On Polling Results
A few thoughts concerning polling results that are popping up daily:
First of all, the election is still almost two months away; most people (non-political junkies) are just starting to pay attention. After the two conventions there were bounces and the numbers will continue to go up and down a few points with each week’s good and bad news.
Second, one thing almost all of the polls have one thing in common is that President Obama fails to garner 50% or more. After almost four years, he has not convinced a majority that he should be re-elected, and there is little that is likely to occur that will affect that in the next two months. It’s conventional wisdom, but it is also statistically true: the majority of those undecided will go to the challenger.
Taking a closer look at the polls showing Obama with a lead, it’s apparent they are correct: if the electorate in 2012 is the same as the one in 2008 (or even more Democratic), he may indeed win. Of course, if the electorate of 2012 looks more like the one in 2010, Mitt Romney wins easily.
At times we all wonder “In this economy, why isn’t Obama down by 15 points”. The answer is that, because of today’s political environment, President Obama is virtually guaranteed 40%-45% of the vote (just as is Mitt Romney). Remove 5%-10% who are undecided and it becomes apparent that either candidate will never lead any accurate poll by more than 5%-7%. There’s an old baseball saying that applies: Every team is going to win 60 games and lose 60 games, it’s what you in the other 42 games that determines a winning season.
Whether the Party composition of the poll sample matches who shows up to vote in November will determine much of its accuracy. Below is a graph of Party ID trends since 2004, based on Rasmussen’s tracking poll. As you can see, the Democrats had a slight edge in 2004 (~2%), which resulted in a narrow win by George Bush. In 2006, they opened a wide advantage (~6%) and in 2008 even wider (~7%), both big years for the Democrats. But when the advantage narrowed to about even in 2010, the Republicans had their best year in decades. Now granted this is just another poll, and just because it closely mirrors the election results and exit polls for the last four Presidential elections doesn’t mean that it is infallible in predicting the party split in 2012. Still, it shows that Republicans now have the advantage in party ID, meaning we are very likely to see an electorate in 2012 as favorable as the one in 2010, if not more favorable.
Here is an argument that I find brightens my spirits. Obama won in 2008 with 53% of the vote. Virtually every poll, even the ones heavily weighted with Democrats, indicates that his support is down across the board in 2012. All the state and national polls say he will get 5-10-15 points less that his winning margin in 2008; no one (not even the Obama campaign) thinks he is likely to improve his vote share. If Obama wins this election, he will win by getting less than 52% of the vote (and more than 49%). That’s it, that’s his entire window to winning, 49% to 51%. We don’t need to defeat a heavy favorite, just prevent Obama from eking out a narrow victory. And that, fellow Republicans, is very doable.
Doomsayin’
For the record, this is how the “most predictable crisis in history” unfolds:
1) Europe has kicked the can on the Euro about as far as they can. The PIIGS have borrowed too much for too long and cannot ever pay it back, but as long as they are in the Euro they cannot default or devalue. Germany will not pay off their bonds, so the EMU will break up, probably by spring (3-6 months). Just to break up the Euro will still require a massive amount of lending (printing) from the ECB to prevent every bank in Europe from going belly up. Europe’s economy will be in recession for several years, inflation and devaluation will lower income and net wealth in the north by 10-20%, and in the south by 30-40%.
2) In America, despite claims that we have unleveraged from European sovereign debt, the crisis will roll across the ocean and American banks will have to deal with about $1 trillion in bonds and CDS suddenly wiped out. We will find out that, as conservatives predicted, Dodd-Frank did not eliminate “too big to fail”, it institutionalized it. First the Fed will bail out foreign banks to the tune of trillions, then the Fed will bail out the US banks; neither will require a vote in Congress. The Obama Administration will act like it doesn’t cost a thing, but it will. It will be another nail in our fiscal coffin, another 10%+ loss in wealth and standard of living from inflation and devaluation. The US will also slide into a shallow recession (we are just about there already) for the rest of 2012.
3) China, while considered a potential savior, will be forced to admit to its own debt problem. With the US and European markets in the toilet, growth will drop sharply. The real estate bubble in China will collapse, and all their foreign reserves will not be enough to cover the massive amount of malinvestment they have been using to inflate their growth numbers. China will erupt in civil unrest, with tens of millions of unemployed men marching in the streets.
4) The rest of the world won’t fair much better, recession and devaluation will be the norm. A few countries that never succumbed to the lure of cheap credit will do alright (Switzerland and Norway for example), and become islands of security, although their export industries will suffer.
What can we do to lower the inevitable pain? Elect a Republican House, Senate and President. Cut federal spending like crazy. Cut regulations like crazy, and agencies like the EPA entirely. Open up the entire US to energy exploration and production. That’s just the easy stuff.
A permanent solution requires heavy lifting. Privatize the Social Security and Medicare entitlements, offload Medicaid to the states and gradually eliminate it as a federal program. Break the government monopoly on education at all levels in favor of school choice. A Balanced Budget Amendment and the political will not to sidestep it. Paying down the national debt and removing the easy ability to grow it back. Permanently shrink the size of the federal government to early 20th century levels. Replace the national income tax with a small sales tax. Get control of the border by putting in place a secure border and visa system.
Many would call this an impossible dream, but I have no doubt that this is all very possible, in the sense that it already existed one hundred years ago. What it will require is a conservative reawakening unlike any we have seen in our history. Unlikely, but not impossible.
The Income Inequality Illusion
With the Occupy Wall Street protests comes a renewed focus on the issue of income inequality. Plenty of time has been spent with competing statistics showing that it is increasing or decreasing, and whether it is larger or smaller in America than it is in this country or that. But the real question that needs to be asked is this: “What does it matter?”
Exactly what problem does the existence of the very rich present? Exactly how does having X number of millionaires or twice that number of millionaires detract one iota from the lives of the poor or middle class? There are many ways in which the presence of millionaires in a population improves the financial well-being of the poor and middle class, but I have yet to discover a single concrete reason that the rich cause any harm. If the rich only bring positive benefits to society as a whole, then it stands to reason that the current measures of income inequality, and whether they are growing larger or smaller, are completely irrelevant.
Consider the benefits of having millionaires around:
Because of our progressive federal income tax system, the rich pay a much higher proportion of their income in taxes, allowing the poor to pay little, or none at all. If you had less income inequality you would necessarily have a higher tax burden on the non-rich. The rich also pay a greater proportion of property and sales taxes.
Having more disposable income, the rich are also able to be more generous to charities. As anyone who has worked with non-profits can tell you, having masses of small donors is great, but it’s the big checks from the rich that really help pay the bills. The poor and middle class are the chief beneficiaries of assistance from non-profits and charities.
The buying habits of the rich also benefit the lower classes. A company can use profits from selling their luxury products to help keep the prices low on the economy products. Purchasing a Cadillac, for example, at a higher profit margin allows GM to sell Chevys at a lower, more competitive mark-up. When the early adopting rich purchase new products at a premium, they pay for the R&D and advances that make the later versions affordable to all. It was the rich buying $100 hand calculators 30+ years ago that led to the $2 calculators of today.
Of course, the rich also provide jobs for the lower income classes directly through their businesses, and by hiring personnel assist them personally. But they also provide jobs indirectly through consumer purchases, and more importantly, through the investment of capital. The investment of wealth leads to the creation of new businesses and employment opportunities for the non-wealthy.
When the complaints against the rich are examined, and not just uncritically accepted, you find they are completely without merit. “The rich stole their wealth” is often asserted. True, there is a small minority who broke the law to accumulate their wealth, but we are a nation of laws, and they are treated as any other citizens are. Can it not be said that an equal (or larger) number of the poor have stolen what they have? The exception is not the rule.
When the left complains of the injustice of the rich possessing more than their “fair share”, it is inferred that they have taken some of the poor’s share. As Reagan said, they can’t see a fat man next to a thin man without thinking that the fat man got that way by taking advantage of the thin one. It is a fallacy to think that a man cannot become wealthy without impoverishing others. If our economy was a zero sum game, with only a fixed amount of wealth, there could never be any growth, which has obviously never been the case. Ironically, where you are most likely to find a zero sum economy is when the state attempts to set everyone’s wage in order to be fair, killing initiative and productivity. Through logic and experience we know that efforts make income equal inevitably lead to impoverishment. Taking from one to give to another will never result in a larger sum than you started with; it is instead certain to result in a lower average standard for all.
At its core, the concern over income inequality masks nothing more than simple envy and greed. Envy that someone has wealth that they do not, and greed to acquire it from them through force of law controlled by the “tyranny of the majority”. America is an open and free democracy, ruled by law, where some grow wealthy through their honest labor. This is not some banana republic ruled by the barrel of a gun; we should not let those with a misguided and erroneous sense of justice make it into one.
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