Is the U.S. Government Really Broken?
The shutdown of the federal government last fall exacerbated the cries of those who maintain that the U.S. political system is broken, dysfunctional, gridlocked, and, in general, incapable of doing what needs to be done.
Naturally, this hand-wringing was accompanied by lists of what is wrong and how to fix the system. Forget for a moment that pundits, journalists, bloggers and others disagree about what is wrong with the system and thus about how to fix it. Roughly, the solutions range from more government activism to more market solutions.
There is some consistency in that those favoring more government want to change features of the system that slow down government’s ability to act, e.g. Rule 22 (regarding cloture and the filibuster) in the Senate, divided government, the Republican majority in the House, the primary election system, and so on. Those that favor more market-based solutions to the economy and health care want to limit the government’s ability to act by, among other things, cutting spending, reducing the government’s ability to regulate, closing down presidential rulings and, in general, getting the government out of the private sector.
That reasonable people would disagree over the causes, effects and solutions to the 2008-2009 banking crisis and its aftermath is not surprising, given the depth of the crisis and the global economy that it affected. What is surprising is the certitude demonstrated by those convinced that they have the right answers to the policy problems. In this essay, I begin from two premises: first, that I don’t have the answers, only questions; and second, quoting T.S. Eliot, “The only wisdom we can hope to acquire is the wisdom of humility, and humility is endless.”
My approach is to try to assess how the U. S. is doing, relative to the other developed democratic countries. The premise for the analysis is that the great transformation of the world economy over the last 30 years (documented by Nobel laureate economist A. Michael Spence) has generated a difficult set of problems that no individual or country has solved. There is in this new transformed economy increased global competition as labor in Asia and the developing world displaces the middle class and high-paying manufacturing jobs in Europe and the U.S., leading to high unemployment levels and the concomitant spending increases.
There is also a jump in inequality indexes and the resulting politics of equality. Immigration issues arise in various forms. In the U.S., they range from citizenship for working-class pilgrims already in the country to the issuing of green cards for immigrants with skill sets useful for high-tech companies. The banking and finance industries are specifically featured as causes of both recession and inequality. Generating economic growth is further complicated by how such growth would affect global warming and the environment. Finding solutions to this set of problems will not be easy, as the tradeoffs between the environment and the economy, today’s workers vs. tomorrow’s workers, and a host of others, are quite complicated, surpassed only by the difficulty of building political support for proposed solutions, both domestically and internationally.
The first great transformation of the world economy occurred in the 19th century, and the early 20th century. That transformation, smaller than the second transformation because it dealt with only one-fourth to one-third of the world’s population, nevertheless generated a set of problems in the U.S., eerily similar those of the present. The post-Civil War growth of the U.S. and world economies led to a gilded era, with the “1 percent” one hears so much talk of today enjoying vastly increased income, contributing to greater wealth disparity and the corresponding politics of equality.
Finance and monetary policy were prominently featured as bankers and the system were blamed for the Panic of 1893. Proposals to inflate the currency by coining silver at 16 to 1 with gold, thus reducing debt obligations, as well as proposals to prohibit the government from selling bonds, electrified American politics. Moreover, there were proposals for a graduated income tax so that “aggregated wealth shall bear its just proportion of taxation” (Democratic and Populist Party Platforms, 1896), demands to regulate railroads, provide free homes for settlers (including taking over Indian reservations), and to have the government provide jobs through public works. Immigration policy also came to the fore as Democrats and Populists wanted to restrict “the importation of foreign pauper labor” while industrialists needed the foreign labor to run their factories.
These economic, banking and income equality problems are similar to the present set of issues facing the United States. In addition, there was no shortage of political reforms that would presumably “fix things.” Driving the political reforms was the idea from the Populists and Democrats that more democracy would surely break the hold of the elites who had done so much to put the country at risk. Thus, there were proposed remedies—many of which were enacted— ranging from the direct election of the president and senators to new ballot initiative procedures and referendums designed to inculcate a more direct democracy. For the most part, Republicans proposed few significant institutional reforms, with the exception of the creation of an arbitration board to deal with interstate economic transactions, in order to enhance a national market.
For the GOP, the “solution” to the economic troubles of the 1890s was winning control of government—the presidency, House and Senate—which it kept for over a decade. Republicans passed a gold standard, instituted tariffs and, through the Supreme Court, created a national market where companies did not have to operate differently in Illinois or Iowa than in New York or Ohio.
The present crisis generates a similar set of problems, though even more consequential for the U.S., because the world is more connected now, with China and India leading the transformation. The problem for the U.S. is further complicated by the world economy counting on U.S. military might to keep oil flowing around the globe and to bring stability to the Middle East, among other duties. Given this daunting set of problems, how is the U.S. doing economically, relative to the rest of the developed world?
Using data from the International Monetary Fund, let’s compare the U.S. performance to those of the advanced economies, the advanced G-20 economies, the Euro area on real GDP growth, unemployment, hourly earnings, productivity, unit labor costs, growth in employment, inflation, and debt to GDP.
Taking the IMF figures (in percentages) for 2013 and their projections for 2014 and comparing the U.S. to advanced countries, G-20 advanced economies and the Euro area shows that the United States is faring comparatively well on a number of important economic markers.
On change in GDP, the U.S. is first in growth in 2013, and in projected GDP growth. Unemployment figures for 2013 and 2014 show lows of 7.6 and 7.7 for advanced G-20 countries, with the U.S. lower at 7.3 and 7.2, while the Euro zone is at 12.3. In hourly earnings change, the U.S. is first in 2013, nudging out the advanced economy figure but doubling the Euro zone’s figure.
The 2014 projections show the U.S. predicted to lead at a 2.9 percent increase in earnings. Productivity is the first area where the U.S. is not in the lead, with a 1 percent increase, while the Euro area has 1.2 percent. In the 2012 projections, the U.S., as in the 2013 figures, finishes second to the advanced economy group. Growth in employment shows the U.S. first by its largest margins: three times higher in 2013 than the 0.5 percent for advanced economies. The 2014 IMF projections show the U.S. growth doubling that of the sum of the advanced economies’ growth. Finally, in regard to inflation figures for 2013, the figures range from 1.6 percent to 1.5 percent for the U.S., which is tied with the Euro area for lowest inflation.
So what does all this data tell us?
First, it’s hard to look at these numbers and say that the U.S. is in the back seat. Rather, they show that although the recovery times may all be slow, the U.S. recovery is less slow than others.
Second, it’s undeniably true that in some areas other nations do better than the United States. Unemployment in Germany, Canada, and Japan is lower and projected to continue to be lower in 2014. In hourly earnings change and productivity shifts, Germany tops the U.S. for 2013 and in 2014 projections.
But it’s also true that German job creation and inflation figures are below those for the United States. Even with the possible exception of Germany, one cannot credibly claim that the U.S. economic response to the recession compares unfavorably to other advanced democracies. All of which raises a logical question: How could a broken, gridlocked, dysfunctional government come out so well when compared to other countries?
Yet this is not the narrative one hears discussed—on either side of the Atlantic.
On October 1, 2013, the stately BBC broadcast a program titled “Is American Government Broken?” The reporting of the ensuing piece stayed true to this headline, proclaiming that “the fundamental and largely unseen issue is whether a political process designed by the best minds of the 18th century can survive the realities of the 21st.”
Many American political scientists were singing from the same hymnal—with a specific culprit in mind. Darrell West of the Brookings Institution, for example, asserted that the issue was not governability per se but “the war within the Republican Party.”
The problem won’t be resolved, he added, “until prominent Republicans demand the House takes action.”
Chris Edwards of the libertarian-leaning CATO Institute countered by blaming President Obama for not seeking bipartisan support for his big policies, such as the Affordable Care Act. Political scientists Iwan Morgan and John E. Owens blamed the breakdown on filibuster and the fact that separate institutions share power. Overall, Morgan cited checks and balances, divided government, polarized parties, money and full-time campaigning as sources of the problem.
Ron Fraser, a columnist for TheTrumpet.com, maintained that the dumbing down of American culture, from food to television programming, from families to drugs and crime, “all these bitter fruits now being reaped by an Anglo-American society in decline are ... proof of the failure of the great Western dream.” Amanda Marcotte argued just the opposite in the December 13, 2013, edition of Salon: “The election of Obama has triggered an all out response from the Christian right.” In the process, she said, conservatives had galvanized to thwart progressive policies.
On Oct. 7, 2013, Washington Post columnist Ezra Klein offered 13 reasons why the government is failing: “Washington is actively failing. It’s failing to craft policies that make the country better. And it’s failing to avoid disasters that make the country worse.”
In Klein’s telling, the Republican Party is responsible for five of the villains on his list: the “Hastert Rule” and the filibuster in the Senate make the list, as do polarization, gerrymandering, and a politicized media.
The result of these flaws allows him to conclude that our system of government “is pretty unstable” because “both sides end up having control over some levels of power ... and incentives that point in opposite directions.” He contrasts the American model with that of the United Kingdom, where only one party controls the government at any given time.
In regard to fixing the problems, the proposed solutions vary widely. Harvard Business School professor David A. Moss posits that the way to fix the ineffectiveness of the political system is threefold: break the grip of special interests, increase responsibility in communities and at every level of government, and fix the mechanisms of government.
These specific mechanisms include the flood of corporate money, the influence of lobbyists, redistricting, permanent campaigns, and self-serving leaders, among others.
Meanwhile, the ever-present Fareed Zakaria looks back nostalgically on the 1950s and 1960s when D.C. spent lavishly on domestic investments and claims that the solution is to establish “massive job training programs” and a “national infrastructure bank” where “technocrats” could allocate funds to public works based on merit, not pull. Contrary to this view, Philip K. Howard, writing in the April 10, 2011 Daily Beast, advocates a general sunset law where every law with budget implications would expire after 10 years.
Trying to put forward policy solutions without specifying how you will do it is reminiscent of the distinction between campaigning and governing: that is, policy proposals put forward in a campaign often either don’t become policy or are altered during the process of building support for them with a majority in Congress.
Maybe the proposed solutions would work, but it is not likely that the government could either pass 10-year, zero-based budgets or begin a massive jobs program. Thus, the place to begin is to ask what’s wrong with the U.S. government, and claims that it is the Republican Party, the filibuster, long campaigns, divided government, etc., seem to me to be, in the simple sense, factually wrong. Britain, France, Japan and Italy don’t have divided government, a Tea Party, filibuster rules, “Hastert Rules,” or any number of other American problems, such as too much money in politics.
Why, then, are they not doing better than the U.S. economically? The answer surely will not be simple, but if the U.S. had put into place, a la Ezra Klein, a U.K.-style government in 2008, would our economic recovery have been even better than those of Britain, France, Italy and so on? It’s possible, but I strongly doubt it.
The broken, dysfunctional, gridlocked U.S. government has generated better results than the unbroken, less dysfunctional governments in almost all the rest of the developed world. If pundits, columnists, bloggers and others could recognize that the economic problems generated by the second great transformation are complex and profound and thus hard to solve, our national debate might be more civilized and relevant.
An approach that took humility seriously – going into discussion with ideas, not certainty – might actually lead to better ideas and, ultimately, better policy.