America's political system: State of renewal THE American political system, as all the world thinks it knows, is gridlocked, not to mention dysfunctional and broken. The tea-maddened Republicans who seized control of the House of Representatives are holding Barack Obama and the Democrat-controlled Senate to ransom, refusing either to balance the federal budget or to pass any of the administration's legislation without first getting swingeing cuts in taxes for the rich and in aid for the poor. In the White House Mr Obama is too busy planning his re-election to govern, while the economy races towards a "fiscal cliff" of tax increases and spending cuts that will take effect on January 1st next year unless they can find consensus; that seems more elusive than at any time since the end of the civil war. All true, up to a point; but not the whole story. Across America, most obviously in the battered Midwest and the property-busted sunnier climes of Florida and Nevada, a turnaround is under way. Thank many things for that: lower energy prices, recovering demand in at least a few places abroad, exceptionally loose monetary policy at home and the effects of the stimulus that Mr Obama was able to push through Congress before he lost control of it at the 2010 mid-terms. But also thank the fact that gridlock in Washington does not mean gridlock in the real drivers of America's prosperity, its 50 competing states and its hundreds of self-governing cities. It is in those states and those cities that America is endlessly renewing itself. It is at city and state level, for instance, that America's education system is being rewired, thanks to the independent or "charter" school revolution that was pioneered in places as diverse as New York City and Texas and is growing all the time. Experiments with health care in states as far apart in every way as Utah and Massachusetts pre-dated anything done at the federal level. A clutch of new Republican governors elected at those mid-terms have been driving forward the reform of the public sector, often controversially but in the long-term interest of their states. In Republican Indiana Mitch Daniels, the governor, has made his state the only one in the Midwest to ban the closed shop; other states in the region may have to do the same if they don't want to be left behind. And, it bears repeating, since states and cities are not supposed to run deficits, it is at these levels that most progress has been made in restoring public finances. Jon Kasich, the new Republican governor of Ohio, for instance, has made up an $8 billion shortfall while cutting taxes. A number of states, mostly Republican ones, have "rainy-day funds" which saw them through the worst of the post-Lehman storm, though the federal government also helped a lot. Slashing red tape and opening government to inspection by the public by means of "sunshine laws" have also played their part; here again, the record of Republican states has been better than Democratic ones. California, for the eighth year in a row, has just been voted the worst state in which to do business, with New York (also strongly Democratic) a close second, thanks to high taxes and excessive regulation. According to Chief Executive magazine, which did the survey, all top ten spots are held by Republican states, with Texas in the lead. As we report here, a feature of the past year or so of the recovery is that among the dozen "swing states" that will determine the outcome of the election, unemployment has fallen by more than the national average. You might think that this is bad news for Mr Romney: his pitch is that Mr Obama has failed to sort out the economy and that he can do better. Actually, it is potentially good news for the man who this week clinched his nomination with a spectacular victory in Texas. Florida, Michigan, Ohio, Virginia and Wisconsin, probably the five states most critical to the election, are all run by new small-government Republican deficit hawks. Mr President, learn from your enemies The newcomers do not deserve all the credit, of course. The bail-out of the car industry, for instance, was what saved Michigan. Yet Mr Obama should take note. Sound public finances, opening up government, taking on unions, privatising services: the mid-terms showed that there is a great appetite in America for these right-of-centre remedies.