Why are teachers being fired?

Economics professor Tyler Cowen attributes the decline in public-sector employment to “a collapse of trust in politics.” In fact, he says, “the reason that we aren’t getting more expansionary macro policy is fundamental: a lack of trust.”

I don’t buy it. I think the reason we aren’t getting more expansionary macro policy is a polarized political system oriented toward gridlock.

(Khalil Senosi - AP) If there’s been a decline in trust toward state and local governments, it’s hard to find it in the polling. State and local governments rank as highly trusted. In a March 2011 poll — so, the period when state and local cutbacks were at their worst — Gallup found that most Americans thought state and local governments had “about the right” amount of power. Only 34 percent wanted state governments to have less power, and only 22 percent wanted local governments to have less power. They outpolled banks, corporations, the federal government and the courts. Local government outpolled churches.

Moreover, the particular classes of workers being laid off in state and local cutbacks rank as, again, the most trusted in the nation. A December 2010 poll — the most recent survey of attitudes toward various professions that I could find — shows grade school teachers and police officers to be among the most trusted professions in the country. That’s not exactly the same as saying that Americans want to spend more money on teachers and firefighters. But it’s difficult to detect a lack of trust here.

Here’s the thing, though: Americans definitely don’t trust banks and the federal government. The same March 2011 poll that found most Americans thought state and local governments had “about the right” amount of power also found majorities saying corporations, banks and the federal government had too much power. And the same December 2010 poll that found teachers and police officers to be among the most trusted professions also found business executives, bankers and politicians to be among the least trusted.

Policy hasn’t tracked public preferences very closely. In polls, Americans have clearly supported higher taxes on the rich and a much more punitive approach to banker compensation. Neither has happened. They supported the American Jobs Act -- the major vehicle for more expansionary macro policy on 2012. It didn’t pass. They’ve also supported much more deficit reduction -- a contractionary policy. That hasn’t happened, either. If policy were responding to what voters wanted, it would likely look quite different today.

But rather than following a “trust” model, policy over the last year has quite precisely tracked the consequences of federal gridlock. States have had to cut back because they’re out of money and the federal government isn’t helping. The American Jobs Act didn’t pass because congressional Republicans opposed it. Policy hasn’t become truly austere or more stimulative because neither side can actually pass its policy preferences into law.

Put another way, the consequence of party polarization in our political system is gridlock, and the consequences of gridlock are mechanical and predictable. Nothing we’re seeing deviates from what we should have expected after the 2010 election.

Amidst all this, it’s certainly the case that Americans have been losing faith in their institutions, and in Washington in particular. But I’d say Cowen has the causality backwards: He says policy is following the declining trust Americans have in their political institutions. I’d say the trust Americans have in their political institutions is declining in part because policy is doing so little to follow their preferences.