Economic policy in the United States is ruled by gridlock. That’s the common belief, and it’s easy to see the evidence for it in the daily headlines. Immigration reform didn’t even come up for a vote in Congress this year, and the budget deal approved by the Senate this month managed to amend the sequestration but was far from a “grand fiscal bargain.” It was the best that could be accomplished, given gridlock. Yes, there’s some truth to this view of our state of affairs. Still, the American political system allows for more change than its current reputation suggests.
The Affordable Care Act offers an example of how American government sometimes makes sweeping changes – not to everyone’s satisfaction, of course – followed by years of bitter contests at the margins. The enmity and duration of these fights produce impressions of sheer gridlock that are strong and often reinforced; thus the narrative of political immobility is easy to accept.
When evaluating the claim of gridlock, it is useful to examine it within a broader historical setting. In his 1980 book, “The Hare and the Tortoise: Clean Air Policies in the United States and Sweden,” Lennart J. Lundqvist, a Swedish political scientist, recognized what is perhaps startling to the contemporary observer: that the United States was the relatively rapid “hare” in decisively addressing its air pollution problems, while the Swedish government was the “tortoise,” moving more gradually.
The period immediately before the passage of the Clean Air Act of 1970 was a time of creative ferment in the United States, when different branches of government, including those at the state and local level, competed to offer solutions for cleaning up the air. Yet once these laws were passed, a period of retrenchment and gridlock set in, whereas Sweden saw through its reforms more consistently. Later, the United States had another wave of rapid policy change with amendments to the Clean Air Act in 1990. On balance, both countries ended up in more or less the same place, namely with effective anti-pollution laws.
That may seem old news, but similar patterns have been repeated recently. Consider the financial crisis of 2008 and 2009. Coordinated actions by the Federal Reserve, the Treasury and Congress geared up rapidly, were decisive by global standards and received a fair amount of bipartisan support. In contrast, the eurozone is still discussing how to manage its bailouts or whether to start a program of quantitative easing, which the Federal Reserve will begin to wind down in January. And Japan, after letting problems with bad banks fester for decades, is only now using monetary policy to fight deflationary pressures.
After that initial decisiveness in the financial crisis, America did indeed slow down in policy innovation. Bailouts and our activist central bank have become extremely contentious factors in the nation’s politics, and there has been bitter fighting over how to set into motion the Dodd-Frank financial reform law.
Lunging and lurching forward with big changes, then enduring periods of backlash, consolidation and frustration, is often a better description of our political system than is “gridlock,” which is too unidimensional a concept to capture the reality.
At other times, because political flexibility is a fundamental part of the American system, it doesn’t feel as though we are defeating gridlock as much as bypassing it. Fracking – hydraulic fracturing – is reshaping the American energy sector, in part because of previous federal support for research and development, and in part because of regulatory tolerance: Many of the relevant changes took place through agencies like the Energy Department. In contrast, much of Europe is refusing to proceed with fracking at all. The American breakthrough has generated economic headlines, but rarely is it cited as an example of political success.
The growing commitment of the American political system to intellectual property protection and enforcement, like that in trade treaties, also hasn’t gained much explicit notice. This shift of priorities is likely to become more important as economies move toward creative production and information technology.
Of course, gridlock can save us from major mistakes, and sometimes we should wish for more of it. One problem, however, is that the fear of eventual gridlock can make our policy lurches too hasty and ill-considered. It might have been better to think through the Affordable Care Act or the fiscal stimulus more carefully, but a now-or-never logic discourages such introspection. Indeed, subsequent improvement of the legislation has proved politically difficult in both cases.
Beyond economic policy, there is further evidence that gridlock does not rule America. Since the start of this century, the government has fought wars in Iraq and Afghanistan – truly major undertakings – and significantly expanded the surveillance state, as shown by revelations about the National Security Agency. These policies have economic implications, even if they wouldn’t be described as economic policies in the usual sense of the term.
Politicians have reason to let the myth of extreme gridlock persist. Leaders like to pledge support for some ideas of their more extreme supporters without wishing to actually enact such changes, which would alienate many other voters. An appearance of gridlock makes it easier to save face. To many partisans it feels like gridlock, but in reality moderate voters are getting their way.
As 2013 comes to a close, it may appear that economic policies are frozen into place. But let’s keep this broader perspective in mind: It’s a good time to wonder which surprising and sudden lurches the new year might bring, and whether we will bypass gridlock without even noticing.
Tyler Cowen is a professor of economics at George Mason University.