The Stability Trap

by Reihan Salam

Last week’s EconTalk (my favorite podcast, with the possible exception of Earwolf’s How Did This Get Made?) featured Barry Weingast, a Stanford political scientist who works on how political violence shapes political economy. One of Weingast’s central points is that political instability is pervasive in the world’s less-affluent countries and almost unheard of in the world’s most-affluent countries, and that this is not a coincidence. Violent regime change represents a threat to property rights as well as life and limb, and this in turn makes the expected returns of any given investment look less attractive than they might under more stable conditions. But Weingast also offered thoughts on how societies shift out of what he calls “the violence trap” to achieve stability and security. He suggests that French stability improved when it became clear that the danger posed by a united Germany to any given French political faction was greater than that posed by any rival French political faction, and so there was an incentive to cooperate across internal French political divides.

When we lament partisan rancor in the United States, we tend to neglect the role played by collapse of the Soviet Union, an existential threat that, for a few decades at least, effectively narrowed the U.S. political divide. The need for a large military establishment essentially guaranteed that the U.S. would have a big government, and anxiety over what looked to be emerging human capital deficits with the Soviet bloc spurred growing federal investment and influence in K-12 and higher education and other domains. The propaganda war with the Soviet bloc led elites to an accommodation with the civil rights movement, and it also contributed to the liberalization of U.S. immigration laws, which had previously excluded immigrants from Asia and Africa. There was always opposition to the expansion of the federal government and to the rights revolution that has transformed American social life, but this opposition was constrained by an elite consensus that appears to have been shaped by America’s geopolitical rivalry with the Soviets. So if, as Weingast suggests, a powerful external threat is an important way modernizing societies have built coalitions for reform (Europe in the first postwar decades, South Korea and Taiwan), one wonders how the U.S. will build a coalition for the reforms we need to raise the growth rate and to mitigate the social damage done by family disruption. Some believed that Al Qaeda and other transnational terror networks posed a sufficiently grave threat to the U.S. as to unite right and left, but I’m not sure this was ever a plausible claim. China has the potential to pose a Soviet-scale threat to U.S. interests, yet China is a highly vulnerable society that has much to fear from a serious strategic rivalry with the U.S., so I don’t we’re in for another cold war — a cool war, maybe, per Noah Feldman, but nothing more than that. 

So I would expect that the partisan divide in the U.S. will actually grow deeper in the years to come, and this will shape the political playing field in a variety of ways. Both major parties might pursue strategies to entrench their position, whether by creating roadblocks to political participation (stringent voting regulations or stringent campaign finance regulations) or by attempting to shape the future electorate (creating a path to citizenship for less-skilled immigrants and increasing the influx of less-skilled immigrants vs. tax cuts for middle-income households with minor children). Brief periods of unified party control will see sweeping legislative change, followed by decade-long efforts to reverse legislative change. Or perhaps we will all learn to get along. A “stability trap” — in which domestic political factions (rightly) see each other as the biggest threat on the horizon, due to the absence of geopolitical threats — is not nearly as bad a violence trap. Stability does, however, lead to pathologies of its own, as Mancur Olson famously argued. 

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.