Conventional wisdom could be wrong in this year’s elections

Gordon L. Weil

With the elections at hand, the conventional wisdom is that the Republicans will gain, almost certainly picking up control of the House of Representatives and possibly the Senate.  President Biden has a net negative rating and that’s expected to aid the GOP across the board.

The political analysts reach these conclusions based on three factors: the polls, higher retail prices that can easily be blamed on government spending, and the usual loss of seats in Congress by the president’s party in midterm elections.

Most election speculation is based on polling data.  The public is bombarded with online surveys and automated phone soundings to find out what issues matter to people and how they will vote. But there’s plenty wrong with polls.

Public opinion surveys are most reliable when they are based on a truly random sample of the population. They don’t exist.  Many people refuse or those who answer are not typical. Pollsters adjust the results and their natural bias can creep in. The survey questions may reflect political leaning if not outright bias. And the results are subject to interpretation. 

In short, polling dictates commentary and there’s good reason to be skeptical of it.  On this shaky foundation, the punditry begins.  The analysts sound authoritative, but at best they are making informed guesses.  The expectations created by polls that have the aura of being objective can affect decisions voters make at the ballot box.   Polls create momentum.

Biden tells us that the elections depend on whether the parties get their voters to the polls. The gap between a survey result and what people really do, including not even showing up to vote, is what the Democrats hope will refute the forecasts.

Inflation has become the big issue because it hits you every day.  What either party did for them six months ago matters less to many voters than what they pay for groceries or gasoline today. 

Higher prices have several causes.  The increase in the cost of oil and gas, the major economic byproduct of the Ukraine War, affects almost everything we buy.  Just like the disease itself, the economic effects of Covid-19 seem to be staying with us and are costly.  Bringing production home from China raises costs.

Though these factors are undeniable, they are simplistically boiled down to the cost of government being too high.  The GOP is the party that wants to lower taxes and cut down the size of government. 

Even if there’s a disconnect between benefiting from government action, like renewed roads or Covid-19 income support, and wanting a smaller government, the price of daily purchases may be somewhat blindly dictating the political response.  The purse beats policy.

Conventional wisdom also tells us that people are concerned about crime.  It is difficult to know what that means to each voter, but there is undoubtedly a sense that things are getting out of control when each day’s news seems to contain a report of killings of innocent people.  Without knowing how to stop these incidents, voters may feel that authorities should do better.

It’s also possible that talking about “crime” really relates to ill-considered calls to “defund” the police or police treatment of Blacks and the related reactions to tense situations.

Elections are supposed to give the people the opportunity to tell political leaders how they rate.  Whether the hopes raised in a presidential election year have been realized becomes the test.  If there’s enough disappointment, those in power suffer.  That’s considered to be the normal rule.

The country seems to be evenly divided politically.  As a result, even a small swing to one side or the other can change who’s in control of the government.  This year, there are at least two other factors at work.

One of them is Donald Trump’s effect.  The Republicans have produced some candidates who are closely aligned with him and his policies.  Do they appeal only to the right wing of the GOP, essentially ceding the election to the Democrats, or do they represent a majority of the voters?  Here’s where Biden’s emphasis on Democratic turnout may matter.

Politics in America has always contained a lot of negativity.  You are asked to vote for a candidate because of the defects of their opponent not because of their skills or policies. The chief casualty of this kind of politics is truth.  That’s one reason why elections almost inevitably lead to voter disappointment.

The other factor, mainly identified with the GOP, is voter suppression.  Reducing the effect of Democratic voters by gerrymandering districts, making access to voting difficult or even questionable vote counting are expected to be key factors in flipping the House to the Republicans.

Taking all this into account, we probably know less than we think we do about next month’s election results.    

Ukraine war remaking the economic, military world

Gordon L. Weil

The Ukraine War wasn’t supposed to happen.

At the end of the Second World War, Americans and others drank their own bathwater, as the saying goes.  They imagined that the winning alliance – the U.S., Britain, the Soviet Union, France and China – had finally halted the endless land wars for territorial gain.

In 1945,their dream was wrapped into the United Nations, a forum for negotiating settlements and avoiding war.  The five big winners would run it, though really it would boil down to the U.S. and the U.S.S.R.

Within four years, they failed.  After stealing American nuclear secrets, the Soviets occupied much of Eastern Europe.  To stop their advance, the U.S. organized NATO with Britain, France and others. Meanwhile, China crumbled, paving the way for a Communist takeover.  Quickly, the post-war world evolved into opposing blocs: democratic countries and dictatorships.

The Soviet Union was really Russia and the neighboring countries it controlled.  Eastern European satellite states were a buffer between Russia and the West.

Russia suffers from historical paranoia. With flatlands on its western border, the Russian Empire and later the Soviet regime always feared invasion, and with good reason.  Napoleon in 1812 and Hitler in 1941 marched on Moscow.  Only because they were overextended, outnumbered and seriously cold were they forced to retreat in defeat.

The history of national boundaries in Eastern Europe shows almost continual change.  At times, Ukraine was a key part of the Russian Empire, but it was also a maltreated part of the Soviet Union.  When the U.S.S.R. folded in 1991, it achieved independence.  In effect, it took its place near the end of the decolonization that had swept the world after the Second World War.

In the 1990s, it appeared that Russia’s paranoia could be cured by closer economic links with the West. But then Vladimir Putin came to power.  He lamented the end of the Soviet Union, and hoped to revive the Russian Empire.  Otherwise, he feared that the Russia he ruled would be nothing more than “a regional power,” just as Barack Obama had labeled it.

In his view, Ukraine, home to second-rate Russians, had to be recovered. As it became more attracted by the EU and NATO, Putin saw Russia’s buffer disappearing.  The West would be at the door, able to invade.  He had to stop Ukraine’s drift westward.

Based on his largely unopposed take-over of Ukraine’s Crimea peninsula, Putin seemed to believe he could capture the rest of the country in a matter of days.  With the UN having become ineffective and NATO having lost its mission as it still hoped for amicable relations, Putin could imagine winning a land war in Europe.

If Putin were a throwback to the bad old days of Nazi aggression, he surprisingly faced Joe Biden, an American president who was a throwback to the Cold War with the Soviets.

Putin made two mistakes.  He badly underestimated the Ukrainians, and he mistakenly believed that the only weapon in the U.S. arsenal was words. The impact of his errors was huge, disastrously affecting Russia and undermining the world economy.

Russia emerged as no longer worthy of a seat among world powers.  Its only weapon was nuclear, more effective as a threat than as an instrument of war.  By revealing his country’s essential weakness, Putin turned Russia into the junior partner of China.  His timing was bad.

Xi Jinping, China’s president, is at an earlier place on the dictator’s learning curve than Putin.  He dislikes the instability that Putin created, though he exploits it to boost China’s standing in the world. If Xi opposed Putin, the Ukraine war might come to an end. But he may reason that Putin taking even part of Ukraine by force is a helpful model for China taking over Taiwan.

And Putin could succeed at least in gaining some territory.  After a one-sided war in which Russia could pulverize Ukraine while Ukraine was restrained by its backers from touching Russia, a negotiated settlement might allow the Russians to save face by dividing Ukraine.

The world economy will never be the same.  Overdependence on others can be dangerous, as Russian oil and gas customers have learned.  Or as China’s TikTok users are learning. Globalism is reverting somewhat back to national self-sufficiency.  But this can bring higher prices.

It will also cost more to be prepared.  The Ukraine war has shown the limits of Russian readiness and war production, but it has done the same in the West. This is not merely a matter of armed forces and weapons.  It’s also about the domestic economy ranging from modernizing manufacturing to advanced research.

Above all, it is critically important to recognize that the post-war world is gone.  The times call for the U.S. to reassert itself as the world’s leading economic and military power.

 

  

Could U.S. become the ‘most successful failing state’?

Herschel Walker could help the U.S. top Belgium!

Gordon L. Weil

Herschel Walker could bolster U.S. chances of topping Belgium.

It’s not about football. The odd mix of Walker and a world record held by the European country echoes the classic story of a student in Poland, told to write about the elephant, who amazingly came up with an essay entitled “The Elephant and the Polish Question.”

Last week in the Financial Times, perhaps Britain’s most serious newspaper, a commentator wrote that, until now, Belgium had been the world’s richest “failing state” – a country that is simply ungovernable.  It is now losing the title, because “America is history’s most successful failing state.”

The Belgian “question” is about a deep split between two language groups – Flemish, which is a form of Dutch, and French.  Belgian history now includes the record for going without a national government, because the two sides could not agree.  Still, the country prospers and is the seat of both the EU and NATO.

The U.S. is similarly deeply divided between Democrats and Republicans.  As in Belgium, the two sides are so far apart that the federal government may end up incapable of deciding anything. Also like Belgium, the American economy produces great wealth, though lower taxes and easier regulation create a bigger gap between rich and poor in the U.S.

What does Herschel Walker, a former football star and current GOP Senate candidate in Georgia, have to do with the potential inability of the U.S. government to function?   

The Republican Party’s prime political goal seems to be defeating the Democrats.  In 2000, its National Convention failed even to adopt a party platform, preferring to fall in line behind Donald Trump’s presidential re-election campaign. While the GOP has positions on issues from abortion to deregulation, they mainly serve to create an anti-Democratic majority.

Candidate Walker was picked because he is famous for his Georgia Bulldog football career and is Black.  Incumbent Democratic Senator Raphael Warnock is also Black and the minister at Martin Luther King, Jr.’s Atlanta church.

Walker has little else going for him, having no political or government experience. He does have a carload of scandals, including fathering four children with four different women, while living with another. One of these women says he paid for her abortion and offered her another abortion, though she had the child.  He denies the claim. 

But one of Walker’s supporters responds, “I don’t care if Herschel Walker paid to abort endangered baby eagles. I want control of the Senate.”

Those are the words of an ardent Republican who would accept an abortion that he might otherwise oppose to win GOP political control in November. Anything goes. Remember that married candidate Trump bragged about groping women in the “Access Hollywood” tape, but still was elected president.

The assumption is that as a senator, Walker would do as he was told by his party. All he has to do is show up. If he flips the Georgia seat, the GOP could attain a Senate majority, giving it veto power over any proposals by President Biden. That kind of gridlock makes for a “failed state.”

So do repeated challenges to election results. If Walker loses, it is reasonable to expect that the GOP will challenge his election defeat. Many Republican candidates around the country either claim past elections were tampered with or say they believe next month’s will be. Maine’s former governor Paul LePage and former congressman Bruce Poliquin are in this group.

Wanting to win so badly leads to candidates who are willing, even before a single vote is counted, to assume that being defeated means being cheated.   Winning is more important than avoiding serious harm to the political system.

How you get to that point is simple.  Some of the January 6 rioters believed Trump’s statement that the election was stolen and thought they were trying to stop Democratic tyranny.  If you can defeat the Democrats, you can prevent them from destroying the country.    

It has become clear that Trump knew that he had lost the election and that claiming fraud was a political strategy to change the results outside of the bounds of the traditional political system.  He was president and could lead his loyal followers to carry out his strategy.

The question this year may be whether questionable candidates like Walker can be elected based on a false fear of two more years of Democratic government.  If the partisan voter access and vote counting maneuvers of Republican state election administrators help GOP losers, governments across the country will be greatly stressed and the courts will be busy.

Much also depends on this year’s state legislative elections.  State legislators elected in November will make the rules for the 2024 presidential vote. 

This year could be about the GOP’s elephant and the American question.

  

Biden didn’t cause inflation; elections won’t fix it

 

Gordon L. Weil

The political campaign focuses on inflation.  Somebody must be held responsible for high prices and even for a recession that hasn’t happened.

Economic conditions could always be better.  But right now, things may be better than they seem.  And they’re surely different.

First, some good news.  The U.S. is the world economic superpower with the world’s leading currency.  When times get tough, people want the dollar. 

A strong dollar cuts the cost of imports, benefitting our consumer-based economy. But it boosts the price of American exports.  That’s somewhat masked by rising prices worldwide, thanks to shortages and supply chain glitches. And higher revenues bring new profits to some industries, like oil.

The glory days of American industrial production began to fade in the 1970s.  Now, in the wake of the Covid recession, manufacturing is again growing at the pace of 50 years ago.  More people work in factories now than before the virus struck.

Compared to other major economic powers, the U.S. is doing better.  China has a Covid problem. Europe and Brexited Britain face major fuel price increases and struggle with shortages, high inflation and reduced industrial output.   Then, there’s Russia!

We keep expecting unemployment to increase as the Federal Reserve raises interest rates in hopes of reducing inflation.  But the Fed’s moves have not yet caused joblessness, which remains low.

Higher interest rates raise costs, but the situation may not be as bad as we think. The Fed is bringing rates up to a level that used to be called normal.  For more than decade, they have been historically low and we grew used to it.

Contrary to the usual mantra, the biggest help has come from the federal government. To deal with the effects of Covid, the need to renew basic infrastructure, the climate crisis and bringing production back from abroad, the Biden administration and Congress have pumped trillions of stimulus dollars into the economy.  It worked.

The result is record high government debt. That may have been acceptable when interest rates were low, but paying it down later could hurt.  But that’s left by both political parties for another day or generation.

If everything is so good, why don’t people feel better?

In this country, the answer is clearly that the prices of essentials – food and fuel – are much higher than they were.  Inflation takes place when too much money chases after too few goods. That’s exactly what happened.

Two causes drive these price increases:  Covid-19 and Russia.  The virus brought a recession when millions lost their jobs or faced cutbacks.  Some workers chose not to come back after vaccinations were developed.  Workers stepped up demands for better pay.  Production could not keep up with normal demand.

Russia’s unexpected and disastrous land war in Ukraine led to inevitable disruptions in the world’s supply of oil and grains.  Russia used oil as a weapon to force its customers to accept its invasion, but the customers have resisted, pushing up the price of gasoline worldwide.  It cut grain exports from Ukraine, increasing the cost of wheat and other grains.

These causes contributed to uncertainty, which can cause the economy to hunker down.  The British decision to quit the EU was followed by its relatively sudden fall from the top ranks of the world economy.  Recently, that has added to uncertainty.

It falls to central banks like the Fed to manage policies that would combat inflation while trying not to overdo it and end up with a recession.  The uncertainty about their chances of success adds more doubt.

Although the economy seems to emerge as the major issue for many voters, no election result – keeping the Democrats in charge or turning the veto over to the Republicans – will change much.  The problems are not merely a short-term matter of national politics.

The world economy may be entering an historic transformation, almost at the level of the Industrial Revolution or the growth of social welfare like Social Security, each about a century apart.  After another century, we may be turning a new corner.

Technology with growing artificial intelligence, remote work, a more educated workforce, tax policy and deficit spending, trade and the new demands on the domestic economy will likely drive major change.  It will never be the same.

It’s possible that prices will never settle back to levels below where they are now.   Workers have forced a new minimum wage without government action.  Bringing production home from China, a sound policy, will cost more.  Dealing with climate change carries its own price tag.

Such changes cannot be reversed by this year’s congressional elections.  Economic reality in the U.S. and across the world will impose itself on us.  No president or Congress can change that, but they must now try to make the best of the new emerging economy.