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 U.S. 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 U.S. clearly is not paying a high price for political dysfunction.
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