The House speakership debate is like the implosion of a dysfunction neutrino. It's like a Russian stacking doll with ever deeper levels of dysfunction. It's House Republicans basically showing the world that they can't even figure out exactly how they're going to remain dysfunctional. They'll figure it out, but it's going to be messy. They're dysfunctional in their dysfunction.
But what I'm interested in is the economic impact of all of this, and not just this round of meta-dysfunction, but the broader impact of a federal sector that's working very poorly in an $18 trillion economy.
Spoiler alert, I don't have the answer, but I don't think anyone else does either. It's actually a hard thing to figure out. There are various indices that purport to measure economic uncertainty but it's a very abstract concept, one I'm not sure is even very useful.
That is, there's always uncertainty in economies (not to mention life). We never know what the Fed's going to do next. Our guesses on GDP or next month's payrolls are basically statistical looks in the rear-view mirror. That means we'll generally be in the ballpark as long as where we're headed is much like where we've been. Catching turning points or even secular shifts still eludes us.
I'll stipulate that there's more of this sort of uncertainty now than in past periods (the index cited above shows the current level to be one standard deviation above its mean, which is less than one might have guessed), particularly regarding discretionary actions the federal government must take. There's the highway bill, the Ex-Im Bank, the debt ceiling, tax extenders and spending levels that expire later this year.
Then there's the nervousness about problems in the real economy: dis-inflation (slower-than-normal price growth), slow productivity growth (a truly fundamental concern), interest rates stuck at low rates, wage trends unresponsive to low unemployment, the prospect that job growth may be slowing, the very low levels of labor force participation. And, of course, longer-term structural issues including job quality, inequality, immobility and the absence of full employment.
To what extent does dysfunctional federal government cause or exacerbate these real economy problems? It's not, of course, just the list of stuff above that they must get to, but are consistently avoiding until the last minute. It's actions they could be taking to address these challenges; there are sins of commission and omission.
Why are we in this mess? Surely, the interaction of wealth concentration, money in politics, and our unique, non-parliamentarian system, which allows a small group to block compromise, all play a role. The result is politics over policy. Politicians are increasingly motivated to do the bidding of their funders.
Paul Krugman was noodling on similar matters this AM and he landed in part on the role of the media in failing to recognize that debates over Benghazi or the public debt are not really policy debates about national security or fiscal policy at all; they're pure politics.
He's right, but, in fact, much of the coverage really is political. Even before Kevin McCarthy confused his "outside words" with "inside words" (you must, MUST, watch this clip, by the way), pretty much everyone following the Benghazi hearings realized they were, at this point, politically motivated attacks on former Secretary Clinton.
In my view, what's missing is only partially sober analyses of what's actually going on with public policy. Paul himself goes there regularly, as do many, many more of us. Ezra Klein's outfit at Vox, e.g., is a mouseclick away with a full spate of balanced policy analysis in digestible form.
But what's really missing is the question I'm admittedly not answering here: the cost of dysfunction. What harm is all of this dysfunction doing to the economy? How is it hurting the quantity and quality of jobs? What role is it playing in low productivity growth, dis-inflation, inequality, slack in the job market?
Those of us in the analytic community have yet to develop such metrics. We can tell you all day about the extent of regressivity and revenue losses from the Trump tax plan. We can show the billions cut due to the sequestration budget caps. We can connect our troubled public infrastructure with our lack of action on its behalf.
Yes, those are pieces of the puzzle, but I don't think we're helping people understand the costs of dysfunction in any sort of a holistic manner. In fact, I don't think we really know those costs ourselves. What's left then is the horse race: who's up, who's down, who said something outrageous and how has that affected their poll numbers.
So that's the challenge that this latest episode in the House raises for me and, I hope, for many others: analyzing the costs of dysfunction and, if they're as significant as I suspect they are, promulgating them and making sure people understand them.
This post originally appeared at Jared Bernstein's On The Economy blog.