Irreconcilable Differences: Let's Divide America in Two

NEW YORK ( TheStreet) -- From the fiscal cliff to gun rights, from divisive social issues to mandatory health care insurance -- America is more divided between red and blue than even the 1860s. We are a nation that is trying to compromise between driving on the right side of the road or on the left side such as in the British Empire and Japan.

In this chaotic mix of trying to drive a little bit on the right side of the road and a little bit on the left, there is not only almost zero economic growth and legislative stalemate, but also eternal strife ahead. Each side will not yield, and the result will continue to be societal unhappiness and massive waste of productivity. Gridlock defined.

The creation of America in the 1770s was about freedom of choice. The options to mankind were to be expanded from a few monarchies in Europe to a new form of a country on the other side of the Atlantic Ocean. This birth of freedom ignited the greatest expansion of economic activity, standards of living and average biological longevity in history.

In those colonial days, however, the U.S. population was less than 1% of what it is today. The U.S. population has increased more than 100-fold in 236 years. We often wonder why small countries with only 10 million or 30 million people can exhibit so different social characteristics than the U.S. Well, one of those reasons is that they are so relatively small -- 10 million or 30 million people isn't 300 million.

Trying to keep 300 million people of widely different ideological beliefs together under an umbrella of ideological rigidity only lasts so long. We saw this with our Cold War adversary the USSR, which in 1991 dissolved into a broad set of republics.

Considering the current fundamental disagreements about taxes, government spending, regulation, government deficits and debts plus all the other socio-cultural issues, one can make the argument that we now have the following three options in the years ahead:

  1. Hold hands in continuing economic paralysis, leading to the ultimate bankruptcy and hyperinflation. No balanced budget ultimately results in the government printing the difference. With hyperinflation comes the total societal collapse, such as in Germany in the 1920s.
  2. Civil War. Yeah, another one. Irreconcilable differences without divorce can result in spousal abuse. Witness what happened in Yugoslavia in the 1990s and in Syria today.
  3. Amicable divorce. This is what happened to, for example, Czechoslovakia in the early 1990s. Two countries emerged without a shot being fired and they have both seen increasing relative prosperity to varying degrees. It's a success story.

Any fourth "option" is a pure fantasy and product of utopian wishful thinking. Each side of the political divide may believe that it will prevail forever, suppressing the other side into a compliant and irrelevant minority. History does not speak well to this kind of prospect.

So what is America to do? It is clear to me that America needs to be split up, into at least two countries. At over 300 million people, the conglomerate has become one that business schools would use as a case study for unlocking the value by divestitures. Any corporation with over 300 million people is probably way too big, with massive inefficiencies and lack of management accountability.