It's easy to roll your eyes at the dysfunctional U.S. Congress – I've certainly done my share. For now, we can only wait patiently for the usual archaic culture war and organized rent-seeking to fade to the background.
But pioneering research from MIT economist Daron Acemoglu suggests that we should all be paying more attention, and that declining faith in political and financial institutions presents dire risks to the economic future of the Western world.
Dr. Acemoglu's Why Nations Fail: The Origins of Power, Prosperity and Poverty is among the most influential and widely read economics books of the past decade. On the subject of the Arab Spring uprisings, he argues:
"Egypt is poor precisely because it has been ruled by a narrow elite that have organized society for their own benefit at the expense of the vast mass of people. … Countries such as Great Britain and the United States became rich because their citizens overthrew the elites who controlled power and created a society where political rights were much more broadly distributed, where the government was accountable and responsive to citizens, and where the great mass of people could take advantage of economic opportunities."
Without getting into political theory or the specific merits of the Affordable Care Act, it's not hard to see how the current political morass is detrimental to America's economic future. The political structure, which in Dr. Acemoglu's model should function as check on the power of the economically powerful, is no longer functioning.
The current government shutdown is exasperating, but it will likely end up as a mere footnote in history. The post-crisis acrimony towards the financial industry is a much bigger deal.
The resentment surrounding the crisis-era bank bailouts, combined with a level of economic inequality last seen during the Gilded Age of the 1920s, is a toxic political mix with potentially wide-reaching economic and social implications.
The American people are too proud and myopic to admit it, but the current state of U.S. politics more closely resembles that of Mr. Mubarak's Egypt than the idealism of their founding fathers. Withering contempt towards Congress is a cliché, and Americans have almost grown to accept that representatives from both parties have been captured by special-interest money.
Jon Stewart will happily keep supplying the jokes, but they doesn't seem funny any more. If Dr. Acemoglu is right – and the rave reviews his book received from all quarters suggest he's on the right track – political failure and growing rage at the country's financial oligarchs increase the risk of both social unrest and slowing economic growth.
Pictures like this are certainly not going to help.
Scott Barlow