Politics-Proof Economies?

Governments’ inability to act decisively on their economies’ growth, employment, and distributional challenges has emerged as a major source of concern worldwide. But, as a recent study has shown, there is little correlation between a country’s relative economic performance and how “functional” its government is.

MILAN – Governments’ inability to act decisively to address their economies’ growth, employment, and distributional challenges has emerged as a major source of concern almost everywhere. In the United States, in particular, political polarization, congressional gridlock, and irresponsible grandstanding have garnered much attention, with many worried about the economic consequences.

But, as a recent analysis has shown, there is little correlation between a country’s relative economic performance in several dimensions and how “functional” its government is. In fact, in the six years since the global financial crisis erupted, the US has outperformed advanced countries in terms of growth, unemployment, productivity, and unit labor costs, despite a record-high level of political polarization at the national level.

Of course, one should not paint with too broad a brush. Unemployment is lower in Germany, Canada, and Japan. And America’s income distribution is more unequal than most advanced countries’ – and is trending the wrong way. Still, in terms of overall relative economic performance, the US clearly is not paying a high price for political dysfunction.

To continue reading, please log in or enter your email address.

To read this article from our archive, please log in or register now. After entering your email, you'll have access to two free articles from our archive every month. For unlimited access to Project Syndicate, subscribe now.

required

By proceeding, you agree to our Terms of Service and Privacy Policy, which describes the personal data we collect and how we use it.

Log in

http://prosyn.org/1vUUQvo;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.