The morning after
By Scott Sumner
Here I’ll list a few observations:
I’ve been consistently wrong about Trump, so I won’t even try to predict what he’ll actually do.
This is the most Republican national government of my lifetime. Will they shrink government, or increase spending and deficits?
The UK stock market is doing better than most—I wonder if that’s because this result gives them a stronger position in the Brexit negotiations. They can say that voters all over the world are rejecting open borders. Perhaps even Le Pen could now win in France.
At the same time, remember that Trump won power, not a public opinion poll. Hillary won more votes. And people vote for many reasons, so it’s hard to know what “the voters are telling us” in a close election. They are certainly telling us something, but different voters focus on different issues.
Since I’ve been wrong about most election issues, I’ll point to a couple items I got right:
a. I claimed politics isn’t about which party wins, it’s about which issues win. I also claimed that each party would win about 50% of the elections in the 21st century, just as in the 20th century. The issue is what those parties do doing their 50% of time in office. I was criticized for ignoring the fact that the GOP was “obviously” committing suicide for decades due to demographics. Seems that reports of the death of the GOP have been premature.
b. A few weeks back I pointed to a global trend of 5 recent elections where the right/nationalist/non-PC candidate or issue was outperforming the polls. This election was almost exactly like Brexit, right up to the initial market misjudgment on election night. BTW, one of those over-performances was the UK Conservatives getting re-elected—so this global trend is not just about “throw the bums out”.
I doubt this election will have much impact on monetary policy, but we will see.
It will be interesting to look at the data, which will undoubtedly show lots of odd facts. One I just noticed is that Hillary won Orange County, California by 5%, while Trump won Kern County by an 18% landslide. Never heard of Kern County? It has as many people as San Francisco County, and it’s 50% Hispanic. That’s right; Trump won a 50% Hispanic County in deep blue California by 18%.
Trump did much better than Romney is working class white areas on the East Coast (often Catholic) such as Rhode Island and Staten Island. Otherwise he did poorly in that region. The big story is the big cities trending blue (all over the country) and the smaller towns trending red.
It’s difficult to know whether the third party candidates were decisive this time (unlike 2000 when it was obvious). My hunch is that it would have been very close in a straight one on one match-up.
I agree with Tyler.
On paper, this is a complete repudiation of President Obama, as the GOP has promised to undo almost all his important decisions. But will they? I have no idea. Interestingly, Obama is far more popular than Trump, and I mean more popular by landslide proportions. So what exactly are the voters “saying”? I’m not sure, but we’ll see the results soon enough.
I wonder if the weird stock market reaction is a microcosm of the split between elite opinion and average opinion. Elite opinion is horrified, and drives stocks much lower last night (in futures markets) then average opinion wakes up and sees a buying opportunity, and calls their broker—looking to spend some of those big tax cuts for the rich that Trump promises.