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Scalia, Partisanship bias, and Long Term Stagnation

So a student asked me if the nomination for the Scalia vacancy at the Supreme Court would have any macroeconomic impact. Can't imagine what kind of effect he was thinking about, but there is a relevant question on what are the effects of the inability of the legislative to get things done. The most obvious is the inability to pass a budget that deals with the slow recovery.

It used to be the case that both parties had a a very different fiscal agenda, with Democrats being for tax and spend, in particular spend on social welfare, while the GOP was for, at least nominally, for small government. And up to the Vietnam War, hawks tended to be Democrats (certainly before World War-II, most isolationists were Republicans). But as I noted before, there has been a switch in both parties, with the GOP being since Gerald Ford the party of Big Government.

In part, the switch is explained by the fact that the GOP has become the party of the neocons, and of the shadow government that requires contracts for the Military-Industrial Complex. Big Government for corporations so to speak. And low taxes for the wealthy, hopefully allowing debt to accumulate, and creating the conditions for cutting welfare programs and spending. Democrats too have accepted some of this logic, as the speaking fees of Hillary Clinton seem to indicate (but that's another story).

At any rate, it used to be that even though the parties had different priorities, at least it was agreed that certain things were necessary (like appointing Supreme Court justices). That included, for example, spending in infrastructure. And the inability to have a healthy fiscal package after the crisis, in my view, and not a long term problem with the technologies associated with the third industrial revolution, as Robert Gordon thinks, is what is behind the new normal, the lower growth in output and productivity.

I've deal with demand driven views of labor productivity before, here and here, but there are more if you search the archive.


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