What You Think Matters In Politics, Doesn’t


Art Steinmetz


October 31, 2008

Many of my friends think the policy positions of the presidential candidates matter to voters. They don’t. Obama will win and McCain will lose. That result was baked in the cake last spring. Nothing either candidate has said will have any impact whatsoever on the outcome. It is funny to see folks get all worked up about the positions of the candidates. Yet again, it’s about-the-economy-stupid. BUT…The important thing to note is the election is NOT about what each candidate promises to do about the economy. It is about where the economy is now, about blaming the incumbent and throwing the bastard out.

Perhaps you’ve noticed the stock market lately.

Is it a coincidence that McCain’s fortunes have plummeted at exactly the same time? Here’s the price of McCain in the prediction betting markets. It is essentially a win probability, now down to about 13%.

Economic cycles happen. Much as we’d like to think we are in control of thing’s we aren’t. Even in the old Soviet Union there were cycles. If anything, they were worse (though hidden) because planners are even worse than markets at allocating resources. The pickle we are in could be the same no matter which party controlled Congress or the White House but we need somebody to blame. The elder Bush was “unbeatable” after his victory in Gulf War I. No democrat of any stature wanted to challenge him so an obscure governor got the nomination. Then the economy took a downturn right before the election and Bush was out. Carter wasn’t responsible for the “Malaise.” Hoover didn’t cause the depression.

There is a lot of academic research on this stuff going back to the 1970s covering a whole century of elections. Basically you can predict how much of the popular vote the challenging party will get based on growth, Inflation and unemployment, with an adjustment for incumbency. The models are extremely accurate. What doesn’t matter in these models are candidates’ positions! Since the early part of this year, these models have predicted that Obama will win. So, sure, he might have a visionary plan for universal health care, or he’s a closet socialist with a vaguely foreign sounding name, but it just doesn’t matter. It just doesn’t matter. It just doesn’t matter.

Good luck to President Obama. He’s going to need it.