Lampert (Chairman of Sears and ESL Investments) David Rubenstein (co-founder Carlyle Group) and Larry Summers (former US Treasury Secretary and Harvard President).

I took an intentionally provocative position as moderator to argue that much of the current public company disclosure scheme is a waste of time and effort aimed at positioning or "spinning" quarterly or annual results and interim corporate developments which could one day be replaced by publishing weekly or daily revenue cost and balance sheet figures directly to the internet. As desired I got plenty of pushback from the panel who sensibly argued that no CEO would want to learn of his company’s results at the same time as the public and that this could introduce perverse incentives to manipulate underlying transactions. I remain unconvinced as to much operating data but I do believe that just as diplomatic communications should remain immune to Wiki- or other leaks so that diplomats can negotiate and brief their superiors so should certain corporate developments such as merger plans and new product designs remain subject to protection.

We went on to debate such interesting (at least to me) topics as the blurring distinction between what it means to be a public or private company in the age of active secondary markets relaxed solicitation rules courtesy of the mislabeled "JOBS Act" and delayed IPOs. There was a general consensus that this trend had accelerated in the last several years with greater transparency now available with respect to even "private" companies but that there remained important differences. After staying faithful to the conference’s overarching theme of testing the limits of "collective intelligence" for the better part of the hour I asked the panel to offer their views on the "fiscal cliff" faced by the US at the end of this year and the prospects for recovery (or at least stability) in Europe. The conclusions not surprisingly were that the US would rise to the occasion and at least partially address the fiscal challenges facing the nation (strongly supported by Senator Kerry later in the program) and that the EU would stay united but with little enthusiasm and many nervous moments to come.

What impressed me about the Nantucket Project 2012 was (1) the broad range of topics covered from politics to economics to healthcare to pure science; (2) the sense of community that arose from holding all the sessions in one large tent thereby exposing the politicians to the science and the doctors to the economics; (3) the commitment of the presenters to stay and participate in other sessions rather than just fly in and out; (4) the request by the organizers to push the envelope and not just rehash talking points; and (5) the beauty of Nantucket as backdrop and playground. I would also credit the programming organization and participation by the great team from BigThink.com led by Victoria Brown and Peter Hopkins. In the interest of full disclosure I have a minor advisory role at and financial interest in the company — too small to deserve any credit for their success but large enough to provide me a good window on their talents.

France may be the birthplace of Cartesian logic; however these rationalist roots are nowhere to be seen in President Hollande’s proposed economic and tax policies. I have written before in this blog to criticize then candidate Hollande’s plan to reduce the retirement age in France from 62 to 60 enforce the 35 hour cap on working hours and raise the top tax rate to 75% (actually far higher when social charges are included). These are not only fiscally reckless for a nation with a stagnant economy a huge public debt and generous social benefits promised to an aging population but they reinforce a view already all too prevalent in France that work is some horrible affliction designed by evil plutocrats to interfere with "real life" and which should be restricted to the smallest corner of that life as possible.

I did not expect Francois Hollande once at home in the Elysee Palace to suddenly succumb to free market fever but I did expect him to be consistently socialist. A candidate who declares that he hates "rich people" should stick to his guns. Thus it came as quite a surprise when I learned this summer that Hollande was proposing to create an exception to the confiscatory 75% tax bracket for professional athletes and creative talents. Now those who know me well can attest to my love of Euro Cup calibre football and French art and film but I cannot see why Zlatan Ibrahimovic deserves millions at PSG but a self-made man like Maurice Levy who built the advertising agency Publicis into a global power does not.

I do of course see the awkward policy position President Hollande backed himself into because it would certainly be embarrassing if French club teams consistently lost against international competition when the talent (including French players) chose to sell their skills elsewhere. But what if it didn’t matter? What if the Messis van Persies and Ballotellis are no more talented than the sub-one million Euro players? Why not tax all workers who earn more than one million Euros at the top rate? This at least would be a consistent policy and would be an interesting experiment to run with the downside limited to disappointed football fans. If this is not an appealing prospect then why run the same experiment in the business world when the risk is fielding a second-string team to help grow the economy?

The answer can only be that French society believes that talent matters in sports and the arts (and I agree) but that it does not matter or at least not that much when it comes to running companies and other institutions. Putting aside my reservations about who is competent to deicide which occupations require talent and which do not (what about brain surgeons?) as an investor I do not want to put my money into a company that is at a significant government-imposed disadvantage when hiring and retaining talented staff.

So what I learned on my summer holiday in France is that the country remains a great place to take a vacation.

Another exceptional Sun Valley conference courtesy of the publicity-shy Allen & Co. What goes on in Sun Valley stays in Sun Valley — those are the rules of the road. While the grateful invitees by and large respect these rules certain of the attendees come with the express purpose of raising their profile — these are the young companies featured in the annual "New Breed" session. The 2012 edition saw Cloudera Evernote Nextdoor and Uber. Of these I regularly use Evernote and Uber and it is on Uber that I wish to focus in this post.

First let me state that (unfortunately) I have no investment or other interest in Uber beyond being a loyal user of the service. When I do have a financial interest in one of the companies I mention in this blog I disclose it. What drives me to discuss Uber is my satisfaction with the service as an ordinary user and my interest in the larger technology themes it raises. What Uber does sounds ordinary enough – the booking of livery cars (radio cars) via smart phone in major cities. However they make it so easy the form-factor and feedback is so good and the role they play for both driver and passenger so useful that they have won me over as fan and loyal user.

The way it works is simple: You download the Uber app to your iPhone or other smartphone enter your credit card once to be stored on an Uber server and you are ready to go — literally. When you open the app you see a Google map centered around your current location; you also see a bunch (especially if you happen to be in San Francisco) of small black icons in the form of cars. These are available car service sedans or SUVs which are part of the Uber network and ready to respond to your call. To book a car to come pick you up at your current location you simply push one large button to register your request. The system then assigns the nearest driver gives you an estimated pick-up time (generally 2 to 4 minutes in San Francisco and 5 to 7 in New York) and you can watch your car approach on the screen. You also often receive a photo of the driver his crowd-sourced rating and license plate number. Fares run generally twice the prevailing taxi rate; no money changes hands as the trip gets charged to your credit card on file with Uber (not the driver) and no tip is expected. After completion of the trip Uber emails the customer a receipt showing a graphic of the route taken the charge and other relevant information.

Over the past six months I’ve used Uber in San Francisco New York and Washington DC and I look forward to using the service in such notoriously difficult taxi cities as Paris. Besides being a great service for users I am impressed with what Uber represents: another example of the internet removing friction and associated transaction costs to empower a new service which was uneconomic before. The use of radio cars is obviously not a new idea. Typically these have been used by companies and professional firms as well as individuals for airport transfers and the like. Booking such a car has usually involved a call to a dispatcher as has getting an updated ETA or other information. What Uber does is eliminate the dispatcher with more efficient AND informative technology as well as enable radio car drivers to turn idle wait times into productive trips by making themselves available on the system. From the user perspective not only is the service more transparent and efficient (think FedEx since the advent of internet package tracking) but also far easier to use. You walk out of a meeting decide that you don’t feel like walking and punch one button on your phone — it does not get much easier than that.

I only wish air travel could be so simple.

I have been watching the sad progression of events in the Barclays Bank LIBOR drama and true to form have a few unfashionable observations to make. I won’t here repeat what is known of the facts of the case other than to state what is accepted: Barclays has agreed to pay a 290 million pound fine to settle charges that during the 2008 financial crisis it submitted estimates of the interest rates at which it could borrow in the London Interbank market below the levels at which the Bank then could actually borrow.

First the uncontroversial: What Barclays did is wrong possibly unlawful and merits the punishment of the relevant employees at least their direct supervisors and the institution.

Now the less politically correct.

1. Barclays was late to the false interest rate party; other less creditworthy banks submitted lower estimates; and Barclays only fell into line after at least a suggestion from their UK regulator that the Bank need not be so out of line. [Note to self: Always get it in writing]

2. It is unlikely Barclays’ false submissions actually influenced LIBOR as calculated.

3. Even if LIBOR was nudged downwards the average homeowner holding a LIBOR-adjustable rate mortgage would have benefited. [Full disclosure I am one]

4. There was a global financial crisis raging at the time of the false submissions and the UK benefited from Barclays not seeking the government bailouts required at RBS Lloyds and Northern Trust.

5. Barclays cooperated with the UK and US investigations and was the first of what are likely to be several institutions which will be found to have submitted false estimates.

6. CEO Bob Diamond was pressured to resign by the Governor of the Bank of England the Chairman of the FSA and the very active intervention of the Chancellor. This would appear to have more to do with Bob’s reputation in the eyes of the British establishment and the words of a former minister as "the unacceptable face of capitalism" than a thoughtful evaluation after all the facts were in as to his actual culpability in the affair.

7. Diamond was seen as the all-too visible and voluble leader of a gang of American investment bankers who somehow corrupted the theretofore pristine British banking culture. [Note to self: Am I the only observer old enough to remember what a cesspool of insider trading and crony capitalism the City was before the 1986 Big Bang?]

8. Bob Diamond led a team which transformed the vestigal Barclays’ BZW markets unit into a world class global bank.

9. I am doubtful that Barclays and its shareholders will be better off for Diamond’s departure as predicted by the Chancellor.

10. The Barclays’ Board should find a way to retain Marcus Agius as Chairman. Amid so much turmoil and leadership turnover the institution needs some measure of continuity and Marcus is a very decent honorable and talented banker.

I was asked by The Economist magazine (they call it a newspaper but this is a small conceit for a publication I hugely admire) to contribute to their new Lean Back 2.0 Blog. My first piece can be found at The iPad and the future of paper.

I encourage you to read the other interesting posts collected there but for ease of reference I reproduce my contribution below.

A little more than two years ago I wrote a piece on my blog entitled “iPad and Beyond“ which celebrated the launch of the first iPad. In the post I argued that we should not view iPad v.1 as the final destination but rather “a trail of breadcrumbs along a path to the future of media.” What I meant and still believe is that industry analysts have a tendency to look at a product – the iPad the world wide web cable television – and draw sweeping conclusions concerning the “future of media” or “the death of newspapers” based on a static product snapshot. To me this is akin to valuing an ongoing business on the basis of a balance sheet but not an income statement and forecast. Thus only an analysis which captures the dynamic progression of technology should be used to support such grand conclusions.

While in my original post I accurately (but none too bravely) predicted future versions of the iPad would have 3G/wifi connectivity a longer battery life and a better screen we have not yet seen my bolder prediction of lightweight digital plastic sheets becoming the new print medium. This will come. As has often been noted technology appears to evolve slowly in the near-term and then very rapidly over longer timespans as we consistently underestimate the compounding effects of incremental development.

While the iPad3 I use today is an impressive and enjoyable machine it is but a hint of things to come. Many await Apple’s entry into full screen home television – likely with a further evolved Siri voice control; however I am still waiting for the re-invention of paper. That’s right paper. What we call paper today has evolved over centuries from stretched animal skins to papyrus to wood paper pulp. It is lightweight foldable easily transportable readable in bright light and relatively cheap. However in its current “wooden” form it is not immediately reusable not searchable and comes with an environmental cost.

While there have been several attempts to date to create high quality digital paper (e.g. Plastic Logic) none has yet delivered a user experience as good as the iPad with the benefits of the traditional paper form factor. Imagine the simplicity of having your weekly subscription to The Economist or your daily newspaper downloaded overnight to your “digital paper.” Crowded train? No worries simply swipe a finger to turn the page. Loss of classified advertising threatening traditional newspaper dynamics? How about an integrated voice-controlled search box to query the contents of today’s paper the archives or the broader internet.

These useful features are not only possible they are likely. With them our notions of what is “paper” what is a book what is television will also change. Many traditional newspapers have begun featuring video on their web sites and mobile apps – why not on the front page of their eventual digital paper? Color photographs in newspapers were also once unthinkable – even after they were technically possible.

One market in which we can see these changes unfolding is book publishing. New electronic publishers such as Byliner are not only publishing traditional books and short stories they are pioneering new mid-length serious writing by authors including Margaret Atwood Laurence Lessig and Buzz Bissinger (full disclosure: I thought so highly of Byliner I bought a small equity stake in it). Technology continues to evolve making new devices possible; artists journalists and novelists experiment with these new form factors and create original works; and entrepreneurs challenge traditional economic models and build entirely new businesses.

The iPad3 is only the beginning. The story of digital content is a fast moving river replete with dangerous eddies and currents for the conservative paddler. Wooden paddles may give way to fiberglass and later carbon fiber but life on the river remains good.

For the last several years I have been writing about the threats posed by the over-indebted West. These are not only threats to the economies of Europe and the US but also to the very political foundations of these states. While the United States has so far enjoyed a ‘bye" from the debt capital markets European sovereign states at least those of the "Club Med" have been less fortunate. Last weekend European leaders finally started to tackle the burning issue of recapitalizing the precarious Spanish banks before nervous depositors took the issue into their own hands. By end of the day Monday the markets were unimpressed but at least the Eurozone is finally tackling the core issue — as the US learned in 2008 when the TARP was converted into a bank recapitalization fund.

These financial machinations can appear highly technical and esoteric — and in many respects they are. However it would be a mistake to underestimate the economic (and potentially political) reset coming. This was plainly brought home to me on a recent visit to France. My wife Maarit and I spent a few days in the South of France in May where I was speaking at a conference. We stopped for lunch one day at a casual beach restaurant where we have been going for years and not only enjoyed a typically good meal but also a lesson in European economic alchemy. When I asked one of our favorite waiters how he had gotten through the unusually harsh winter he replied that it had actually been a very good season. He and a couple of his colleagues had not only taken their usual overseas winter holiday (Mexico) they had taken a second trip to Miami and New York.

In prior years I had always admired and marveled at the quality of European life which afforded the average waiter ample time off and the opportunity to travel. However this year I began to worry. Would the average waiter in San Diego be able to afford let alone expect even one foreign vacation each year? Was this a special defect of the American capitalist system or was my French waiter soon in for a shock? Certainly not the latter if the new French government can fulfill its promises. The freshly elected Francois Hollande promises that France will reduce its deficit to under 3% of GDP – already quite a challenge — but also lower the retirement age to 60 (from 62) while hiring 60000 additional teachers.

I hope I am proved wrong but the Hollande fiscal program like so much of the post-war European agenda seems destined to continue the financing of this generation’s above-budget spending at the expense of their children. If like my favorite waiter you are childless then you are only piling debt onto someone else’s children; however I doubt the crime is this knowing and cynical. Rather successive generations of politicians have encouraged this inter-generational borrowing by recklessly promising that the average worker can work a 35-hour week; take long vacations; retire at age 60; enjoy free education and healthcare and still remain competitive in a relentlessly global economy. This is not only bad economics it is politically exploitive and insulting.

The United States has the benefit of some time (and scale) to avert this train wreck. We would be wise to not to assume that the credit markets only punish Mediterranean-bordering borrowers.

While I was growing up in New York I watched a lot of television despite the admonitions of my school teachers . My two favorite programs were Star Trek (the original series) — yes I’m that old and Hogan’s Heroes. The latter show was very funny but had almost zero intellectual content other than perhaps predicting the creation of the EU in the sense that the English French and Germans on the show all got along well despite the fact the show took place in a Nazi POW camp.

Star Trek was different. The original series produced by Gene Roddenberry was full of philosophical and technological content. Tricorders matter/anti matter propulsion medical scanning beds cloaking or stealth shields and transporter machines. We forget how prescient the writers of the series were in the mid 1960s because so much of the then science fiction has turned into accepted contemporary technology.

I was reminded of my admiration for the original Star Trek series twice recently. First rummaging through some old files I found a yellow campaign pin circa 1967-68 which read "Nixon is only a Klingon in disguise." [For the non-Star Trek cognoscenti (if one can ever use that term to refer to a very nerdish community) the Klingons were pointy-eared enemies of the Federation good guys.] Second the US administration’s increasing fondness for Predator drone strikes (in action in Pakist again today) reminded me of a Star Trek episode in which the crew of the Starship Enterprise encounters an advanced civilization on the planet Eminiar VII which has been at war with its planetary neighbor for generations. The interesting aspects of this war are that (i) no one on either planet can remember why the war began or why they are still fighting and (ii) no weapons are actually fired. Instead these "advanced" societies have long-since moved beyond the crude form of warfare still more or less current on earth in favor of computer simulations of the destruction that kinetic weapon strikes would have had. Once these simulations have identified the putative victims of these attacks they are required to report to liquidation centers to be killed quietly and with no collateral damage.

The verile Captain Kirk will have none of this. In the episode he berates the leader of Eminiar VII for continuing to meekly follow this bloodless war protocol notwithstanding the latter’s protestations that this is the most advanced humane and civilized way in which to wage war. Kirk’s winning (of course) argument is that by so attenuating the gory and repugnant aspects of true warfare these self-proclaimed advanced civilizations had established a means by which to fight an endless war without the usual attendant mayhem.

So why does this 40+ year-old example of science fiction remind me of current US Predator drone warfare? It is of course the "stand-off" nature of the combat; the very attractive (from an American viewpoint) ability to project violence without putting American human forces in harm’s way and the computer-controlled seeming precision of the affair. What differs of course is that in the Star Trek episode both warring planets possessed the relevant technology but so far in real life only the US can project such lethal force. This will of course change.

There is another less immediately apparent manner in which the US is able to wage war without putting too many of our sons and daughters in theatre. First by using an ever increasing number of contractors (I would just call them mercenaries). Second via a volunteer army whose members are increasingly drawn from the less well-off. Now don’t get me wrong; I am deeply grateful to live in a society in which my young children do not expect to serve (at least unwillingly) in combat. However I do worry that our political leaders are somewhat more willing to take the nation to war because the consequences (at least to the most influential members of the electorate) are more attenuated.

Star Trek teaches us to be wary of the sanitization of war.

What if every wrong does not have a remedy; every pain a pill; every injury a cause of action? What if in each case the cure were worse than the illness?

This is a tough choice for government and for the governed. It requires great legislative executive or judicial restraint often in the face of true human suffering not to create some new government solution. However this is what I believe we must be prepared to do if our societies are not to become ossified webs of regulation.

This is not some personal frolic into far right conservatism or libertarianism. I have always believed and continue to believe that there are two core functions of the nation state: To protect its people and to preserve their liberty. These always exist in a certain dynamic tension; however of late I have begun to worry that at least in the US and Western Europe the balance is overly tilted to nanny-state protectionism.

Unfortunately bad stuff sometimes happens to good people. Cancer and other disease is an obvious example so are many other less life-threatening conditions. Let’s imagine that this morning Glocer the Klutz slipped and broke his leg in the shower. Not a good way to start the day but also not to my mind ground to sue the bathroom tile manufacturer for failure to affix a warning label reading: "Danger May Be Slippery When Wet." Similarly but on a grander plane some real bad acts were committed in the US mortgage banking crisis but that does not mean that the right answer for society at large is the passage of the Dodd-Frank legislation and its tangled web of implementing regulations.

Here is the crux of the issue: It is very difficult in the face of a specific bad outcome to stay the legislative hand from enacting new rules that when added to all the existing and accelerating lawmaking do not make society as a whole worse off. Or as I learned in law school bad facts make bad law. What makes this a particuarly difficult issue is that the bad outcome is known and measurable but the benefits of liberty are general and unquantified. I cringe each time a sitting President of either party points to the upper tier of Congress during a State of the Union address and singles out one American citizen by name (usually seated next to the First Lady) as deserving of some government-privided solution. You can almost feel the surfeit of legislation to come.

This phenomenon is not by any means limited to lawmakers. So for example when a civil jury awards millions in damages for pain and suffering in the last seconds of an accident victim’s life the money is not a "free" good; rather it will be funded through small increases in the insurance costs for all of the responsible citizenry. It would be far more efficient for society to provide adequate healthcare generally to accident victims than to use the courts and juries to allocate lottery-like awards to the specifically litigious few.

One person who has been doing more than just talk about these issues is Philip K. Howard author of The Death of Common Sense (subtitled "How Law is Suffocating America") founder and chairman of Common Good (www.commongood.org) and cited favorably in prior posts to this blog (see Debt vs. Equity –The Ossification of Economics and Politics). Core to Phil’s message is that the continual enactment of new laws much like the successive hardening layers of lava in Pompeii have ossified and buried the ability of the Nation to govern itself. What we are left with is a modern America in which good people elected to high office with the best of intentions find themselves incapable of using their best judgment to govern in our common interest.

As Phil writes:

"Today Americans are tied in legal knots and can’t use their common sense. Teachers are diverted by endless bureaucracy. Doctors are paranoid about lawsuits. Officials have their noses in thousand-page rulebooks… Even the president is stuck unable to approve environmental projects without a decade of review… To fix things however officials must be free to do things differently. There’s only one solution: Allow officials flexibility in exchange for individual accountability if they abuse their authority."

Rather than Tea Party conservatism or Occupy Wall Street nihilism we need a national reset. A return to common sense for the common good in which we stop trying to micro-manage every individual outcome in a nation of 300 million and let good people get on with the serious job of governing a great country.

I have written frequently in this blog about many countries I admire most recently Brazil. However there is only one country to which I am very attached and in which I have lived worked and owned property but which has not featured prominently in these pages. That country is France.

What prompts me to write today about this always elegant usually rational and sometimes maddening nation is the current race for President of the Fifth Republic. Even by French standards this years’s campaign is shaping up to be a campaign of economic suicide. The first round of the election will be held on April 22 and if as is likely no candidate achieves an outright majority a run-off between the top two candidates will be held on May 6. The two current front runners are the incumbent President Nicholas Sarkozy of the center-right UMP party and the current leader Francois Hollande of the Socialist party.

What I find remarkable about this election is the economic policy upon which Hollande is campaigning. He has promised to reduce the retirement age from 62 to 60; raise the tax rate on high-earners to 75%; renegotiate the recently-agreed European fiscal treaty; and wage war against "le monde de la finance." Now if Europe including most pointedly France were not facing a near-existential financial crisis these sort of campaign promises could be dismissed as harmless populism but the stakes are much higher this election. First Europe is by no means out of the woods despite the breathing spell afforded by Mario Draghi’s decisive action at the ECB. Second Hollande is not just a fringe candidate seeking to motivate his faithful; the polls have him well in front with less than two months to go before the expected run-off election. Third these are not ordinary times – global markets remain on edge – and these are not merely symbolic measures like Lionel Jospin’s mandated 35-hour work week in 2000. Finally responsible governments in Europe are going in the other direction seeking to raise retirement ages not reduce them.

In fairness President Sarkozy has also staked out some economically indefensible positions. Playing to the extreme right Sarkozy has vowed to slash immigration in half which is not only questionable on humanitarian grounds it is bad economics (at least in the longer run) for a country with an aging population and a low birth rate. Otherwise as far as I can tell President Sarkozy has done a decent job in office but when I expressed this opinion recently to a French friend he replied "we just can’t stand to watch his face on TV any longer."

So as things stand now France is likely to elect a new president within the next two months. Perhaps as Hugo Dixon has argued recently in Reuters Breaking Views this is not as dire economically as I make it out above because Hollande’s "reforms" are likely to be heavily caveated and watered-down. However as someone who believes that too many continental governments have been pandering to their citizens and delaying their day of reckoning for much of the post-war period this latest election contest strikes me as one more good crisis wasted. My only worry is that the next one will be worse and the ECB printing press will have run out of paper to print.