Trump’s long shutdown could destabilise the world

By Noah Feldman / BLOOMBERG

US PRESIDENT Donald Trump in a meeting with congressional Democrats last Friday said he was prepared for the partial government shutdown to continue for months — or even years — if he doesn’t get the money he wants for a wall along the Mexican border. It’s not hard to see how that prediction comes true.

Both sides have framed the issue such that a victory for one side on funding a border wall entails defeat for the other. Neither side has much incentive to compromise.

Suppose Trump is right. The longest shutdown on record is 21 days, from late December 1995 to early January 1996. (This is the 21st in the modern era.)

What would a much longer shutdown mean for US political life?

Judging by public reaction thus far, you might think the answer is, not much. After all, we’ve become increasingly inured to Trump’s attempts to break established quasi-constitutional customs.

Maybe keeping the government open is just another unwritten norm; maybe breaking it isn’t the end of the world.

Yet, the likelihood is that a long shutdown would exert real negative gravitational pull on the stability of American government. There are key factors at play.

First, there’s the message of dysfunction. Passing a budget — even a stopgap budget — to keep the government open is a sign that both the Democratic and Republican parties see the management of the government as a common task.

They might differ deeply on policy priorities. But they agree that the government is necessary to effectuate the commands of the legislature and the president and to keep the country humming.

When and if the two parties reach a standoff they are genuinely unwilling to resolve, the message they are sending to the country and the world changes.

Instead of a message of underlying cooperation, the message will be of underlying disagreement — with cooperation only accidental and occasional.

In other words, the organs of US government will be saying they have higher priorities than actually governing.

Short shutdowns are manageable because the public assumes that they will soon be resolved.

That assumption makes sense because we believe that both sides think they will gain by reaching agreement — because the public wants the government to govern.

In Trump’s political experiment, he’s open to the idea that the public doesn’t care, or at least care enough to punish him or the Republicans for shutting down government over the principle of the wall. Meanwhile, the Democrats are letting him run his experiment — by refusing to be bluffed.

If the quasi-constitutional norm that Congress and the president compromise to fund the government is broken, it means the assumption that the public wants government will have to be re-evaluated. Then comes the enforcement gap.

The world’s confidence in the US government — and by extension, the US economy — depends on seeing the American polity as basically functional.

A functional federal government performs the basic tasks of preserving societal stability. Stability depends on more than just national security, which will be maintained during the shutdown.

It includes basic regulatory functions — of the markets, the environment, food and drugs, and so on.

Those function aren’t consistently sustained during a shutdown. In a short shutdown, the public understands that the government will play catch-up in the aftermath. So, stability isn’t disrupted.

In a long shutdown, it is far from clear that the catch-up will make up for the regulation that will be lost. Slowly, gradually, maybe even imperceptibly, the social functions that depend on regulatory stability will begin to erode.

It isn’t that bad actors will immediately start insider trading or breaking environment laws on some specific day in the shutdown. Or at least not exactly.

Rather, people will eventually begin evaluating whether the costs of compliance outweigh the benefits of violating the regulations — less enforcement will lead to more rule-breaking.

The odds of being caught are always part of the calculus. Less regulatory enforcement means lower odds of being caught — hence more violations.

Weaker enforcement isn’t something that the American public will notice right away. Its consequences will accumulate subtly, over time.

But the rest of the world will eventually get the message that the institutions that create American political and economic stability are eroding.

That will reduce confidence in American leadership. Rationally, it should also reduce confidence in the American economy.

In the Trump era, it’s becoming commonplace to assume that the economic fundamentals that make the US attractive for investment will remain unaffected by our political dysfunction.

That’s a mistake that confuses shortterm predictions with the long-term institutional structures being damaged.

In the long run, the national commitment to effective government and meaningful regulation is necessary and unavoidable. Eroding it by a longterm shutdown will be costly — not today or tomorrow, but soon, and for the rest of our lives.


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