Economic Implications of Nation Divided

When candidates at every level talk about the economy, listen closely for suggested solutions.

In September, faculty from the Harvard Business School’s U.S. Competitiveness Project released a report, Problems Unsolved and a Nation Divided, tying a sluggish economy to partisan gridlock.

“[O]ur survey revealed broad consensus on the nature of the problems—particularly on corporate taxes—and the fruitful directions for reform. The survey also revealed several new reforms—a carbon tax, a new higher bracket, and the deductibility of dividends at the corporate level—that are really promising and that enjoy surprisingly broad support.”

Despite widespread agreement on governmental priorities, the authors note that partisan gridlock and dysfunctional government make implementation of solutions unlikely.

Historically… the U.S. set a bold agenda in economic policy and competitiveness: the U.S. invested heavily in infrastructure and education, made a commitment to strict antitrust policy to ensure open competition, created institutions for innovation, and took many other steps. Bold policy initiatives like these strengthened the business environment and built crucial assets that enabled America to be competitive. Today, the major obstacle to progress on the economy is politics, especially at the federal level. A large majority of alumni of every political affiliation believed that the political system obstructs U.S. economic growth and competitiveness (56 percent among Democrats; 82 percent among Republicans; 74 percent among Independents; 80 percent other).

The report describes needed reforms, including tax structure and immigration. Among recommended solutions, redistricting reform is most strongly endorsed.

“Gerrymandering reform and campaign finance reform had overwhelming majority support. Term limits, a lifetime lobbying ban, and eliminating party control of the legislative process registered strong majorities.”

Download the Nation Divided Report