Gridlock and Regime Uncertainty
They aren't the same.
For those of us who want to see the role of the State reduced in the bedroom, the boardroom, and the war room, election day always brings mixed feelings. However, the one outcome that sometimes cheers us up happened this week: one party in control of the presidency and the other in control the Congress. What is often called “gridlock” is often good for freedom, at least in relative terms, since it checks the power of any either party to ram through its nearly-always anti-freedom agenda.
In the current environment, anything that halts the forward march of government control over economic decision-making would be a good thing. This is particularly so because the economy currently seems to be suffering from what economic historian Robert Higgs calls “regime uncertainty.” For Higgs this term refers to the uncertainty generated by government policies that generally trend toward more State control.
Even proposals that have passed, such as health care and financial “reform,” are so complex and confused that no one is sure exactly what they will mean for the business community. As a result, Higgs argues, the private sector hesitates to invest.
With both a Democratically controlled Congress and presidency for the past two years, this sort of uncertainty has been solidly in place. One would think that divided government might end that uncertainty. More recently, though, some observers have argued that Republican control of Congress might actually increase it because many new members, especially those associated with the Tea Party, will be trying to pass major legislative changes, such as repealing the health care law, reforming the Fed, or trying to put major limits on other government spending programs. These possible shifts in policy, it is argued, creates new uncertainty.
Not Paralysis
I think this argument misses a fundamental point about the nature of the uncertainty generated by bad government policy. The term “gridlock” itself is part of this confusion since it suggests that with divided government comes paralysis. When the two parties check each other’s worst tendency, nothing “gets done,” and it is assumed that is bad. This of course treats anything government does as good and ignores that most of the good in the world “gets done” by individuals, families, and firms figuring out new and better ways to do things in the private sector and civil society. To the extent that “gridlock” slows or halts the growth of government, it enhances, at least in relative terms, the freedom of people to make those improvements in their own lives and those of others. That’s not “gridlock” or “paralysis;” that’s an expansion of the range of human freedom.
To the degree that gridlock stops the growth of the State, it stops the growth in uncertainty inherent in enlarged State power and provides some hope for the private sector that it will be able to get on with its business without having to worry about what the next set of regulations or taxes will be.
Rolling back the size of the State simply extends this same argument. It’s true that eliminating programs or whole agencies or departments, or dramatically reducing spending, changes the rules under which the private sector operates. The critics would say this increases regime uncertainty. But they misunderstand the central point: The source of uncertainty is the discretion that comes with State power. Rolling back the State changes the rules, but does so by eliminating the source of regime uncertainty. It is State power that both tends to expand and does so in complex and unpredictable ways. Returning power to the people gives them more control over their lives and thus reduces the debilitating uncertainty that is hampering recovery.
Divided government’s gridlock does not halt recovery. Instead, it stops, or at least slows down, the growth of the State and the discretionary power that destroys the incentives for wealth creation in the private economy. Regime uncertainty is indeed a serious problem, but it’s a problem that is part and parcel of giving increasing power to politicians and bureaucrats. Their ability to change the rules on a whim or use them to attenuate private property rights, and do so in ways that are more complex than the citizenry or the bureaucracy itself can understand, causes regime uncertainty.
The world of divided government is no utopia, but it is probably the best we can hope for in a world of ever-growing State power. We will know more in two years, but the most optimistic scenario is that during that time we will have each party blocking the worst instincts of the other. We could do a lot worse than a stalemate, as the last two years demonstrate.
Comment by Troy Camplin on 4 November 2010:
Hey, it worked after the 1994 elections. Yea, gridlock!
Comment by Trudy Pomerantz on 4 November 2010:
But wouldn’t we need at some stage one party control to try and reverse some of the infringements on our liberties that have developed and accelerated recently? Or do you agree with Jefferson, I believe it was, that to restore liberty requires revolution?
Comment by Gary on 4 November 2010:
I believe that a revolution is necessary. Not a guns and bombs revolution, but a revolution in how people view the government. For the past century, we, for the most part have stood by while government tried to solve every problem through more government. As many of us now know, that hasn’t worked out too well.
Only if we can somehow convince the people that less government is better will the needed revolution take place. We simply cannot continue to throw money we don’t have at problems that haven’t been solved by throwing money at them in the past.
Comment by Michael Thomas on 4 November 2010:
To what extent was Clinton’s historical remaking of welfare a result of the mid-term elections in 1994?
Bill Clinton gives a 10 year retrospective on the August 1996 bill:
http://www.nytimes.com/2006/08/22/opinion/22clinton.html
In my humble opinion this was his greatest success as a president, his Nixon and China moment.
Comment by David Beadles on 4 November 2010:
The last two years of the Democratic juggernaut that has attempted to steamroll the country with their agenda is the best illustration of the dangers of one party government. I voted for McCain basically for no other reason than I knew the Democrats would have overwhelming command of Congress. The revolution that is required may well be one that involves not so much a change in government but a change in the expectations of the role of government and the willingness on the part of the electorate to be largely responsible for their own well-being. Individual freedom will never thrive under a patenalistic state wherein people look primarily to the state to succor and care for them and alleviate and correct every perceived wrong.
Comment by Guillermo Barba on 4 November 2010:
Excellent article.
My impression is that only bankrupcy will force large portions of individuals to accept that we have lived beyond our means for many years, and structural changes are needed, including the incentive system in place.
When you have trillions of unfunded liabilities and debt, when government spends 40% of the economy and intervenes with thousands of regulations, when many groups find more profitable to lobby versus facing the markets, and when half of the population receives more ‘benefits’ that what they contribute, the system is ‘designed’ to colapse… eventually.
Comment by F.A. Hayek Fan on 4 November 2010:
We may see gridlock as it pertains to the expansion of the welfare state but I do not believe we will see any gridlock at all when it comes to the expansion of the warfare/police state.
Comment by Michael Wayne on 8 November 2010:
Those who do not think for themselves will forever rely on the government to think for them. Small businesses are the backbone of America and we need more of them to generate more honest jobs. Too much big government handouts and too many people with their hands out. Gridlock is a great thing to have. It promotes checks and balances. Now if only gridlock could keep the potus in his seat!!!That would be nice!
Pingback by July – Dec 2010 Browseworthy Stories Archive « Clear Thinking on 1 February 2011:
[...] 11-5-10 Steven Horwitz A slowdown in game-changing legislation will be a good thing. Gridlock and Regime Uncertainty [...]
Comment by Gary Alder on 2 November 2011:
Great article!
Gridlock is probably the greatest protection against “the other party” that we can have in a party environment. The original structure of the Constitution however created a gridlock situation that would make today’s gridlock seem like “rubber stamping. This was done for the very purpose of protecting freedom by keeping the government in check. Many people can see why the 17th amendment destroyed this by turning the Senate over to party control rather than State control. What most people do not understand is that this was only a follow up to turning over the presidency and vice-presidency to party control which was legitimized by the passage of the 12th Amendment. In our award winning book ‘The Evolution and Destruction of the Original Electoral College’ we detail that process.
Comment by Drik on 3 November 2011:
If a monarchist be in office anywhere, and it be known to the President,the oath he has taken to support the Constitution imperiously requires the instantaneous dismissing of such officer; and I hold the President criminal if he permitted such to remain. To appoint a monarchist to conduct the affairs of a Republic is like appointing an atheist to the priesthood.
Thomas Jefferson