Tuesday, October 7, 2008

Elections and the economy

The headline one year from today: "[Obama/McCain]'s economic policies bearing fruit"

Larry Bartels:
Considering America’s Depression-era politics in comparative perspective reinforces the impression that there may have been a good deal less real policy content to “throwing the bums out” than meets the eye. In the U.S., voters replaced Republicans with Democrats and the economy improved. In Britain and Australia, voters replaced Labor governments with conservatives and the economy improved. In Sweden, voters replaced Conservatives with Liberals, then with Social Democrats, and the economy improved. In the Canadian agricultural province of Saskatchewan, voters replaced Conservatives with Socialists and the economy improved. In the adjacent agricultural province of Alberta, voters replaced a socialist party with a right-leaning funny-money party created from scratch by a charismatic radio preacher, and the economy improved. In Weimar Germany, where economic distress was deeper and longer-lasting, voters rejected all of the mainstream parties, the Nazis seized power, and the economy improved. In every case, the party that happened to be in power when the Depression eased dominated politics for a decade or more thereafter. It seems farfetched to imagine that all these contradictory shifts represented well-considered ideological conversions. A more parsimonious interpretation is that voters simply—and simple-mindedly—rewarded whoever happened to be in power when things got better.
Bartels uses this evidence to make the case that voters aren't very knowledgeable. The same evidence could be used to argue that governments have very little ability to directly affect the economy.

Literal video

A-Ha's "Take On Me," with the words changed to reflect the visual.

See more funny videos at Funny or Die

Largest bar graph ever

I'm tempted to cancel class tomorrow so I can go see this.
At a press conference Wednesday, Headwaters Economics will release a report detailing how Colorado, Montana, New Mexico, Utah, and Wyoming choose to tax oil, natural gas, and coal extraction-and how the revenue is spent.

The report shows Colorado has the lowest effective tax rate in the Intermountain West. It also demonstrates that states can increase their effective tax rates with little risk of affecting the local energy economy.

A giant bar graph, perhaps the largest bar graph ever in Colorado, will dramatically illustrate the differences between the 5 states studied in the report.

You'll be able to sit down atop Colorado's three-foot bar on the graph, while Wyoming's bar will loom over you head at about 8 feet tall. That's because the effective oil and gas tax in Wyoming is over twice Colorado's (6.2% for Colorado and 15.9% for Wyoming).

When: Wednesday, Oct. 8, at 10:30 a.m.

Where: Civic Center Park (East side of the park, directly across from the State Capitol)

Stay and fight

I have to admit I'm enjoying some of the satire afoot this election. This one's great. This one had me until they started talking about moving to Canada if Palin becomes vice president. There are few things that make me hate liberals (disclosure: I am one) more than empty threats to move to Canada if Republicans win. Why? Because such threats validate three talking points that conservatives are always using against liberals:
  1. Liberals are intolerant. They talk a good game, but when it comes down to it, they just don't want to live in a country with people who disagree with them.
  2. Liberals don't love America. They'll stay if they like the government's policies, but they'll find another home if they disagree with the government. They don't think their country is worth fighting for.
  3. Liberals are liars. How many liberals moved to Canada after the 2000 election? After 2004? They won't really do it this year either.
For all of conservatives' faults, do you ever hear them threaten to move to... well, I'm not sure where they'd move to, but they don't threaten to leave if they get an election result they don't like. They impeach, they recall, they filibuster... they fight to control their country. Dirty at times, but they still fight. If liberals want their ideas to be taken seriously, they might start fighting for them instead of whining about running away.

Monday, October 6, 2008

Close elections

I was giving a lecture over the weekend about why this presidential election is so close. Given that the fundamentals of the race (fundraising, presidential popularity, voter registration, etc.) seem to overwhelmingly favor the Democrats this year, shouldn't Obama be winning by 20 points by now?

My main answer was that blowouts rarely happen in presidential elections. Here's a graph of presidential election margins since 1948:
To be sure, there were some big margins in there. LBJ beat Goldwater by more than 20 points, and Nixon beat McGovern by a similar margin. However, if you omit elections in which an incumbent president was running for reelection, there just aren't that many blowouts. Kennedy/Nixon, Humphrey/Nixon, and Gore/Bush were all nailbiters. The last time a non-incumbent won by more than 10 points was when Ike beat Stevenson in '52. So judging from this history, it would seem more than likely that McCain will get at least 45% of the vote. And, of course, my official forecast model only saw Obama winning by 4-6 points, and that's not accounting for any sort of race effect.

That said, this may not be a normal election. Obama's recent surge in the polls seems largely due to the financial crisis, but neither the crisis, nor the surge, seem to be abating. (See the graphs at the top right of this page, and your 401k.) The question, I think, is whether voters believe this is 1979 or 1929.

When traders lose their lunch

Dow drops below 10,000.

Sunday, October 5, 2008

A telltale election sign

It's easy to get lost in a sea of conflicting polls. But if you're looking for one little indicator to tell you what the candidates themselves think of the way the race is shaping up, look no further than this: A month prior to the election, McCain has pulled out of Michigan, and Sarah Palin is campaigning in Nebraska.