(REUTERS/Jonathan Ernst)
(REUTERS/Jonathan Ernst)


In 2010 and 2011 Belgium was without an elected government for 589 days- a record for a democracy. Tensions had risen so high between the Flemish (Dutch speakers) and the Walloons (French speakers) that the various political parties were unable to agree on a coalition that could govern the country. Yet, budgets were passed, government workers were paid, and government services continued to be provided.

A Washington Post article today notices that countries like Pakistan and Colombia have had civil wars, coups, financial crises, even defaults but never a government shutdown. I will appeal to the collective wisdom of Monkey Cagers, but I cannot think of a single foreign analogy to what is happening in the U.S.  today.

Why is that? Congressional politics is quite dysfunctional. But politics in Belgium, Colombia, Pakistan, and many other places in the world is pretty crazy too.

My guess is that it has to do with institutions, in particular something we call the “reversion value” for annual budgets. In the U.S., if Congress does not pass a budget, then the budget for the next year equals zero. In most countries I know, if the politicians are too polarized to reach agreement, then the budget simply reverts to last year’s budget (or some other reversion value that keeps the government open).

Such a rule obviously affects bargaining over budgets. Usually, different sides in a debate want to change something. When threatening a shutdown is not an option, the incentives to compromise may well increase.

It is tempting to simply blame the current crisis on extreme ideologues from either side. Yet, we must also look at the institutions that allow polarized politics to produce such costly outcomes.