Devaluing our way to depression

Byline: | Category: Above the Fold, Culture, Economy, Government, Taxes & Spending | Posted at: Friday, 23 January 2015

Imagine this scenario:  The United States, in an effort to spur exports and boost domestic producers, institutes a tax on foreign imports, some of the proceeds of which go indirectly to exporters to make their goods more affordable in international markets.  Most of Europe then retaliates with tariffs on American exports that raises the cost of American exports in Europe.  Japan does the same, erecting some of the highest tariffs in the world.  Most of China follows suit.  Britain tried to stay aloof of the customs war, but eventually caves, building its own economic borders.

Of course, I’m talking about the interwar period, when in the aftermath of the Great War, the world’s major economies played a game of tariff-one-upsmanship until global trade collapsed and the world entered the Great Depression.

But I’m also talking about today.  Let’s consider what actually happens when a country devalues its currency.  Switzerland, as we discussed last week, by pegging the franc to the dwindling euro, essentially devalued Swiss money 20%.  Swiss consumers and Swiss businesses paid 20% more on imported goods and raw materials.  Swiss exporters weren’t subject to that tax, effectively receiving a 20% subsidy for Swiss items sold domestically and being able to export at a lower cost.  In other words, Switzerland’s attempt at currency devaluation yielded the exact effect of a 20% protective tariff on imports.

Switzerland wasn’t the only major economy doing this.  In fact, the Swiss are the only major economy to have stopped devaluing its currency–to have stopped building a de facto protective tariff around its borders.  The United States has gone through three rounds of quantitative easing, and there are increasing calls for a fourth.  All signs point to Europe doing the same as early as next week.  Japan has been devaluing its currency for twenty years with the same predictable result.

This is what doesn’t make sense:  virtually every economist agrees that protective tariffs are almost always bad.  Virtually every politician knows that protective tariffs beget even more protective tariffs in retaliation.  In fact, the World Trade Organization was created to discourage trade protectionism after the mess of the Great Depression made this painfully obvious to all.  Currency devaluations and protective tariffs are exactly the same in effect.  And yet, there are still economists of all stripes who argue that currency devaluation is a means to lifting an economy out of its depths.

Actually, they are not exactly the same in one significant aspect.  When a country devalues its currency it devalues itself.  It devalues the worth of its labor.  It devalues the strength of its reserves.  It removes incentives for savings and investments, and encourages the export of capital.  Currency devaluation creates a worse outcome even than a protective tariff.

So where does today’s spiral currency devaluation end?  If the 1920s rush to protective tariffs is any indication, the answer is:  not well.

Then, deflation was the result.  Years of forcibly escalating prices to prop up exports and subsidize domestic producers ultimately resulted in a collapse causing prices to fall to where they really should have been all along.  The price of agricultural goods was the most obvious indicator of this effect.  Advances in mechanization, refrigeration, transportation, hybridization, and chemistry resulted in a surplus of agricultural goods worldwide.  Too many people were engaged in direct and indirect agricultural work around the world as a result of the worldwide subsidy effect of protective tariffs.  When it collapsed, so too did prices.  All that the years of protective tariffs did was to take what should have been a gradual de-agriculturalization of the world’s economy and delay it long enough that it became a catastrophic global shock.  In other words:  deflation wasn’t the cause of the Great Depression; deflation was the logical effect of years of misbegotten economic policies practiced by every major economy in the world.  To blame the Depression on deflation, therefore, is as ludicrous as blaming the mercury in a thermometer for causing a heatwave.

Central bankers today fear deflation unnecessarily.  So much so that the world’s bankers are doing exactly what they know the world’s politicians did 90 years ago that led to the last Great Depression. This won’t end well.

Comments (0)

Fences work both ways

Byline: | Category: Culture, Economy, Ethics, Foreign Policy, Government, Regulations, Taxes & Spending | Posted at: Thursday, 22 January 2015

Because we always must heed the law of unintended consequences, Americans–particularly Republicans–probably should be more circumspect in their calls for the government to erect a border fence.

We live in a time when the American economy no longer is a beacon to the world’s entrepreneurs and when members of both parties want to implement laws inhibiting American companies from relocating overseas.

It would be a shame if a border fence, once built, wasn’t necessary to keep foreigners out, but instead became a convenient means of keeping Americans in.

Comments (0)

Watch the Swiss

Byline: | Category: Economy, Government, Taxes & Spending | Posted at: Thursday, 15 January 2015

Thursday the Swiss National Bank gave the world a quick lesson about why a strong currency is almost always better for an economy.

It is not uncommon for economic populists to attempt to demonstrate that a falling currency benefits an economy by helping exports and by claiming that devaluation is the “normal way countries emerge from financial crisis.”  Neglected by that line of thinking is that an economy’s imports necessarily increase in price as a result of that same currency devaluation.  But even if we analyze both sides of the equation, it would seem that the two should balance out.

However, lower import costs as a result of a stronger currency are almost always better for both consumer and producer.  Here is why this is the case:  while in a global market, only a few people’s livelihoods are dependent on exports, everyone depends on imports. Even the exporters depend on imported raw materials.  This sets up a situation where the individual costs of a bad economic policy–currency devaluation–are relatively small and diffused across the entire population, while the benefactors are fewer in number but have large visible gains.

But just how “small” are those costs?  On Wednesday a hundred Swiss francs bought about 83 Euros.  By the end of the next trading day it bought a hundred euros.  As a result, everything priced in Euros fell in real terms for the Swiss consumer:  Italian vegetables, German cars, French wine.  And as the franc increased by a similar amount against the dollar once Switzerland removed its artificial peg to the euro, the cost of oil, metals, and most commodities likewise plummeted.  It takes a lot of export losses to make up for the fact that the cost of almost everything Swiss consumers buy fell nearly 20% in a single day.

Under normal circumstances currency interventions are incremental and thus difficult to tie to precise costs.  That’s what makes them fun targets for government interventionists.  When gains are concentrated and losses are dispersed, it is the perfect scenario for central bankers and politicians to embark on policies that are decidedly not in the interest of the general welfare, but are in the specific interests of organized benefactors.  But the SNB’s surprise move demonstrated just how big the costs of currency manipulation really are when governments and central bankers conspire to devalue money.

Unfortunately, consumers don’t have well organized and vocal advocates, so you’re not likely to hear from most quarters that what happened Thursday is good news in the long run. (“In the long run” being defined as the amount of time it takes for the Swiss economy to readjust to an unsubsidized natural state).  Instead you’ll hear  plenty from groups like Swiss watchmakers, who by the way, are an anachronism tethered to a technology made obsolescent 50 years ago by quartz crystals.

And that’s the point.  The Swiss watch industry has much to lose only because the SNB’s artificial intervention in the currency market subsidized a larger existence these last four years than their business model deserved.

Just how large the subsidy had been is evident in today’s currency climb.  Effectively, Swiss citizens were paying a 20% sales tax on almost everything they bought so that Swatch could still churn out cheap watches for overseas markets.

Comments Off

This is what war looks like

Byline: | Category: Culture, Economy, Ethics, Government, Taxes & Spending, Uncategorized, wine | Posted at: Friday, 5 December 2014

Mayor Michael Bloomberg promised New York City a war on smoking.  War is what they got.

eric-garner-police-brutality-ramsey-orta

 

While it didn’t do so explicitly, New York’s progressive government decided that smoking was so bad that it was worth killing over.  You may accuse me of hyperbole, but consider that when government passes and enforces any law, it has taken the decision to use the State’s coercive powers against the non-compliant.  Above is a picture of what the law’s coercive powers look like, what a war on smoking looks like.  The “war” in this picture does not look like hyperbole to me.

The law that led to Eric Garner’s death was a prohibition on the selling of loose, untaxed cigarettes.  In other words, Eric Garner was a bootlegger.

Any time that government restricts a willing buyer and a willing seller from agreeing upon a price, a black market will develop.  It is a rule as old as mankind.  During the first Progressive era, the rule was Prohibition and the black market was big.

Eighty-eight Christmases ago sixty New Yorkers lay violently ill in the hospital.  Eight already had died.  The culprit was poisoned alcohol.  But the criminal mind behind the culprit was the government itself.

During Prohibition, alcohol still could be produced.  It was needed in the manufacture of paints and solvents.  So to legally produce it, the government required it to be “denatured”.  Usually that was done with the addition of poisonous methyl alcohol.  But it was a simple chemist’s trick to turn methyl alcohol into ethyl alcohol, which could then be drunk.  By 1926, thousands of amateur chemists were performing that trick and thereby skirting Prohibition’s rules. They had to be stopped.  It was the law, after all, and the law had to be enforced.  So the federal government required the addition of toxic chemicals in industrial alcohol.  The additives included kerosene, strychnine, and formaldehyde.  All are highly poisonous if ingested.  By Prohibition’s end an estimated ten-thousand drinkers were dead.

The ten-thousand were collateral damage.  Nay, they were actively violating the law.  They weren’t just innocent bystanders, but were enemy combatants in the war on drink.  They deserved to die.  After all, they were violating the law.  And if we shrink from enforcing the law, people will cease to have respect for it.

Over the last dozen years, New York City was the central front in the second progressive era’s war on smoking.  Mayor Bloomberg was that front’s field marshal.  He raised the legal age to purchase cigarettes to 21, prohibited smoking in all restaurants, attempted to prohibit it in parks and even apartments, and both he and his successor increased taxes step by step to an absurdly high$5.85 per pack.  At that price the black market is big.  But all this was necessary, Bloomberg and Deblasio have said, because 6,000 New Yorkers die every year from the effects of smoking.

In the war on smoking Eric Garner was an enemy combatant.  And for that offense, the supporters of New York’s war on smoking determined that he deserved to die.  I trust they’re happy with the result.

Comments Off

Progressivism defined

Byline: | Category: Government, Health Care, Progressivism, Regulations, Taxes & Spending | Posted at: Monday, 17 November 2014

Jonathan Gruber, a paid White House Obamacare consultant, said that “Seniors do a terrible job choosing health care plans.”  A slide deck he circulated in 2013 claimed “12 percent of seniors allegedly picked the lowest-cost Medicare Part D plan and could on average save up to 30 percent more.”

Gruber seems to be saying that if one-in-eight adults make (what he perceives to be) a bad choice, then the government should step in and dictate what eight out of eight adults should choose.

Shorter version:  You’re too stupid to know what’s best for you.

Comments Off

Who you calling stupid?

Byline: | Category: 2008 Presidential Election, 2012, Environment, Ethics, Government | Posted at: Friday, 14 November 2014

Jonathan Gruber is right.  The American people are stupid.  But not all Americans.

Take the President’s much recently heralded “climate change” agreement with China as an example.

Al Gore  says that the joint announcement “demonstrates a serious commitment” to combating global warming.

Brad Plumer at Vox says, ”This is a significant shift in climate politics — and possibly a first step toward a broader global climate agreement.”

James West at Mother Jones enthusiastically announces, “The announcement between the two biggest emitters deals a blow to the oft-stated rhetoric that the US must wait for China before bringing domestic climate legislation.”

The Washington Post’s Stephen Stromberg gushes, that this “landmark agreement . . . does not merely commit the countries to trajectories they are already taking. It will require both nations to push harder toward cleaner energy.

According to these reports, the agreement with China was, what one Vox headline writer called, a BFD.

But was it?  What exactly was agreed to?

Nothing actually.  The United States and China both made non-binding pledges to reduce greenhouse gasses.  However, neither side agreed to an enforcement mechanism.  There is no treaty agreeement to be submitted to the Senate for ratification.  There are no laws that Congress will consider.  There are not even any proposed steps that the EPA could take.

Not everyone was fooled by the Administration’s announcement and the breathless fawning of his media sycophants. RedState’s Erick Erickson nailed it:  ”Like so much of President Obama’s decisions over the past six years, this is another photo-op with a compliant press that does not matter and will do little.”  David Harsanyi says that “there are two problems with treating the deal as big news. 1) We’re not really doing anything we weren’t going to do anyway. 2) Neither is China.”  Senator James Inhofe (R-OK) called it a “non-binding charade”.

If you understand anything about the American Constitutional system and have any inkling about the current political situation in Washington you must conclude that Inhofe is right.  This entire hullabaloo is a charade.  International agreements can only receive the imprimatur of law by being subjected to Senate ratification requiring a two-thirds agreement.  Now that the new Senate will contain only 46 Democrats, this would require that 21 Republicans join all Democrats.  In fact, there isn’t even a treaty for submission to the ratification process.  And the last one (Kyoto) was never submitted, because then-President Clinton knew it would fail.  Laws restricting carbon consumption must go through the House that is more Republican than at any time since Calvin Coolidge was still alive.  The Supreme Court has already limited what the EPA can do without additional authorizations from Congress–which is not going to happen at least before the end of the Obama Presidency.

So any objective reading of the recently announced agreement between China and the United States should be met with no more than a shrug.  President Obama can announce anything he likes, but without a valid enforcement mechanism, it’s just words.

But let us get back to Gruber who called it “the stupidity of the American voter” who could easily be misled by promises grounded in economic lies and obscured by a lack of civics knowledge.  That worked to get Obamacare passed, and it apparently is working in getting the Left thrilled about the President’s war on carbon.  But it is not all of the American voters who are so easily duped.  It apparently is only the stupidity of the President’s supporters who are so easily misled by words without substance.

In other words, the Left might want to keep in mind that Jonathan Gruber wasn’t calling all Americans stupid.  He was calling the President’s supporters stupid.

Comments Off

Progressivism cannot win without useful idiots

Byline: | Category: Above the Fold, Ethics, Government, Regulations, Taxes & Spending | Posted at: Wednesday, 12 November 2014

Ron Fournier doesn’t like being lied to:

Appearing on an academic panel a year ago, [Jonathan Gruber] argued that the law never would have passed if the administration had been honest about the fact that the so-called penalty for noncompliance with the mandate was actually a tax.

“And, basically, call it ‘the stupidity of the American voter,’ or whatever, but basically that was really, really critical to getting the thing to pass,” Gruber said.

He called you stupid. He admitted that the White House lied to you. Its officials lied to all of us—Republicans, Democrats, and independents; rich and poor; white and brown; men and women.

Liberals should be the angriest. Not only were they personally deceived, but the administration’s dishonest approach to health care reform has helped make Obamacare unpopular while undermining the public’s faith in an activist government. A double blow to progressives.

Right up to the last sentence I made the same point in March of this year:

Progressives believe that they know better than others how others should live their lives.  That makes Progressivism inherently anti-democratic and requires that its adherents subvert truths and manipulate rules to advance their ends.

Democratic governments follow where their people lead.  Progressive governments—those led by people who see popular opinion as wrong—lead their people in a direction that they do not want to go.  When the subterfuge is discovered, or when the unpopular project spectacularly fails, popular opinion turns viciously against the Progressive.

What Fournier gets wrong is that he de-links the lying from progressivism.  They can’t be separated.  That is because progressivism cannot survive without the lies–at least not in a democratic society.

Definitionally, progressivism is the belief that an enlightened elite knows better how people should live their lives than the people know themselves.  The progressive views government as a tool for leading the populace toward change, whereas the democrat (small “d”) views government as responsive to what the people want.  In other words: a democratic government does what the people want it to do, while the progressive government demands that the people do what it wants them to do, whether they want it or not.

When a minority wants the government to do what a majority does not wish to do, the minority has a choice:  it can make the case to persuade, or it can lie.  Since progressivism requires that the majority subvert its will to what its leaders want, its only option, if progressivism is to succeed, is to lie.

Even as he supported the intent of the law, Fournier finally admits “Obamacare was built and sold on a foundation of lies.”  If he takes a step back, he will have to see that it is not just Obamacare that is built on a foundation of lies; it is progressivism itself.

So, contra Fournier’s assertion, the progressive will not be bothered  at all by Gruber’s lying–except for his having been caught.  The question facing Ron Fournier going into the future, is that now that he has found himself duped by the Administration and its allies’ lies, will he allow himself to play the part of the useful idiot the next time?

UPDATE:

Here’s another “Kinsley Gaffe” from Herr Gruber:

Obamacare was “a very clever, you know, basically [sic] exploitation of the lack of economic understanding of the American voter.”

Comments Off

After Tuesday,100% of Republicans do too

Byline: | Category: Uncategorized | Posted at: Friday, 7 November 2014

Poll:  39% of Democrats want Obama to run for a third term.

Comments Off

Some thoughts in the immediate aftermath

Byline: | Category: Above the Fold | Posted at: Wednesday, 5 November 2014

In no particular order, here are some thoughts 12 hours after the first polls started closing:

1.  Harry Reid is a HUGE loser.  He and his party paid dearly for failing to do what every Senate Majority Leader before him did:  Protect the dignity of the Senate.

It used to be said that the Senate contained 99 members who looked in the mirror every morning and saw the next president looking back at him, and 1 member who didn’t want to be president because, as the Senate Majority Leader, he already thought that he was more powerful.  Let’s be blunt:  Harry Reid spent the last six years being President Obama’s water boy.

Popular House bills died in the Senate because the White House told Harry Reid to not let them get to the President’s desk.  Harry Reid rammed unpopular bills (Obamacare) through without any Republican input, because the President refused to negotiate.  When the President couldn’t get his controversial nominees through confirmation, Harry Reid scrapped the filibuster (which I bet the Senate Minority Leader now wishes was a power he still had).  Harry Reid never gave Senate Dems the power to distance themselves from the President on bills like Keystone Pipeline approval or approval of popular amendments to Obamacare because the White House said no.  Instead, Obama flagrantly usurped Congress’ Constitutional legislative authority via executive orders, and Harry Reid let him get away with it.  Harry Reid was not the Senate Majority Leader; he was the Senate Liaison Officer to the White House. He protected the President’s ego instead of the dignity of the Senate and his own Senate majority.  For being a ball-less sack without the ability to tell a President from his own party to screw himself, Harry Reid deserves the axe.

2.  Harry Reid will not be the Senate Minority Leader.  For one thing, see point #1 above.  For another, he is a Democratic Senator from a purplish state.  After yesterday there are a lot fewer of those than there were before.  ”Moderate” Dems took a beating last night.  That means that the remaining Democrats will be both fewer and bluer on average than they were before.  Prediction:  Chuck Schumer will be the Senate Minority Leader. Say what you want about him, I don’t think that anyone doubts that if confronted with a situation that threatens Chuck Schumer, that Schumer will tell Obama to twist himself into an anatomically impossible sexual position.  If Nevada had a Democratic governor, Harry Reid would likely resign within the month.  Even with Republican Brian Sandoval appointing a successor, Reid still might resign just to spite the President and his colleagues.  But he has only himself to blame.

3.  Democrats have a serious problem with the kind of industrial union and rural white voters they once had in their camp.  I looked in great detail at Kentucky before the race and during the release of the results. Compared with 2010, Mitch McConnell did slightly worse than did Rand Paul in Jefferson County (Louisville), in Fayette County (Lexington), and in the three ring Cincinnati suburban counties (Boone, Campbell, and Kenton).  Looking at just those three areas which contain the states largest urban black population, its student population, and its middle and upper middle class populations, the results looked exactly like the polls indicated:  a McConnell win of about eight points, and a GOP performance that would fall short of 2010 levels.  Instead, Mitch McConnell won by double the expected amount.  And exactly as I predicted, Kentucky would tell us all that we need to know about how the rest of the night was going to unfold.

We’ll need to look at more exit polls and additional states to have a better idea, but here’s what I think happened.  The Democratic message is an exclusionary one:  It says to America that if you’re not black, a single female, or a government worker, you’re part of the American problem.  I think that when the analysis is done we’ll learn that the overt appeals to racism turned off more white voters than it brought blacks to the polls.  And if this is true, it’s good news.  That’s because it might finally be the beginning of the end of the cynical Democrat-driven racial division in this country.  That said, I fully expect Democrats to try it one more time in 2016.  For one thing, I don’t see the President changing (see below), and for another, they really don’t have anything else to fall back on.  (For example: not the “war on women”.)

You’ll hear Democrats justify last night’s abysmal loss by saying that it was typical of a mid-term result. But what they might not realize is that with absolutely no upside left in the black vote, it only takes a little bit of a change in a white electorate seven times as large to completely overwhelm a black electoral advantage.  In other words, from a strictly numerical perspective, the party that has a problem with 12% of the electorate has a much smaller problem than does the party that is falling behind with 70% of the electorate.

4.  Democrats also have a serious problem with other minorities.  They won Asians by only one point. Four years before, Democrats took the Asian vote 58-40.  They also lost support among “other”.  In 2010, Democrats took that electorate 53-44.  Yesterday the margin was down to 50-46.  Asians and “other” are a each only 2% of the vote, but the 5-point and 18-point slippage among Dems with those groups, is not insignificant.

Message to Democrats:  Just as it should be obvious to you by now that not all women think and vote alike, not all minorities think and vote alike either.  Duh.

But here’s where the exit polls disagree with each other.  The white percentage of the electorate this year was 2% smaller and virtually unchanged in its outcome (60-37 in 2010 and 60-38 in 2014).  This should have translated to a smaller GOP lead.  The black percentage of the electorate also was virtually unchanged (89-9 in 2010 and 89-10 in 2014) and the black electorate climbed to 12% versus 11% in 2010.  Dems also gained with Latinos, going from 60-38 to 63-35, while the Latino portion of the electorate stayed stable at 8%.

In other words, the exit polls actually indicate a slight Democratic improvement over the 2010 result.  This is consistent with what happened in the key counties I analyzed in Kentucky.  And it is consistent with pre-election polls.  But is not consistent with the actual result.

Theory:  Pollsters don’t weight for urbanicity, and as a result, completely missed the disdain that rural Americans have for the Democratic Party.  A county by county look at the results might bear this out. Either that, or the exit polls were completely wrong.  (These are not necessarily mutually exclusive results.)

5.  Don’t fuck with football.  Ed Gillespie ran one spot during MNF the night before election day.  It belittled Harry Reid for diminishing the Senate by taking up a bill to force the NFL to change the name of the Redskins.  Red or Blue, everybody in the Washington area unites about the Redskins.  The two biggest earth-shattering results last night occurred in the Virginia Senate race where nobody had Ed Gillespie within 9 points of Mark Warner, and in the Maryland Governor race where no public poll released in 2014 had the Republican candidate in the lead.  Maryland and Virginia is Redskin fan base.

But let’s take this beyond football.  This ad and the controversy around it was emblematic of the Democrat’s problems.  Americans want their leaders to be serious and to offer serious solutions about serious problems.  Re-naming a football team is not serious.  Voters in those two areas rebuked Democrats for their frivolity.  Oh, and don’t fuck with football.

6.  The donkey in the room.  (Actually the saying is about an elephant, but you know what I mean.)  The donkey in the room is Barack Obama.  The American people have judged him to be a failure.  He is now the lamest of lame ducks.  Before the 2006 midterms, President Bush went into his final two years with  55 seats in the Senate and  232 in the House.  After the the opposing party holding 51 senate seats and 233 seats.  Barack Obama watched the opposition party gain even greater control than happened eight years before.  Republicans will likely control 54 senate seats and about 248 House seats.

More succinctly: Barack Obama took a bigger beating in 2014 than George W. Bush did in 2006.

After the defeat he took in 2010, Barack Obama didn’t change course as Bill Clinton had done when the electorate pronounced a midterm decision about him.  Barack Obama has yet to show humility or responsibility about anything.  Perhaps this time will be different.  But probably not.

Now might be a good time for Democrats to re-look Dan McLaughlin’s primer for what to expect in 2016 that so many of them scoffed at before.  His look at history said that the party with the presidency for two elections, will see a drop-off in support the third time around.  Let me add to the foreboding news for Democrats:  After taking sharp losses in the sixth year election, the President’s party usually loses even more two years later.

In the sixth year of the Bush administration, the President’s party lost 30 seats in the House.  The following election, they lost another 21 seats and the Presidency

In the sixth year of Nixon’s administration (yes, technically Ford was president), Republicans lost 48 seats.  Two years later they lost another seat and the presidency.

In 1966 LBJ’s party lost 47 seats.  Two years later they lost five more and the Presidency.

We have to go back to 1958 to see a counter-example.  Ike’s party lost 48 seats in the House in his second midterm, but managed to win back 22 of them in 1960.  But he still lost the presidency.

The recent historical record suggests that as bad as things are for Democrats today, they are likely to be even worse after the election two years hence.

And that brings us back to Obama.  He is an anchor on the Democratic Party.  The damning evidence for this comes not from the Senate, where Democrats lost only red and purple states.  Nor does it come from the House, where with a few exceptions the same thing occurred.  No, it comes from the gubernatorial races where Republicans held purple seats in the face of overwhelming media opposition (Florida, Michigan, and Wisconsin) and picked up cobalt blue state seats in Illinois, Maryland, and Massachusetts.  There is no rational way to shrug off this result other than to say that Barack Obama was a weight on the entire Democratic Party.

And here’s what should alarm Democrats up for election in two Novembers.  President Obama has been intimating to his supporters that he’s going to take all kinds of executive actions when he has more “flexibility” after this election.  If those unspecified actions were popular with the American public, don’t you think he would have taken them before the election?  If we are to take him at his word, the President’s apparent intent is take his favorability down even further.  Here are some Democrats who might be particularly alarmed by this prospect:  Colorado’s Michael Bennet, Oregon’s Ron Wyden, Washington’s Patty Murray, and whomever is going to be the Democratic nominee to try and succeed the retiring Harry Reid.  All of them will have to face voters in 24 months, and the lesson of last night is to not face those voters with an overwhelmingly unpopular incumbent from the same party sitting in the White House.

7.  One final winner this night is Sean Trende who replaces Nate Silver as this election’s geek par excellence.  As early as January, Trende nailed this election.   His hypothesis was that Presidential popularity and the partisan tilt of a state would play an enormous role in the closing days of the race.  Ten months ago, he predicted nine seats using this methodology and it looks like this is exactly where it is going to end up.

Comments (1)

2014 Election Results

Byline: | Category: Uncategorized | Posted at: Tuesday, 4 November 2014

Live feed continuously updated.  For a guideline of what I’m looking at, check out this earlier post.

1903 Eastern

Good news for Republicans.  Fox News has called Kentucky for Mitch McConnell.  Right on target with the 2010 result in Kentucky.

No surprise:  Georgia is too close to call.

Also good news for Republicans.  Virginia is too close to call.  The longer this goes on, the better the news this is for Republicans.

1925 Eastern

Good news for Democrats.  With 68% of precincts reporting, Grimes is exceeding Rand Paul’s level of support in Fayette County, home to Kentucky’s second largest city (Lexington) and the University of Kentucky.  She is up almost 6,000 votes and 9%.  Rand Paul lost Fayette by only 1,200 votes four years ago.  McConnell lost in 2008 by 8%.  And that was in a disastrous Republican year.  If those numbers hold, it’s a good sign for how Democrats and how they may be doing with younger voters.

1930 Eastern

No surprise.  Republicans pick up West Virginia.

No surprise.  John Kasich wins in Ohio.

No surprise.  North Carolina Senate is too close to call.

1935 Eastern

Bad news for Democrats.  Mark Warner still hasn’t won his race.  Exit poll internals are horrible for him. He is underwater on the favorable/unfavorable rating and Ed Gillespie is ahead on that question.  (See UPDATE at 1945)  This is not at all like anyone expected.  Keep in mind that exit polls have errors.  Right now, Democrats have to hope that the exit polls are wrong.

1940 Eastern

Michael Barone is reporting that with 100% reporting Gillespie is leading Culpepper County 64-33.  George Allen in a losing effort won Culpepper 58-42.  This is the kind of exurban county and the kind of margin that Ed Gillespie needs to win if he is to make a realistic go of Virginia.

1945 Eastern

Fox News just showed that Warner is winning the favorable/unfavorable race 56-43.  That’s different from what I first heard ten minutes ago.

2025 Eastern

Good news for Republicans.  Both CNN and Fox News are reporting that Mitch McConnell leads Allison Grimes 56-41.  Of course only 65% of precincts are reporting, but because the eastern half of the state has a one-hour head start in vote counting, the results from the western half of the state aren’t likely to diminish McConnell’s lead.  Bottom line:  if this vote holds up, Mitch McConnell’s 14-point margin will beat the 8-point two-way race spread predicted by RCP.  That would be HUGE.

2030 Eastern.

No surprise.  Fox News just called both Arkansas races for the GOP candidates Tom Cotton and Asa Hutchinson the moment the polls closed.

2035 Eastern

No surprise.  New Hampshire is still too close to call. But with 16% reporting, Jeanne Shaheen has an 8-point lead.

Potentially earth-shaking bad new for Democrats.  With 59% of the vote counted, Ed Gillespie has a 51-46 lead in Virginia.  No one expected this race to be uncalled 90 minutes after the polls closed.  Even if Gillespie loses, it shows that Democrats are fighting to hold their own terrain while Republicans have an advantage on offense.

2040 Eastern

Fox News is reporting bad news for the Clintons.  Bill Clinton campaigned hard in Arkansas and Kentucky.  His candidates lost fast.  On the other hand, I think that this really tells you how far gone the South is for Democrats.   (Juan Williams supports a version of this view.)  Of course, that wouldn’t be a good sign for Georgia, Louisiana, or North Carolina.

2045 Eastern

Speaking of which . . . Michael Barone is tweeting 100% counted counties in Georgia and Virginia that are showing better results for Republicans Perdue and Gillespie than Republicans in previous years.

2050 Eastern

Bad/Good news for both parties.  With 64% of the vote counted, Ed Gillespie still has a 5-point lead. Nobody expected this.  But what is really unexpected is that in neighboring North Carolina, which is a shade more red, Kay Hagan has a 7-point lead with 46% counted.  If the two results were reversed, I wouldn’t have batted an eye.  If both vote counts hold up, this will definitely merit a closer post-election look.

2055 Eastern

No surprise.  These results came in earlier–in fact, when the polls in both states closed.  Democrats won senate seats in New Jersey and Illinois handily.

2100 Eastern

No surprise.  The GOP picked up a third seat in South Dakota.

No surprise.  Michigan Dems hold the Senate seat there.

No surprise.  Colorado is too close to call.

No surprise.  Kansas is too close to call.

No surprise.  New Hampshire is still too close to call.  (But it’s looking like it’s just a matter of time until Shaheen gets the call.)

No surprise.  Georgia is still too close to call.

No surprise.  North Carolina is still too close to call.

No surprise.  Minnesota Dems hold on to the Senate and the Gubernatorial seats.

Big surprise and bad news for Dems.  Virginia is still too close to call two hours after the polls closed.

2110 Eastern

Some networks are calling VA10 for the GOP candidate John Foust.  That would be a good sign for Ed Gillespie.

2115 Eastern

With 78% counted Gillespie’s lead in VA is down to 2-points.  This race has the feel of ultimate Democratic victory.  But still, this is a race that is about 10 points off of the RCP average in the GOP’s favor.  Even as a former professional pollster, I’m heartened by the notion that voters matter more than polls.

On the flip side, Kay Hagan’s lead is down to two points with 60% counted.  It’s hard to see VA going red and NC staying blue.  If NC flips but VA doesn’t and both (obviously) are very close, that almost perfectly matches the 2012 results and would be strong indicator of the nationalization of these races.

2129 Eastern

Kay Hagan’s lead is down to 1% and 27,000 votes.

Gillespie’s lead is also 1% and 23,000 votes.

Meanwhile in GA, Perdue has 60% with 36% in.  Michael Barone is looking at the counties and thinking that this one is close to being called as a victory without a runoff required.

2130 Eastern

Jeanne Shaheen’s lead is down to 7,000 votes with 37% counted, a 4-point spread.  Still too close  to call.

Here’s where we are now.  Among the RCP tossup states in the Senate, none have been called.  The two “pink” seats (Arkansas and Kentucky) were called immediately.  The one “light blue” seat (Virginia) is still too close to call 150 minutes after the polls closed.  Bottom line: I’d rather be in the Republican’s shoes right now.

2138 Eastern

No surprise.  Louisiana will go to a runoff.

2139 Eastern

No surprise.  New Hampshire will stay blue.  Right now it looks like a 52-48 margin.  I’m not sure what we can extrapolate from this race for the rest of the field.  The key point is that this is the first “toss-up” state to be called for either side.

2145 Eastern

Let me get back to Kentucky.  With 94% counted, Mitch McConnell has a 15-point lead over Allison Grimes.  This is almost double his RCP lead.  Points to consider:

Nate Silver says that there is no such thing as momentum.  In a strictly mathematical sense, he’s right. But polling isn’t math, not entirely.  What we’ve seen in the last week is:

(1) A return to the state’s bright red hue.  I think we’re seeing the same thing in New Hampshire: a return to the bluish purple tint of that state.  If everything breaks the way that 2012 went, Republicans will win North Carolina and Georgia, while losing Colorado and Iowa.  I don’t think that’s going to be the way it ends, but we’ll see.

(2)  President Obama is creating a ceiling for Democrats.  I don’t think that anyone is surprised by that, but it certainly undercuts the argument that you’ve heard that says that Dem candidates should have embraced the president more.  Sorry, but Grimes was mired in the low 40s and that’s where she is going to end up.

2154 Eastern

Fox News just called Colorado for the GOP candidate Cory Gardner.  Huge news that it was called this early.  So much for the “war on women”.

2155 Eastern

From my earlier post:  (2014 results in bold)

Boone

2010 Sen:  R over D, 24,332 (74.4%) to 8,364 (25.6%) 23,200 to 9,800

2012 Pres:  R over D, 35,922 (68.4%) to 15,629 (29.8%)

Campbell:

2010 Sen:  R over D, 18,386 (64.9%) to 9,948 (35.1%) 17,600 to 11,000

2012 Pres:  R over D, 24,240 (60.3%) to 15,080 (37.5%)

Kenton:

2010 Sen:  R over D, 29,372 (66.8%) to 14,582 (33.2%)  28,300 to 16,700

2012 Pres:  R over D, 41,389 (61.1%) to 24,920 (36.8%)

In all three Cincinnati suburban ring counties McConnell didn’t match Rand Paul’s numbers from four years ago.  In fact, the numbers are exactly in alignment with what I would have expected if the RCP numbers were correct.  Remember, the RCP two-way race in 2010 projected an 11-point lead, when this year it anticipated an 8-point lead.  So a strong Republican win, albeit by a smaller amount than four years ago, is exactly what we should have expected in these three counties.  That Republicans have won so handily in Kentucky means that the result was decided by a large amount elsewhere in the state.

But where?  In Fayette County, McConnell lost by 6,000 votes, five times what Rand Paul lost by four years ago.  In Franklin County, McConnell beat Paul’s margin, but only by a mere 300 seats.  In Jefferson County, McConnell fell short of Paul’s margin by about 7,00o votes.

It looks like Eastern and Western Kentucky coal counties trounced the Dems.  If this is true, it means that rural and industrial labor may completely be divorced from Democrats forever.  (BTW, Elliott County hasn’t reported its votes.)

2220 Eastern

Meanwhile, it looks like Scott Walker is going to hold on to win Wisconsin for a third time in four years. And it looks like a margin of error greater than what RCP predicted.

2225 Eastern

Mark Warner is now ahead of Ed Gillespie by 2,500 votes.  And it looks like the remaining uncounted votes are in NOVA.  Great fight.  And a huge surprise, but it would appear that the Democrat candidate is going to hold on to win by a far narrower margin than anyone expected.

Meanwhile in North Carolina, Tom Tillis is up by 31,000 votes (2%) and only 15% of precincts remaining to be counted.  Of course, where those precincts are means a great deal.

Also in Georgia, there’s no question that Perdue is going to beat Nunn.  Perdue is now at 57%, with 64% of the vote counted.  If he stays over 50%, Republicans hold this seat.

2230 Eastern

I haven’t heard it mentioned yet.  One of the “streaks” that had been going against Republicans was their recent inability to beat a sitting incumbent.  So far, it looks like they have unseated Mark Udall in Colorado and Mark Pryor in Arkansas.

2235 Eastern

Pat Roberts has a 4-point lead in Kansas (17,000 votes).  No one knows was tracking this race eight weeks ago and there is no history of strong polling in this state.  Thus no one knows which way this might turn.

Meanwhile in Iowa, the returns are very spotty and Bruce Braley is up over Joni Ernst.

2240 Eastern

Tom Tillis’ margin is larger.  It’s still only 2%, but that is now 53,000 votes.

No surprise.  In Michigan the Republican governor won re-election.  Along with Wiconsin’s Walker, these are huge gains for budget-cutting governors and against government unions.

2245 Eastern

In Arizona the ice cream man won.  This was a Republican gubernatorial hold.

In Florida Republican Rick Scott is ahead by 80,000 votes with 97% counted.  Close to a call.

2246 Eastern

HUGE NEWS.  Republicans will hold Kansas.  If Dems don’t take Georgia (and it looks like they won’t), they have to hold Alaska, and North Carolina, and then Louisiana again next month.  Not likely.

In North Carolina, Tom Tillis still has a 52,000 vote lead and there’s only 7% of the vote left to count.  Karl Rove just named four counties where if Kay Hagan is going to win, she has to run up the vote.  Only one of those counties has enough uncounted votes left to count.  It is Mecklenburg (Charlotte).  Depending on where they are in the county will determine the outcome.  Still, it’s looking better for Tillis than I think the RCP average predicted yesterday. (538 is saying a similar thing:  Wake County (Raleigh) is not going to yield any more votes for Hagan.)

2300 Eastern

Democrats will flip no GOP seats.  The last possibility, Georgia, was just called for the Republican Perdue. The win of any one of these seats–Alaska, Iowa, North Carolina, or Virginia gives the 51st seat to the GOP.  If it doesn’t happen tonight, it could be Louisiana next month.

Right now, it looks to me like Republicans will win 53 seats, with 54 very possible, and 55 a still remote possibility.

2305 Eastern

HUGE news.  I will be able to buy wine in grocery stores.  If you don’t live in Tennessee, you won’t comprehend how incredibly stupid it is that has taken this long.  Worse still, the new law won’t take effect until July 2016.

2308 Eastern

Michael Grimm won NY-1.  He is under indictment for 20 felony counts.  And yet, he is still better than the other guy.  Watch the Jon Stewart story on this race and you’ll understand that the Democrat in this race is a complete idiot.  Congratulations, Staten Island.  In your choice between crook and the dunce, you chose the lesser of two very bad evils.  But seriously, is this the best you can do?

2310 Eastern and here’s an update.  The GOP has 50 senate seats already locked up and no seats that the Dems will take.  Here are the seats still in play:

North Carolina.  The margin is 46k in favor of the GOP with 4% remaining.

Virginia.  The margin is 11k in favor of the Dem with 7% remaining.

Iowa.  The Republican Joni Ernst is leading 50-47 with 53% of the vote in.

Alaska is still voting.

538 is giving Dems a 1% chance.

2322 Eastern

Game.  Set.  Match.  Joni Ernst wins Iowa.  Republicans unseated a third sitting Democratic senator and now have at least 51 seats.  Four more are possibilities, although Virginia is looking very unlikely.  Still, 54 is a very possible amount for the GOP.

Oh, BTW, I called it.  I said that Iowa would be the 51st seat.  (Of course, I didn’t expect that CO would be called by now and I expected NC already would have fallen.)

Here’s why that matters:  that’s a big cushion going into 2016 when the mix of states with seats up for grabs in the Senate is less favorable to the GOP.  Of course, being a presidential year, whomever wins that race will likely have coattails.  Dan McClaughlin makes the case that the Democrats don’t have a structural advantage going into 2016.  I agree and will make that case in the coming days.  But even if a Democrat wins the presidency, he might have to carry seats to get back to 50.  If the Republican wins, that’s a tall order for Democrats.

2329 Eastern

Speaking of North Carolina, Tom Tillis wins.  It’s now a net at least 7-seat victory for the GOP and at least four sitting senators fell to Republicans.

2340 Eastern

Let’s look at some of the gubernatorial races.

Right now Republicans have held tossup seats in Florida, Georgia (seriously, did Dems expect to win with a Carter?) Michigan, and Wisconsin.

Dems have held onto seats close seats in Minnesota, New Hampshire, and Rhode Island.

The only gubernatorial change is that Republicans have picked up a seat in Illinois (metaphor alert). (UPDATE: I forgot Arkansas; that’s two. I also forgot Democrats won PA.  Both of these were off my radar because they weren’t really close.)

Here is where some of the other governor’s races sit:  Republicans lead in Colorado, Connecticut, Kansas (thanks to Pat Roberts–more specifically thanks to Democrats nationalizing the Kansas senate race), Massachusetts (seriously), Maryland (even more seriously) and Maine.  Dems hold the current lead in no gubernatorial race they don’t currently lead.  Four of the above seats would be GOP gains.

2345 Eastern

I’m glad she won and her past indicates that she has a strong future.  But Joni Ernst won’t ever realize that future if she doesn’t get rid of that annoying laugh of hers.

2350 Eastern

Martha Chokely will never be heard from again.  At least that’s what Massachusetts Democrats hope.  The GOP picked up that seat.

Also, I missed earlier that PA and AR were pickups (one Repub and one Dem) when I counted up the gubernatorial seats.  This now makes a net GOP +2 in governor’s races.

2356 Eastern

Mark Warner is the “apparent” winner in Virginia.  The margin is only 12k.  But that’s a lot to make up in a recount.  There are still votes outstanding.  But still it looks bad for the GOP candidate Ed Gillespie.  That said, he may be the biggest winner of the night.  I expect that in the morning they will look at what the final count looks like and then determine if there is anything there to contest.

0005 Eastern

Maryland and Virginia are both major surprises tonight.  Even if the GOP candidates end up losing, nobody expected these contests to be that close.  Question:  did the Redskins name controversy crush Democratic support?  It may seem like a little thing, but that’s the point.  Is the (former) Senate Majority Leader’s desire to use the federal government to change the name of a sports franchise a symbol of a massive overreach of federal power?  Discuss in the comments.

0015 Eastern

Republican Paul LePage holds on to win the governor’s seat in Maine.  Alaska, where voting is still ongoing, and Kansas, where Sam Brownback is holding a 2.5% lead with 17% of the vote left to count, are the only tossup incumbent seats held by the GOP that remain to be decided.  Meanwhile, Colorado and Connecticut could still flip to the GOP.  And in both, the Republican candidate currently is winning–albeit by less than a point in each race.

Bottom line:  Governor’s races were as nationalized in 2014 as were the senatorial races.  I’m not surprised by this, as it is a natural result of the 40-year ongoing ideological homogenization of the parties, as well as by the demographic stratification of the Democratic Party.  When your base is near unanimity among blacks, single women, and government workers, and huge negative margins with almost everyone else, you’re only going to do well where those demographics approach a majority.

Oh, btw, President Obama waded into governor’s races when it looked like senatorial candidates treated him like President Ebola.  Just like Clinton’s foray into the Southeast, that didn’t work out so well.

0035 Eastern

With 65% of the vote counted, the margin in the Connecticut governor’s race is 7.  Not seven percent, but seven votes.

0030 Eastern

HUGE Upset

Republican Larry Hogan will win the governor’s race in Maryland.  This is the fourth GOP pickup in gubernatorial races against only one loss.

Two lessons:  Barack Obama, who actually campaigned here, is now persona non grata everywhere.  And don’t run against the Redskins.

0033 Eastern

Sam Brownback will win Kansas.  I called this days ago.  By nationalizing the Pat Roberts senate race, Brownback got a boost.  I submit that Brownback was not going to win if the Roberts-Orman race had never heated up.  By playing games in Kansas, Dems lost both races.

0037 Eastern

538 is reporting that Dems had an apparent 6-point advantage in the senate polls and a 2-point apparent advantage in gubernatorial races.  I had a sense that it was going to be like this, although not by this much.  This is a wave, which I define as nearly every race tilting in the same direction.  That’s what happened tonight.

That said, two years ago, I made the analogy to polls being like hitting in major league baseball.  If we poll people randomly–relatively easy to do–we are only half the way there.  The harder part is knowing who is going to show up to vote.  The analogy I made then was that predicting electoral outcomes was like looking at a pitcher-batter lineup and being able to project exactly where the ball was going to land.  A good pollster can do that.  But what the pollster can’t do is to know in which ballpark the game is played. In baseball a long line drive to left field is a home run in Wrigley if the wind is blowing out.  It’s just a long single at Fenway.

Shorter and to the point: pollsters can tell you almost exactly how people are going to vote.  But they can’t tell you who will vote.

0059 Eastern

While I await the Alaska outcome, let’s summarize:

Republicans have won the Senate with at least 52 seats with another GOP gain likely in Louisiana and the GOP favored (at least for another minute) in Alaska.  That’s a net gain of 7 to 9 seats.

Republicans have gained at least a net three seats in governor’s races.  Colorado is looking like another gain.  Connecticut is still a possible gain.  And Alaska is the only remaining state where Dems can pick up a seat.  That’s a net GOP gain of 2 to 5 seats for the GOP when the predictions going into tonight were for a loss of 1 to 2 seats.  This is an astounding loss for Dems.  Look also where the GOP won:  Florida, Iowa, Michigan, New Mexico, Ohio, Wisconsin, and potentially Colorado.  These are presidential battleground seats.  New Hampshire and Pennsylvania are the only presidential battleground seats that Democrats won tonight.  This will have an effect in 2016.

In the House, West Virginia went all Republican.  So did Arkansas.  The GOP picked up all but one seat in Iowa.  I predicted this based on what happened up ticket.  In New Hampshire, Democrat Shea-Porter is again the former congressman from her district.  NY-24 flipped GOP.  A seat in Illinois flipped too.  Georgia and North Carolina house seats also benefitted from upstream GOP wins.  The only tossup that the Dems currently have taken is FL-27.  There are still dozens of seats left to be decided, but it looks like a double-digit gain in the House, and then some.

Finally, before I go to sleep for the night, let’s look at the exit polls in the national House races.

Whites voted 60-38 for the GOP.  That’s right in line with expectations.  What is unexpected is that whites made up 75% of the electorate.  Blacks went 89-10 for Dems.  Ten points is way more than anyone expected among blacks.  Latinos went 63-35 for Dems.  Worse still for Dems is that the Latino vote was only 8% of the total.  That’s a level of slippage that will crush Dems if it continues.  Asians split their vote, going 50-49 for the Dems.  That’s has huge implications for the future when you have one party that wants to treat all minorities alike.  Those minorities have a vote themselves.

Comments Off