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Congressional Gridlock

It is regularly reported in the media that the public has a low opinion of Congress. One reason for this opinion is said to be the gridlock that prevents any action by Congress. My view about this gridlock is simply that it reflects the heterogeneity of the voters who, through the ballot process, effectively vote for this gridlock and so seem to want it. My reason for this opinion is as follows.

Voting is an example of what is known to economists as an agency problem. Principals (the voters) elect agents (politicians) to represent their interests in government activity. This is exactly what happens in a corporation where stockholders (the principals) allow the management (their agents) to manage their firm to maintain their interests. When we vote, we all vote for politicians whose views we largely support. So if there is gridlock in Congress, it is because there are fundamental disagreements among the voters about the proper functions of government. This is exactly why it is misguided to criticize the President for being unable to work with Congress. The presumption behind the view that Barack Obama should be working more closely with Congress is the belief that there is common ground between the President and his political opposition. I do not believe that there is much common ground at all. What compromise could be constructed to make a believer in capitalism sign off on Obamacare? There is none. Barack Obama is a far-left Democrat with nothing in common with many politicians who, among other things, believe in limited government. But is this gridlock really so bad? I think not.

My own belief is that most, but not all, of the problems in this country are created or made worse by government. I believe that the government typically is quite destructive. As an example, Obamacare has already driven firms out of the health insurance market and more are likely to follow. There are many other examples of this damage but just suppose that this is true. Then if the Congress can’t do much, at least they won’t be doing a great deal of damage to the country although there may be some good laws that don’t get passed. Gridlock may be viewed as a safety mechanism protecting us from the profound incompetence of the political class.

I remember reading a comment by the late Milton Friedman who wrote somewhere (I am paraphrasing here and sorry I don’t have a source but I know this to be true) that if you do find a legitimate problem with a market, the government “solution” to the problem will turn out to be far worse than the original problem that was found. I think he was dead right about this (and, as far as I can tell, he was mostly right about everything else he said or wrote) so I think that I am content to have gridlock.


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Economics One

A blog by John B. Taylor

The Grumpy Economist

One economist's views on economic policy.

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