Narrow margins give disproportionate power to small interest groups. With small margins, increased vote trading is necessary to pass bills, as small groups have more leverage. One need look no further for evidence of the deleterious impact of this than in the current budget negotiations. The small Republican majority has forced the GOP leadership to accede to Clinton's spending priorities, and it has also fostered a second straight year of huge amounts of last-minute pork barrel spending. Now this is not in itself an indictment of gridlock.
Gridlock encourages incoherent spending initiatives.
If we are going to spend, we should spend boldly. If we concede that budget totals are going to be overspent, it at least makes sense to have important investments or social goals to show for that extra spending. This line of thinking applies no matter what one's ideological views may be. Unfortunately, the less focused spending is the more likely outcome with narrowly divided government. Somehow, I suspect that is not what the glib proponents of fractured government envision.