It is commonly believed that higher order smoothness should be modeled using higher order interactions. For example, 2nd order derivatives for deformable (active) contours are represented by triple cliques. Similarly, the 2nd order regularization methods in stereo predominantly use MRF models with scalar (1D) disparity labels and triple clique interactions. In this paper we advocate a largely overlooked alternative approach to stereo where 2nd order surface smoothness is represented by pairwise interactions with 3D-labels, e.g. tangent planes. This general paradigm has been criticized due to perceived computational complexity of optimization in higher-dimensional label space. Contrary to popular beliefs, we demonstrate that representing 2nd order surface smoothness with 3D labels leads to simpler optimization problems with (nearly) submodular pairwise interactions. Our theoretical and experimental results demonstrate advantages over state-of-the-art methods for 2nd order smoothness stereo.