Political Evidence File

Mar19: New Political Information: Indicators and Surprises
Why Is This Information Valuable?
The Geography of Partisan Prejudice” by Ripley et al
Surprise
This is another piece of excellent and insightful county level analysis. Ripley and her coauthors find that “the most politically intolerant Americans, tend to be whiter, more highly educated, older, more urban, and more partisan themselves. This finding aligns in some ways with previous research by the University of Pennsylvania professor Diana Mutz, who has found that white, highly educated people are relatively isolated from political diversity. They don’t routinely talk with people who disagree with them; this isolation makes it easier for them to caricature their ideological opponents.”
Europeans Credit EU With Promoting Peace and Prosperity, but Say Brussels Is Out of Touch With Its Citizens”, by Pew Research
“Across 10 European nations recently surveyed by Pew Research Center, a median of 74% say the EU promotes peace, and most also think it promotes democratic values and prosperity.”

“However, Europeans also tend to describe Brussels as inefficient and intrusive, and in particular they believe the EU is out of touch – a median of 62% say it does not understand the needs of its citizens.”

“Many are also worried about the economic future. Across these 10 nations, a median of 58% believe that when children in their country grow up, they will be worse off financially than their parents; only 30% think they will be better off.”

“There are also strong concerns about immigration in some countries. Majorities or pluralities in most nations want fewer immigrants allowed into their country. Many believe that immigrants tend to remain distinct from the broader culture and that immigration increases the risk of terrorism.”
Two recent articles provided very interesting and useful insights into the painful political realignments that are likely underway in the US and UK
Surprise
In “The End of the New Deal Era – and the Coming Realignment”, Frank DiStefano succinctly presents the history of the five previous political realignments in the United States. He notes that, “American parties are temporary coalitions forged as tools to govern our republic at specific moments of crisis. They bind fractious collections of people who disagree about many things but agree on how to solve the biggest problems of their age…Once formed, these new parties wage a great national debate over the problems facing the country. That debate goes on for decades, until Americans almost forget those parties and their ideologies weren’t always there…When the issues America designed those parties to debate were finally resolved or faded away, the parties turned into weak institutions coasting on old ideas. Eventually, they crumbled in what scholars call a realignment…”

“This is why American politics seems so troubled. This is why there’s increasing disorder and chaos. This is why the political world we’ve always known seems to be decaying before our eyes...Our parties are dying because one great debate [between New Deal Liberalism and modern conservatism] that emerged out of the Depression and World War 2] is passing away, and another is being born…the country now faces an onslaught of new problems our parties were never designed to address [as] we stand at the cusp of a global social and economic transformation – from and industrial to a global information economy – as significant as the transformation from the agricultural world to the industrial…”

“Through everything that has happened over the many decades since 1932, the Democrats have continued to be the party of populists and progressives [in the 1920s sense of the latter term] dedicated to the ideology of New Deal Liberalism. The Republicans have remained a party dedicated to protecting liberty and virtue according the ideology of modern conservatism…

“The Democratic and Republican parties have nothing important to say about the next set of problems facing America…all of which come back in some way to one issue: the perceived decline of the American Dream… [The parties] lack even the language to think about them…America is facing a realignment whether we want one or not.”

I don’t quite agree with that last statement, as there are a few people – admittedly who are not mainstream in their respective parties, who have directly addressed restoring the American Dream. An excellent example of this is Oren Cass, and his outstanding essay, “The Working Hypothesis”, which is well worth a read.

In “Welcome to the Hard Centre – and the Future of British Politics”, Paul Collier concludes that the Conservative party has to move beyond Brexit, ideally in the direction “healing capitalism.”

He notes that, “Capitalism is the only system that is capable of delivering mass prosperity, but it cannot be left on autopilot. Once every few decades it veers off track and requires active public policy…Yet there has been little serious rethinking in either party. Labour became so intellectually lost that it got hijacked by Marxists. Meanwhile, the Conservatives flirted with good ideals, like David Cameron’s Big Society, but none became dominant.”

Pithily, he observes that in the face of the increasingly obvious and socially damaging problems of financialized capitalism, both parties retreated “into their equally unviable intellectual comfort zones: the Conservatives wanted a nation without the state, and Labour the state without a nation…”

“Meanwhile, ordinary people facing new anxieties seized their opportunities to mutiny. In Scotland, they voted for the SNP; in England for Ukip, Brexit and Corbyn. Given the travails of Labour, [Collier argues that] recovery of the intellectual confidence of the Tory party has become essential for the country...”

“So what are the options facing the Tories? The American right was lured by libertarianism: ‘neither state nor nation’. This is manifestly ridiculous: I tell my libertarian friends that they do not need to wait in America pining for nirvana. They can breathe the air of freedom from government right now by moving to Somalia…Turning the Conservative party into the Libertarian party would be the royal road to political suicide…”

“The remaining choice is state-and-nation. For Conservatives, it implies taking seriously Cameron’s lone voice speaking up for society… Labour’s roots in society are the cooperative movement; the equivalent for the Conservative party is one nation made manifest by the firm with social purpose. It is Cadbury and John Lewis…”

“Embracing state-and-nation means restoring the ethics of the firm, enhancing the skills of the less-educated and recognising the importance of belonging to place. Each requires tough changes in policies that will outrage vested interests: welcome to the hard centre…”

“Conservatives are quite right to recognise that the left-driven agenda of redistributing consumption (aka ‘equality’) misses the point. People need the dignity of being sufficiently productive to earn a decent living but to be productive, people need massive investment in training, and a cluster of skill-intensive firms in their city. The ideology of leave-it-to-the-market encounters its nemesis in training and in the revival of broken cities: market forces drive firms in the opposite direction…”

“New anxieties need to be addressed by new solutions, not old ideologies. This is the intellectual rebirth that the Conservative party needs. Labour will at some stage go through an equivalent rebirth. The party that gets there first will dominate the next two decades.”
The Six Wings of the Democratic Party” and “The Five Wings of the Republican Party” by FiveThirtyEight.com
These two guides to the subdivisions within the Democratic and Republic parties make for an interesting read in light of the two articles noted just above. In particular, two points stand out. The first is that, as DiStefano and Collier note, no party today has a compelling answer to the social and political challenges posed by the powerful forces of financialized capitalism, rapid improvement in multiple technologies, aging, and climate change.

The second is the risk of another deeply unsatisfying US election in 2020. While a number of Democratic policy proposals (e.g., around healthcare and more progressive taxation) have wide popular appeal, many aspects of their social agenda poll in the 20s, if that. For Republicans, the opposite often holds true. As more than one commentator has noted, neither major party seems willing or able to seize what appears to the most attractive high ground in American politics today – more aggressive and effective government action on healthcare, progressive taxation, competition, data privacy and other issues, combined with a less strident and intolerant social agenda.

This positioning is the opposite of the neoliberal approach (relatively conservative on economic issues, and progressive on social issues) that was a winning strategy for both Bill Clinton and Tony Blair. The lack of enthusiasm for it today is well summarized in Uri Harris’ article in Quillette on Howard Schultz’ campaign for president, “The Sudden Unpopularity of Neoliberal Centrists.”
The ever-readable Joel Kotkin published an insightful article that argues, “Understanding Democratic Socialism is the Key to Defeating It
“Conservatives, in or out of the White House, underestimate the intrinsic appeal of the resurgence of neo-Marxism at their own peril…[Moreover], the rise of ‘woke progressivism’ represents a threat both to the right as well as the super-affluent gentry left.”

“Socialism’s appeal stemmed [in the past] as it does today, from the failures of capitalism…What many conservatives deemed ‘socialism’ in the fifties – social security, the GI Bill, the New Deal infrastructure program – was seen by the working class as helping them become middle class…”

“Generally, today’s socialists pitch European welfare states as their model, with much higher taxes and greater regulation of private businesses…With rampant inequality and a shrinking middle class, the case for socialism should be stronger than any time since the Depression…”

“Today socialism’s leading messengers, reared in the ideological hot houses of elite universities, also constitute the wealthiest and whitest of America’s political tribes. Not surprisingly, these neo-socialists carry attitudes ill-suited to capitalizing, as did Donald Trump, on the mass middle and working class disaffection…”

“But those on the right, with all their fulsome defense of capitalism, also need to be reminded that free markets need to create increased opportunity as well as better living conditions. Our increasingly hierarchical and feudal capitalism all too often fails this test.”
Feb19: New Political Information: Indicators and Surprises
Why Is This Information Valuable?
Stability of Democracies: A Complex Systems Perspective”, by Wiesner et al
A fascinating paper that very much reflects our own thinking and forecasting approach.

“The idea that democracy is under threat, after being largely dormant for at least 40 years, is looming increasingly large in public discourse. Complex systems theory offers a range of powerful new tools to analyse the stability of social institutions in general, and democracy in particular.

“What makes a democracy stable? And which processes potentially lead to instability of a democratic system? This paper offers a complex systems perspective on this question, informed by areas of the mathematical, natural, and social sciences…

“Scholars of democracy need to move away from arguments based on static equilibrium to more dynamic frameworks which are better suited to understanding how stable the equilibria are to perturbations. Some perturbations may cause temporary instability. Others may set in train self-reinforcing changes that may have long-term consequences, up to and including the transition from democracy to non-democracy...

“Many mechanisms can result in institutional instability, ranging from social inequality and financial shocks to disconnected information flow on modern social media…Many of these mechanisms are interconnected, meaning that their temporal and/or spatial dynamics are not separable but influence each other to a significant degree [through positive feedback].”
Millennial Socialism”, The Economist 14Feb19
“Socialism is storming back because it has formed an incisive critique of what has gone wrong in Western societies. Whereas politicians on the right have all too often given up the battle of ideas and retreated towards chauvinism and nostalgia, the left has focused on inequality, the environment, and how to vest power in citizens rather than elites. Yet, although the reborn left gets some things right, its pessimism about the modern world goes too far. Its policies suffer from naivety about budgets, bureaucracies and businesses… Millennial socialism has a refreshing willingness to challenge the status quo. But like the socialism of old, it suffers from a faith in the incorruptibility of collective action and an unwarranted suspicion of individual vim. Liberals should oppose it
The “Green New Deal” (GND) marks another step towards a split in the US Democratic Party, and highlights dynamics similar to those roiling the Labor Party in the UK
As you have no doubt read, the GND seeks to “eliminate all fossil fuel energy production, as well as nuclear energy…eliminate air travel and 99% of cars…provide free education for life and a guaranteed income” – and get rid of all those farting cows.

As David Brooks noted in his New York Times column on 11Feb19, “From Bill Clinton through Barack Obama, Democrats respected market forces but tried to use tax credits and regulations to steer them in more humane ways…That Democratic Party is ending. Today, Democrats are much more likely to want government to take direct control. This is the true importance of the Green New Deal, which is becoming the litmus test of progressive seriousness.”
Understanding shifts in Democratic Party Ideology” by Gallup
SURPRISE
“Between 2001/06 and 2013/18, the percent of Democrats identifying as liberal increased from 32% to 46%, while moderates declined from 42% to 35% and conservatives from 23% to 17%...

54% of White Democrats identified themselves as liberals, compared to 33% of Blacks and 38% of Hispanics…

69% of moderate Democrats did not graduate from college, as did 86% of conservative Democrats. In contrast, only 53% of liberals did not graduate from college. While 55% of liberals believe abortion should be legal under any circumstance, only 35% of moderates and 23% of conservatives agreed with this position.”
Democrats Favor More Moderate Party; GOP More Conservative” by Gallup
54% of Democrats want their party to be more moderate; 41%, more liberal

57% of Republicans want their party to be more conservative; 37%, more moderate
Democrats in New York and Virginia have introduced legislation legalizing third trimester abortions. This will likely be a powerful issue to whomever ends up as the Republican presidential candidate in 2020
SURPRISE
Gallup’s polling makes clear why this is the case. 35% of Americans believe abortion should be illegal in the first trimester of pregnancy, 65% in the second trimester, and 80% in the third trimester.
Donald Trump has begun to attack Democratic politicians as socialists
There appears to be a good reason for this. According to a memo from Neil Newhouse of Public Opinion Strategies, while 77% of Democrats agree with the statement that “the country would be better off if our political and economic systems were more socialist”, only 37% of Independents and 14% of Republicans agreed.
Man Bites Blue Dog: Are Moderates Really More Electable than Ideologues?” by Stephen Utych
SURPRISE
“Are ideologically moderate candidates more electable than ideologically extreme candidates? Historically, both research in political science and conventional wisdom answer yes to this question. However, given the rise of ideologues on both the right and the left in recent years, it is important to consider whether this assumption is still accurate.

The author finds that, “while moderates have historically enjoyed an advantage over ideologically extreme candidates in Congressional elections, this gap has disappeared in recent years, where moderates and ideologically extreme candidates are equally likely to be elected. This change persists for both Democratic and Republican candidates.”
The Wall Street Journal’s Peggy Noonan and the Financial Times’ Wolfgang Munchau are not columnists whose views are usually contrasted. In this case, however, that approach is insightful, and helps to refine our model of political changes that affect financial market behavior, valuation, and returns.
SURPRISE
In “The Future Belongs to the Left, Not the Right” (FT 24Feb19), Munchau notes that, “Liberal democracy is in decline for a reason. Liberal regimes have proved incapable of solving problems that arose directly from liberal policies like tax cuts, fiscal consolidation and deregulation: persistent financial instability and its economic consequences; a rise in insecurity among lower income earners, aggravated by technological change and open immigration policies; and policy co-ordination failures, for example in the crackdown on global tax avoidance.” He “expects the pushback against liberalism to come in stages. We are in stage one — the Trumpian anti-immigration phase. Immigration carries net economic benefits, especially over the long term. But there are losers from it, too, both actual and imagined… For now, the right is thriving on the anti-immigration backlash…

I suspect that immigration will soon be superseded by other issues — such as the impact of artificial intelligence on middle-class livelihoods; rising levels of poverty; and economic dislocation stemming from climate change… This is a political environment that favours the radical left over the radical right. The right is not interested in poverty and its parties are full of climate-change deniers..

The killer policy of the left will be the 70 per cent tax rate proposed by freshman US congresswoman Alexandria Ocasio-Cortez. It is not the number that matters, but the determination to reverse a 30-year trend towards lower taxation of very high incomes and profits. There would be collateral damage from such a policy for sure. But from the perspective of the radical left, collateral damage is a promise, not a threat.”

In her 14Feb19 column, “Republicans Need to Save Capitalism”, Noonan agrees with many of Munchau’s observations.

“The American establishment had to come to look very, very bad. Two long unwon wars destroyed the GOP’s reputation for sobriety in foreign affairs, and the 2008 crash cratered its reputation for economic probity. Both disasters gave those inclined to turn from the status quo inspiration and arguments. Culturally, 2008 was especially resonant: The government bailed out its buddies and threw no one in jail, and the capitalists failed to defend the system that made them rich. They dummied up, hunkered down and waited for it to pass…

“Americans have long sort of accepted a kind of deal regarding leadership by various elites and establishments. The agreement was that if the elites more or less play by the rules, protect the integrity of the system, and care about the people, they can have their mansions. But when you begin to perceive that the great and mighty are not necessarily on your side, when they show no particular sense of responsibility to their fellow citizens, all bets are off. The compact is broken…

Republicans in Washington stumble around trying to figure what to stand for beyond capitalizing on whatever zany thing some socialist said today.
But isn’t their historical purpose clear? Their job—now and in the coming decade—is, in a supple, clever and concerted way, to save the free-market system from those who would dismantle it."
Dancing with Donald”, by Cuchro et al
Despite the title, this paper is actually an excellent review of how the use of different voting systems would have affected the outcome of the 2016 US presidential election.
Jan19: New Political Information: Indicators and Surprises
Why Is This Information Valuable?
In the United States, the announced Democratic candidates for president in the 2020 election are taking positions well to the left of traditional Democratic party positions on a range of policy issues. In some ways, this mirrors the way Green parties in Europe are winning voters from traditional left of center socialist parties.
While polling data shows that a majority of US voters are concerned about increasing taxes on “the rich”, and healthcare (as economic disruption increases employment uncertainty, and makes the link between employment and health insurance less and less tenable), other progressive positions, and the tendency of many left-wing Democrats to impose litmus tests to ensure candidates’ ideological purity, seem likely to cost candidates’ support in the vital center of the electorate. This will be of particular importance if wither (a) Donald Trump is removed from office or (b) he is defeated in the Republican primary, resulting in nomination of a more centrist Republican candidate.
Two analyses, from 2016 and 1981, put the leftward shift of the Democratic party into perspective, and frame that strategic challenge facing presidential candidates in 2020.
SURPRISE
In “Political Divisions in 2016 and Beyond”, Lee Drutman replicated Lilie and Maddox’ classic 1981 paper, “An Alternative Analysis of Mass Belief Systems: Liberal, Conservative, Populist, and Libertarian.”

Both papers located sampled voters in a 2x2 matrix, defined by their positions on economic and social issues. Liberals and Conservatives take consistent views on both sets of issues. Libertarians are socially liberal and economically conservative; Populists are socially conservative and economically liberal.

When comparing the two papers, the first striking finding is the change over 35 years in the percent of voters that the respective authors find in the different categories (note that this is an approximation, as the methodologies weren’t exactly the same). The size of the conservative bloc was essentially unchanged; it was estimated to be 25% of the electorate in 1981 (disregarding Lilie and Maddox fifth category of “inconsistents”), and 23% in 2016. Populists were also roughly the same, at 33% and 29%. Liberals, however, had grown from 23% to 45%, while Libertarians had shrunk from 19% to 4%.

Drutman finds that in 2016, most Clinton voters were Liberals, while Trump voters were a combination of Conservatives and Populists (Libertarians split their votes about equally).

In 2020, the essential question is whether a progressive Democratic candidate’s liberal positions on economic issues (e.g., single payer healthcare) will be able to attract a significant number of Populist voters, in spite of the Democratic candidate’s Liberal position on hot button social issues like identify politics and freedom of speech.
Fake News on Twitter During the 2016 U.S. Presidential Election”, by Grinberg et al
SURPRISE
“The spread of fake news on social media became a public concern in the United States after the 2016 presidential election. We examined exposure to and sharing of fake news by registered voters on Twitter and found that engagement with fake news sources was extremely concentrated. Only 1% of individuals accounted for 80% of fake news source exposures, and 0.1% accounted for nearly 80% of fake news sources shared. Individuals most likely to engage with fake news sources were conservative leaning, older, and highly engaged with political news.”
Bureaucracy versus Democracy” by Philip Howard in The American Interest
SURPRISE
Howard has written an insightful article that analyzes another underlying source of voter frustration with political institutions, noting that, “diagnoses of voter alienation converge at one point: a sense of disempowerment by Americans, at every level of responsibility, to make practical and moral choices. Almost without our noticing when it happened, bureaucratic structures have crowded out human agency.”

In the face of the many problems facing not just the United States, but other nations as well, too often bureaucracies have been unable to design and/or implement effective policies.
The World Economic Forum meeting at Davos produced multiple stories talking about the “grim” or “dark” mood among attendees.
For example, as Fareed Zakaria wrote in the Washington Post (“Davos is a Microcosm of the World, and the Outlook is Grim”), “The atmosphere at the 2019 World Economic Forum reflects the global picture perhaps more genuinely than in years past, and the painting is not very pretty. The mood here is subdued, cautious and apprehensive. There’s not much talk of a global slowdown, but no one is confident about a growth story, either. There is no great global political crisis, yet people speak in worried tones about the state of democracy, open societies and the international order.”

Here is the FT’s Gideon Rachman: “Everybody needs heroes — even Davos plutocrats. But the “global elite” is currently out of enthusiasm and ideas. In the corridors of the World Economic Forum last week, Kenneth Rogoff, the Harvard economist, summed it up: “This is the flattest Davos I can remember. Normally, there is a star country or a star industry that everybody is talking about. But this year, there is nothing” (“Davos 2019: No More Heroes for the Global Elite”).
Dec18: New Political Information: Indicators and Surprises
Why Is This Information Valuable?
The month began with the death and funeral of George H.W. Bush.
As with the funeral of John McCain, only more so, Bush 41’s funeral was a painful reminder for many people of how much the United States has changed.

An article in the Atlantic Monthly (“What the Tributes to George H. W. Bush Are Missing,” by Peter Beinart) raised this surprising point: “In the contemporary United States, presidential legitimacy stems from three sources. The first source is democracy. Although America’s system of choosing presidents has many undemocratic features, many Americans associate presidential legitimacy with winning a majority of the vote.

The second source is background. Throughout American history, America’s presidents have generally looked a certain way. They’ve been white, male, (mostly) Protestant, and often associated with legitimating institutions such as the military, elite universities, or previous high office. Americans are more likely to question the legitimacy of presidents who deviate from those traditions.

The third source is behavioral. Presidents can lose legitimacy if they violate established norms of personal or professional conduct. George H. W. Bush was the last president who could not be impugned on any of these fronts. He was elected with a clear majority of the popular vote. He was racially and culturally familiar: A WASP man who had served in World War II, attended Yale, and held a variety of top government jobs. And he behaved the way Americans expect their presidents to behave.

Since then, every president has faced some sort of crisis of legitimacy.”
December also saw the resignations of Marine Corps Generals John Kelly and James Mattis from the Trump administration, and the latter’s resignation letter, following Trump’s impulsive decision to withdraw American troops from Syria.
SURPRISE

As The Economist noted, Mattis is the first American Secretary of Defense who has ever resigned in an act of protest. More so than any other administration departure, the loss of Mattis will almost certainly be a source of grave concern for many of the president’s Republican supporters.

If Special Prosecutor Robert Mueller’s report eventually provides evidence of collusion with Russia, the Mattis resignation could be the straw that convinces enough Republican Senators to convict if the Democrat controlled House of Representatives passes a bill of impeachment (a 2/3 vote is needed to convict).
The US Senate Intelligence Committee released two reports by independent organizations “detailing the tactics used by Russia’s Internet Research Agency (IRA) in their attempts to influence US political discourse.” (The Tactics and Tropes of the Internet Research Agency and The IRA and Political Polarization in the United States, 2015-2017).
These reports provide very detailed information about the extent to which social media (and social network analysis methods) have made large populations and elections more vulnerable to manipulation.
They have also created a base of evidence for impeaching Donald Trump if Robert Mueller’s report connects his campaign to these Russian initiatives.
The Divide Between Silicon Valley and Washington is a National Security Threat” by Zegard and Childs in the Atlantic Monthly
“A silent divide is weakening America’s national security, and it has nothing to do with President Donald Trump or party polarization. It’s the growing gulf between the tech community in Silicon Valley and the policymaking community in Washington.

Beyond all the acrimonious headlines, Democrats and Republicans share a growing alarm over the return of great-power conflict. China and Russia are challenging American interests, alliances, and values—through territorial aggression; strong-arm tactics and unfair practices in global trade; cyber theft and information warfare; and massive military buildups in new weapons systems … In Washington, alarm bells are ringing. Here in Silicon Valley, not so much…

In the past year, Google executives, citing ethical concerns, have canceled an artificial-intelligence project with the Pentagon and refused to even bid on the Defense Department’s Project JEDI, a desperately needed $10 billion IT improvement program. While stiff-arming Washington, Google has been embracing Beijing, helping the Chinese government develop a more effective censored search engine despite outcries from human-rights groups, American politicians, and, more recently, its own employees.”
The Center Can Hold: Public Policy for an Age of Extremes” by Lindsey et al.
A thoughtful analysis that attempts to chart a course between the two extremes that now seem to dominate American politics, even if they don’t reflect what polls say are the views of the majority of voters.
Newly elected US Senator Mitt Romney wrote an OpEd in the Washington Post newspaper that was highly critical of Donald Trump. Meanwhile, former South Carolina governor and UN Ambassador Nikki Haley has rapidly gained a large twitter following.
SURPRISE

Either or both of these center/right politicians could challenge Donald Trump in a 2020 Republican primary election, and make painfully clear the party’s widening divisions.
The election of Alexandria Ocasio-Cortez (AOC) and other progressives to the US House of Representatives, as well as progressive US Senator Elizabeth Warren’s declaration of her presidential candidacy signal that the long simmering battle between traditional and progressive Democrats is finally coming out into the open.
SURPRISE

This has already led to the introduction of and support for policy initiatives (like single payer healthcare and much higher top marginal tax rates) that in the past either would not have been introduced or which would have been immediately dismissed. That is clearly no longer the case.
Understanding the Customer Experience with Government”, by D’Emidio and Wagner from McKinsey & Company
An often heard observation is that these days governments seem to be filled with more people who studied public policy, and fewer who studied public administration – how to implement those policies and deliver results. Moreover, as business has become much better at understanding customer needs and wants and efficiently delivering value propositions that satisfy them, the public’s perception of government’s performance has inevitably declined (with some notable exceptions like the military), which has no doubt further increased public frustration and anger.

This new McKinsey report will do little to dispel that view. As it succinctly states, “Understanding precisely what matters to the customers you serve is essential to improving their experience. Yet McKinsey research has found that most agencies don’t.”
.
Nov18: New Political Information: Indicators and Surprises
Why Is This Information Valuable?
What Happens if Americans Stop Trusting the System?” by Andrew Sullivan, in New York Magazine, 19Nov18
Back in 2010, The Index Investor first began to write about what we called “Increasing Threats to Political Legitimacy” (e.g., see the May and September issues). Unfortunately, the trends we identified have continued unabated, and indeed have accelerated. Today, lots of smart people are writing about this issue.

One of those is Andrew Sullivan, whose writing we have admired for years. We therefore paid a lot of attention to what he wrote this month.

“It’s been quite a while now that the phrase “cold civil war” has been bandied about. And it’s useful, so far as it goes. Polarization has now become tribalism, and tribe is now so powerful a force it is beginning to eclipse national loyalty. The two nations, to borrow Benjamin Disraeli’s description of 19th-century Britain, stand facing each other, without blinking, faces flush, equally matched, on trigger alert for offense or another set battle.”

“What we don’t quite know is if this tenuous, balanced equilibrium is sustainable indefinitely, the system careening from one party’s bitterly contested rule to gridlock and back again, until our tribal tensions are somehow exhausted. Or whether the cold civil war could at some point get a little warmer, or even, shall we say, hot…What we don’t know, in other words, is when the legitimacy of the entire political system could come into doubt, across the ideological spectrum, in a way that might sanction undemocratic responses.”

Sullivan has expressed his concerns before, for example in his May, 2016 column: “America Has Never Been So Ripe for Tyranny”, which is well worth a read, even if you don’t agree with its conclusions.

We have also seen many other writers searching for historical analogies to the present political situation in the United States. Ones we’ve found thought-provoking include “The Suffocation of Democracy” by Christopher Browning (which compares current circumstances in the US to Weimar Germany), “Lurching to a New Weimar”, by Joel Kotkin, and “The Suffocation of History” by Richard Landes (which criticizes the Weimar analogy).

A quote often attributed to Mark Twain reminds us that “history doesn’t repeat itself, but it often rhymes.” It is one that we are well-advised to keep in mind.
The Republican Party Has Changed Dramatically Since George H.W. Bush Ran It” by Perry Bacon
Written just after Bush’s death, this column makes extensive use of data to drive home how much politics and the composition of the Democratic and Republican parties in the US have changed over the past 30 years. We all know this is true, but this evidence-rich analysis still comes as a bit of a shock to those of us with long memories.
Is the Left Going Too Far?” by Peter Beinart
An excellent article summarizing the history of two periods of the left’s ascendancy in modern American politics – the 30s and the 60s – which Beinart uses to assess the latest one, whose beginnings he dates to the Occupy Wall Street movement in 2011 and the rise of Bernie Sanders. Beinart reminds us that in both these previous situations, the left overreached and triggered a strong electoral counter-reaction, but not before achieving some policy wins.
The Central Challenge of the Age” by David Brooks, in the New York Times, 5Nov18
Following on Beinart’s conclusions, David Brooks highlights some of the challenges facing America’s resurgent progressive left politicians.

“National identity is the most powerful force in world politics today…The Republicans have flocked to Trump’s cramped nationalism and abandoned their creedal story. That has left the Democrats with a remarkable opportunity. They could seize the traditional American national story, or expand it to gather in the unheard voices, while providing a coherent, unifying vehicle to celebrate the American dream. And yet what have we heard from the Democrats? Crickets.”

“What is the Democratic national story? A void…In the past, Democrats tended to see immigration as an economic issue. Most mainstream Democrats have always been pro-immigrant, but they also favored border enforcement as a way to protect working-class wages. Barack Obama deported more unauthorized immigrants in his first two years in office than Trump has so far. Bernie Sanders used to dismiss open borders as a “Koch brothers proposal.” But now, especially in the wake of Trumpian nativism, immigration is seen as a racial justice issue. Calls for law and order on the border are taken as code for racism…”

“Democrats have a very strong story to tell about what we owe the victims of racism and oppression. They do not have a strong story to tell about what we owe to other Americans, how we define our national borders and what binds us as Americans.”

“Here’s the central challenge of our age: Over the next few decades, America will become a majority-minority country. It is hard to think of other major nations, down through history, that have managed such a transition and still held together…If the Democrats are going to lead this transition, they’ll need not just a mind‑set that celebrates diversity, but also a mindset that creates unity. They’ll need policies that integrate different groups into a coherent nation, with shared projects, a common language and culture and clear borders.”

“If you don’t offer people a positive, uplifting nationalism, they will grab the nasty one. History and recent events have shown us that.”
.
Oct18: New Political Information: Indicators and Surprises
Why Is This Information Valuable?
Hidden Tribes: A Study of America’s Polarized Landscape” by Hawkins et al for More in Common
SURPRISE.

“This report lays out the findings of a large-scale national survey of Americans about the current state of civic life in the United States. It provides substantial evidence of deep polarization and growing tribalism. It shows that this polarization is rooted in something deeper than political opinions and disagreements over policy. But it also provides some evidence for optimism, showing that 77 percent of Americans believe our differences are not so great that we cannot come together.”

At the root of America’s polarization are divergent sets of values and worldviews, or “core beliefs.” These core beliefs shape the ways that individuals interpret the world around them at the most fundamental level. Our study shows how political opinions stem from these deeply held core beliefs. This study examines five dimensions of individuals’ core beliefs…[and[ finds that this hidden architecture of beliefs, worldview and group attachments can predict an individual’s views on social and political issues with greater accuracy than demographic factors like race, gender, or income.”

“The [population] segments have distinctive sets of characteristics; here listed in order from left to right on the ideological spectrum:

Progressive Activists
(8%): younger, highly engaged, secular, cosmopolitan, angry.
    Traditional Liberals (11%): older, retired, open to compromise, rational, cautious.

    Passive Liberals (15%): unhappy, insecure, distrustful, disillusioned.

    Politically Disengaged (26%): young, low income, distrustful, detached, patriotic, conspiratorial.

    Moderates (15%): engaged, civic-minded, middle-of-the-road, pessimistic, Protestant.
      Traditional Conservatives (19%): religious, middle class, patriotic, moralistic.
        Devoted Conservatives (6%): white, retired, highly engaged, uncompromising, patriotic.

        Traditional Liberals, Passive Liberals, Politically Disengaged, and Moderates constitute the “Exhausted Majority” that together comprise 67% of the electorate.

        Their members “share a sense of fatigue with our polarized national conversation, a willingness to be flexible in their political viewpoints, and a lack of voice in the national conversation.”
        Yes, It Can Happen Here” by Andrew Michta, in The American Interest, 30Oct18
        This article is another indicator of the how close we may be to a critical threshold related to societies’ capacity for taking collective action to successfully address the most dangerous threats they face.

        After decades of multicultural deconstruction of its nation-states, the Western democracies are internally fracturing, and their societal and national bonds are dissolving. Today, thinking about national security in the West means taking stock of the effects not only of the dwindling sense of mutuality of obligation among the citizenry but also of levels of ethnic, racial, and political polarization not seen since the late 1960s. The current fashion for identity politics has advanced to the point that the progressive decomposition of Western nation-states is now a near-term possibility.”

        “While civilizational collapse may still be a long way off, Western democracies face an erosion of the consensus of what constitutes the larger national community, and hence why its members should rally to defend it in an emergency…since the coming of age of the ’60s generation, the overarching concept of Western cultural affinity as the foundation of national identity in a democracy—one in which an overarching shared heritage can be filled by multiple ethnic narratives but ultimately remains the key trope defining the values at the center of idea of citizenship—has been progressively displaced.”

        “In a world where national solidarity is increasingly deconstructed by the narratives that have begun to leak into broader society from their wellsprings in the academy and media, tribalism will ultimately render the nation unable to function not just in the area of public policy, but most critically when it comes to national security and defense. If Western culture is nothing but a mechanism of oppression, what is the meaning of Transatlantic solidarity in a crisis? If our nations are little more than shared legacies of shame and systemic injustice, why risk blood and treasure to defend them?”
        America’s Resilient Center and the Road to 2020” by the Progressive Policy Institute

        (Note that PPI, whose motto is “radically pragmatic”, dates from the 1980s; when it was created as a policy development think tank affiliated with the Democratic Leadership Council, which was created to move the Democratic Party back towards the middle of the political spectrum after George McGovern’s presidential defeat.)
        SURPRISE.

        This analysis provides a very thought provoking look at the size of key segments and policy views of US voters at the time of the 2018 midterm election. Democrats (39%) and Democratic leaners among Independents (9%) comprise 48% of the electorate. Republicans and leaners (31 + 8) account for 39%, and true Independents for 13%.

        On a different, but important dimension, 32% identify as conservative in their views; 44% as moderate; and 24% as liberal (note that 62% of Independents plus Democratic and Republic leaners identify as moderates).

        “Despite a strong economy, Americans are anxious: 66% worry about keeping healthcare coverage; 64% about paying healthcare bills, 63% about saving for retirement; 77% believe today’s children will be worse off than parents.”

        PPI also found “unexpectedly strong support for nationalized health care”, which 75% of Independents favor.

        Another surprise was that 85% of voters are worried about the size of the national debt – “a possible sleeper issue” in 2020.

        PPI’s Conclusion: “Two requirements for a Democratic win in the 2020 presidential election are a big tent and a pragmatic, solutions-oriented agenda.”
        November 2018 US Election Results
        Two interesting indicators. (1) The swing towards the Democrats among suburban women. In some cases, (e.g., Connecticut), the emotional vote against Donald Trump appeared more powerful than economic self-interest. (2) Yet while the Democrats now control the House of Representatives, the Republicans will pick up one and possibly two seats in the Senate to further strengthen their existing majority.

        This will make any attempt to impeach President Trump much more difficult, as while the Democrat controlled House may pass a bill of impeachment, the Senate must vote to convict. While that is not impossible, it appears unlikely given the currently evidence that would be used to support the impeachment bill.

        That this election provided a conclusive victory for neither side guarantees that political conflict and overall uncertainty will continue unabated, and will likely worsen, between now and the 2020 presidential election.
        Following her party’s poor election performance, Angela Merkel resigns as head of CDU and announces she won’t serve as Chancellor beyond 2021. Macron’s popularity continues to fall as his reforms bite.
        Another indicator of the extent of the collapse the political center across multiple democracies, due to its inability to adequately respond to increasing economic uncertainty, and popular concerns about immigration and terrorism. As it other nations, it is the parties on either extreme that are gaining at the center parties’ expense. In Germany, it is AfD and Greens who are gaining while CDU/CSU and Social Democrats are losing support.

        As the Financial Times Martin Wolf wrote this month, “Populist forces are on the rise across the transatlantic world…The common thread of all these movements is rejection of the contemporary western elite and the synthesis of liberal democracy, technocratic governance and global capitalism that it promoted. It is a revolution against the establishment.” (“The Price of Populism”, 24Oct18)

        See also, “How Social Democracy Lost Its Way: A Report from Germany” by Tobias Buck in the Financial Times, 17Oct18
        .
        Sep18: New Political Information: Indicators and Surprises
        Why Is This Information Valuable?
        Nostalgic reminders of a different and more unified United States – or at least a different political landscape – at Senator John McCain’s funeral at the beginning of September provided a stark contrast to the shocking polarization and extremism on display during the Kavanaugh confirmation hearings at the end of the month.
        I experienced firsthand the euphoria in Europe that was triggered by the fall of the Berlin Wall and the collapse of the Soviet Union, which contributed to the enormous psychological shock produced only a few years later by the savage civil wars that accompanied the breakup of Yugoslavia. I often think that the European psyche has never recovered from this whipsaw.

        While not as powerful, September’s bookend events in US politics cannot help but have produced a similar shock to the US psyche. How it plays out is uncertain at this point; suffice to say that I believe it has widened the scope of what some will see as acceptable political ends and means to pursue.
        Are We on the Verge of Civil War? Some Words of Reassurance” by Morris Fiorina
        Fiorina’s quantitative analyses of the American electorate are always first rate. In this article, he uses a range of data to argue that we are further away from major political change than many media storylines would have us believe. It is a good antidote to what seems to be the conventional wisdom, at least for the surprisingly small minority of highly politically active citizens. That said, he also notes the importance of the ideological sorting of America’s two main parties (i.e., the disappearance of conservative Democrats and liberal Republicans), and the increased uncertainty this creates about political dynamics in the United States.
        America is Moving Towards Oligarchical Socialism” by Joel Kotkin
        Surprise.

        While most political speculation has been focused on the potential implications of rising populist/nationalist movements in the United States, Kotkin provides a provocative alternative view that expands our mental models of the current political situation, and the range of outcomes that could result from progressive dynamics.
        “Before they can seize power from the president and his now subservient party, the Democrats need to agree on what will replace Trumpism.

        Conventional wisdom implies an endless battle between pragmatic, corporate Clintonites on one side, and Democratic socialists of the Bernie brand. Yet this conflict could resolve itself in a new, innovative approach that could be best described as oligarchical socialism.

        Oligarchal socialism allows for the current, ever-growing concentration of wealth and power in a few hands — notably tech and financial moguls — while seeking ways to ameliorate the reality of growing poverty, slowing social mobility and indebtedness. This will be achieved not by breaking up or targeting the oligarchs, which they would fight to the bitter end, but through a massive increase in state taxpayer support.”
        The Science Behind the Brexit Vote” by Michele Gelfand in The Guardian
        “When people feel threatened, they want tighter social norms.” This fits with other research that finds people to have a stronger preference for conformity when uncertainty is high. This is the appeal of populist authoritarian leaders explained at the level of individual cognitive neuroscience.
        The Problem with Populism” by JP Morgan Research.
        Like Bridgewater’s report on the increasing attractiveness of populism, and Francis Fukuyama’s recent essays on the same subject (as well as others by Andrew Sullivan, Michael Lind, and Yascha Mounk), this report analyzes the root causes of various forms of populism’s rising appeal, and speculates on the possible consequences if these views grow in political popularity.