By Xu Qifei
Crook, racist, liar, sexist, so on and so forth. Rather than having productive and honest policy discussions, the campaigns of the current election have once again resorted to name-calling and character attacks. Looking past the veil of political theatre, the one substantial topic that was most heavily discussed in the first presidential debate was the economy. Certainly, this makes those of us who are involved in this subject really curious how this election reflects the readiness of the public to new economic ideas. Before we get to that, I need to preface my answer with 3 things about the relationship between the economy and the election you need to understand.
1. The state of economy is believed to be one of the strongest predictors of presidential elections, but we don’t know how.
Is there a good model to predict who is going to win the presidency? Well, if the result can ever truly be predicted by a mathematical model, then there won’t be any point of campaigning for either candidate. However, we do have a few models that were built based on information of previous elections and successfully predicted almost all the elections afterwards. Granted, most of these models are the products of HARKing (Hypothesizing After the Results are Known) from existing elections, and often were used for future elections on political media as tools to create self-fulfilling prophecies. Nevertheless, there is still one intriguing thing about all of these seemingly accurate models: their operation all heavily rely on the performance of the economy.
Take Moody’s Analytics Election Model for example, which is one of those models that “predicted” all of the elections in the past 30 years (even though the model is created after all of those elections). The model includes many economic factors, of which income growth and home prices are among the most important predictors. This year, Moody’s Analytics predict that Hillary Clinton will easily win the election, due to the positive performance on those aspects from the Obama administration. On the other hand, you can find similar models that give a clear lead to Donald Trump, simply because they weighed other economic criteria more heavily. To that end, even if you follow the statistic models, you won’t have a better idea of the result.
Nevertheless, as far as we know, we can’t really seem to build a fruitful prediction model without having the state of economy being the dominant factor. One thing we can say with some certainty is that the economy is incredibly important in some way, but we have no idea how.
2. Economy is the hottest topic in the debate for voters.
In voters’ minds, economy is the topic that carries the most weight in the election. This is shown by some of the most influential and reliable polling agencies in the country. Both Gallup’s and Pew’s recent polls and research have found that overwhelmingly, voters in the United States put economy as the number one key issue that need to be discussed in the election.
Thus, it does not come as a surprise that trade, wages, taxes and other economic issues were the opening topics in the first presidential debate last week. At the end of the day, people want more stuff with cheaper prices. It also isn’t strange that Clinton and Trump painted such drastically different pictures of what the state of the economy is in order to sway voters. While Trump was claiming how disastrous unemployment and trade deficit had been under the current and previous administrations, Clinton took the rhetoric of praising the healthy recovering economy and potential growth. However, the fact that both of these extremely conflicting views can get traction with voters showed one thing that is quite unique to this election, which we will discuss in the next point.
3. Debates on the economy don’t actually affect the voting results (usually).
As we have established before, the state of the economy is possibly the biggest decider of the election. However, it is important to note that it isn’t what the candidates say about the economy that matters. Rather, the effects of the economy should decide the elections long before the first debate started.
Here is the simplest way how the state of economy dictated all the elections since 1992 (or at least the past 8 years if one believes that the early 2000s’ elections were taken over by anti-terrorism and patriotism): generally speaking, if the economic growth is skyrocketing, the party in power will have a very easy time in the election; vice versa, if the economy is failing, then get ready to see some new faces in both houses and the white house. The effects of the debates are not as important as people think. Many scholars think that there is no evidence for the debate affecting the result of the election at all.
However, some believe that this election could be the exception. The fact that there are enough voters rooting for both Clinton’s and Trump’s polar opposite interpretations of the economy shows one thing: people couldn’t really decide if they are happy with the economy for once. This is largely due to how complicated the economic reality is in a recovering market.
The Bottom line
With all that said, here is what we have learned: people care about the economy, but they don’t understand it; they want better economy, but they don’t know it.
To those of us who are very aware of the threats brought by people’s obsession of economic growth, our biggest question has always been when it will come the right time to introduce new economic ideas and models to the general public. On the one hand, it seems like we will have a lot of obstacles introducing ideas like new economy or limited growth because people can hardly understand the problems of the current economy. It seems like in general, people just want to be able to afford more stuff with cheaper prices. On the other hand, the seemingly unclear state of the economy gives new economic ideas an opening to insert its presence. People are no longer so scared and worried that they will avoid anything they are not familiar with, but they are at the same time dissatisfied and looking for more. The current state may exhibit phenomenal opportunities for the introduction of alternative economic ideas.
Image credit: Flickr