US politics are in turmoil - so why is the country booming?

In Europe, the three signs of spring have arrived: the bright flora, the endless days and the ambient sound of American voices. All are welcome. But the last is also an annual reminder of the spending power of US tourists. That their economy has outperformed the continent’s this past decade or two can be felt, not just measured.

The material success of the US is discussed in all quarters. What isn’t said enough is that it has happened amid political bedlam. The US has roared ahead in the era of the Tea Party, Donald Trump, “forever wars” abroad and culture wars at home. There have been more presidential impeachments in the past generation than in the previous two centuries of the republic.

At the turn of the millennium, 44 per cent of Americans trusted the federal government. Now 16 per cent do. The US failed to achieve even a peaceful transfer of power at its last election. (Unlike, say, Senegal.) The civic rot is so deep that well-adjusted citizens find themselves taking an interest in the health of supreme court justices, lest one die under a president of the opposing side.

So much political turmoil, so little economic consequence. Why?

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It is tempting to credit some unique American ruggedness. But other economies have been able to buck their political troubles for decade after decade. Poland’s enrichment since joining the EU in 2004 has taken place despite the partisan subversion of national institutions, which Donald Tusk is now going to controversial lengths to undo.

France had 30 “glorious” years of economic performance after 1945, through a presidential assassination attempt, a hideous war in Algeria, two republics, student riots and a national atmosphere so raw that The Sorrow and the Pity, a film about Nazi collaboration, was banned. Such political strife should have suppressed the nation’s animal spirits. Instead, France achieved a sort of affluent chaos.

And so we are left to conclude something not about the US, but about politics itself. People like me, who find the subject intrinsically interesting, overrate its importance. As long as a few essential functions of state are never compromised – physical security, contract enforcement, tax collection – it matters less than we think whether public life is “divisive” or even foul. An economy can’t withstand too much bad policy. It can’t prosper against over-tight interest rates or underfunded education. But the health of the overall political system can go very wrong, for very long, without anything like the same effect on real-world livelihoods.

It is possible to suggest something further, in fact. There are active downsides to “good” politics. If there has been a photographic negative of the American experience, it is Germany, whose civic health is admirable (PhD plagiarism still constitutes a scandal in Berlin) but whose economy is a cautionary tale (no major country performed worse in 2023). It might be that the first of these things has enabled the other: that in a consensus culture, no politician is incentivised to point out, say, the rashness of betting on Russian industrial inputs and Chinese consumer demand. Mature, gradualist, coalition-based politics dulls the edge of debate.

Perhaps what US politics lacks in manners, then, it makes up for in creative tension and churn of ideas. This is a country that has executed a world-changing switch from trade to protectionism at light speed.

Or it might be that the causal relationship between politics and economics goes in the opposite direction: that voters have felt liberated to dabble with the extremes because growth is so strong as to be taken for granted. Trump is affordable. Like woke-ism, he emerged during a long economic expansion.

Whatever the answer, it needs explaining, this co-existence of economic success and political failure. It isn’t enough to say that a reckoning will come in time. US public life has been deteriorating since the end of the last century, when Newt Gingrich set fire to congressional norms and the death of the so-called Fairness Doctrine gave rise to brute partisanship in broadcast media. No doubt, economic damage is a lagging indicator of this kind of political damage, but 30 years is some lag.

In liberal thought, stable political institutions are held to be a precondition for affluence, which in turn increases public support for those institutions, until the circle of logic is closed. In the US we are seeing, if not the first ever challenge to this notion, then perhaps the one on the largest historical scale. It is hard to know what to feel: relief at the resilience of America’s wealth creators, or dread that its voters lack a material incentive to fix politics. – Copyright The Financial Times Limited 2024