Despite being relatively secluded from the real world here, I've noticed that both the media and various government figures have been eager to produce exceedingly grim prognoses for the U.S. in the wake of the government shutdown. Sen. Tom Harkin, D-Iowa, recently called the impasse "one of the most dangerous points in our history." Meanwhile, comparisons of House Republicans to the mafia and terrorists have abounded.
Cutting through the hyperbole and politicking, this crisis really isn't all that it has been billed or at least the financial markets haven't taken it that way. Volatility has stayed roughly the same. In no way is haphazardly shutting down various departments a good policy, but thus far it hasn't caused anything near total anarchy. The most important government-provided services the military, tax collection, social insurance programs, the courts and education system are still running. More ancillary departments and services are the ones being furloughed the national parks, NASA and other science-related ventures, along with large sections of the Departments of Commerce, Education, Agriculture and Housing and Urban Development.
For example, most of HUD has been closed down. Many of the impediments only exist because a substantial body of federal housing regulation exists. A number of federal agencies involved in the real estate market are not currently operating, which may greatly impede transactions in the future since furloughed employees can't file the relevant paperwork. If the shutdown is prolonged, the regulatory structure may break down and cause major issues in the market, but some of this fallout must be pinned on the inefficiency of the structure itself.
Similarly, the Department of Education imposes massive paperwork requirements on schools nationwide, and the ability to process this paperwork will be impaired. For example, 2006 estimates found that No Child Left Behind had imposed 6.7 million hours' worth of additional paperwork on schools, redirecting funding from the classroom. Currently, the ratio of teachers to non-teachers employed in public schools is approximately one to one, but it is far from clear that educational outcomes have improved. As with housing, an overbearing bureaucracy's presence is definitely related to our education system's problems.
Beyond these issues lurks the question of whether the departments and programs affected by the shutdown should exist in the first place. HUD's nominal mission is to create "strong, sustainable, inclusive communities," but school segregation, a measure of inclusivity, is higher than it was in the early 1970s. HUD-funded public housing is ridden with crime that often disappears when gone, and a lot of funding meant to strengthen communities goes towards sprucing up rich neighborhoods. Many other agencies perform actions normally done by the private sector, such as the USDA's rural subsidies program and a variety of housing insurance and subsidy programs. The government shutdown, if it continues, may give us an opportunity to evaluate whether we need these programs at all, or at least if we need the government to carry out their functions.
The bottom line is that this whole shutdown business isn't the end of the world. Rather than fear mongering about doomsday scenarios, we should take this shutdown as an opportunity to look at whether we can live with less. Do we need to have the federal government insure hundreds of billions in mortgage loans? Do we need to have the Education Department breathing down the necks of principals? Should the government really be researching chelating therapy, an alternative medicine about which even the NIH concludes that "there is a lack of prior research to verify" its safety and effectiveness? The government shutdown may not be the best way for us to test these hypotheses, but it might at least be a chance. That's better than nothing.
