Luck and fate in politics

There’s a lot of luck[1] in politics. If a handful of events had gone differently in 2016, we’d probably be discussing President Clinton’s second term right now. If the Brexit referendum had been held a few weeks earlier, Remain would probably have won, and David Cameron might still be PM. A few lucky breaks and Labor would have won the 2019 Australian election. And if things had gone slightly differently in Georgia (with the Repubs falling just short in the first round, then losing both runoffs), the prospects for a Biden Administration would be greatly worse than they are.

The first three of these events were unexpected wins for the Trumpist right. And while nobody much pays attention to Australia, the first two were interpreted by Trumpists as much more than lucky breaks. They fed a whole set of beliefs which built up to an expectation that, no matter how bad things looked, their side was destined (for a lot of Trumpists, divinely ordained) for victory.

It’s not surprising then, that Trump’s supporters expected victory in November, and were willing to believe, without any evidence that their victory had been stolen. But as it became more and more evident that the election results were not going to be overturned, cognitive dissonance started to set in. The options were to accept that, fairly or not, they had lost, or to embrace the apocalyptic vision of QAnon and the far right, manifested in the Capitol last week. From the polling evidence, it looks as if the Republican base split down the middle on this.

Now that the insurrection has failed, and Biden’s inauguration is about to take place, the choice gets even sharper. As those who rejected the election result and tried to overturn it are increasingly ostracised and increasingly forced to recant[2], there’s no middle ground between accepting defeat, at least this time around, and going all the way down the insurrectionist rabbit hole and into rightwing terrorism.

From the politics as usual viewpoint of someone like Mitch McConnell, the advisability of the first course of action is obvious. But to the extent that the energy of the Trumpists was built on faith in inevitable victory, that may be difficult to sustain[3].

As for rightwing terrorism, it’s bound to keep on happening. The history of events like the Beer Hall Putsch shows that clownish initial failure does not guarantee defeat (no inevitability, again). We have to hope that, having been directly and personally threatened by the terrorists, the Democrats won’t shrink from the responses necessary to suppress them and the Republicans won’t be willing to defend them.

fn1. My friend, fellow-economist and now politician Andrew Leigh has a great little book called The Luck of Politics It’s mostly about luck as it affects individual political careers, where the same point applies: a bit of good luck is often the difference between being revered and being reviled.

fn2. In this context, the coverage by the Washington Times is just as significant as the apology extracted from American Thinker. The story includes, as background, the observation that

Mr. Trump and some fellow Republicans pushed false claims and conspiracy theories to justify the election’s outcome prior to mobs of the president’s supporters raiding the U.S. Capitol last week, including baseless allegations involving Dominion and its machines.

Republicans will have to get used to reading this kind of thing, even in reliably rightwing media.

fn3. The 20th century debates within Marxism about the inevitability of socialism illustrate this, as do even older debates about predestination within Christianity. Logically, you might expect a belief in inevitability to discourage costly action (why work hard for a cause that is going to win anyway?), but in practice, the feeling of being on the winning side has always won out.

74 million Americans …

… voted for someone who immediately attempted to overturn the election and promote an insurrection. Either they made a terrible mistake or they are complicit in his actions. Impeachment will force them to decide between these two. That could turn out badly.

The alternative is to let them keep the illusion that they are good people who made a reasonable choice last November. I can’t see how that could possibly turn out other than badly.

A pretty dodgy article …

from Peter Collignon on Sydney outbreak Among the problems:

  • The text doesn’t mention mask mandates at all, and captioned photo implies that government initiated this measure rather than being pushed into it, after failure to require them led to Berala cluster (at least according to AMA)
  • Collignon claims that “many prominent individuals” demanded a total lockdown. One link is to Norman Swan, who did suggest it. The other is to Raina McIntyre who said a short lockdown might be necessary if case numbers rose.
  • Opposes border closures while claiming Victorian response as a success
  • There’s no discussion of SCG test, which may still turn out badly, despite original superspreader plans being wound back under pressure
  • Premature triumphalism given that cases and venues of concern keep on coming. A short lockdown might have been a better choice, than daily announcements sending hundreds or thousands into isolation.

Planning for pandemics (repeat repost from 2005)

Vaccinations against Covid-19 have started in many countries. In lots of places, it’s been a chaotic mess but Israel has already vaccinated 10 per cent of its population. Meanwhile, in Australia we not only have to wait for an approval process, but for a lengthy planning period to manage such an exercise. I’m not a public health expert, but I could see the need for such a capability 15 years ago (see post below). How can we have missed the boat so badly on this?

Read More »

Public debt after the pandemic

Another extract from my book-in-progress, Economic Consequences of the Pandemic

Over the course of the Covid-19 pandemic, governments around the world have issued huge amounts of public debt, much of which has been purchased by central banks. In the US, for example, Federal public debt increased by $3 trillion over the course of 2020 (this is about 15 per cent of US national income)

while the monetary base (money created directly by the Federal Reserve) increased by around $1.6 trillion. This money was used to buy government bonds along with corporate securities in open market operations (what is now called Quantitative Easing)

Update Important but complicated: the Treasury has been overfunding its spending needs by issuing securities, and then depositing the excess proceeds at the Fed. To accommodate this, the Fed has increased its secondary market purchases of Treasurys. Netting out the Treasury account, the Fed’s balance sheet is $5.6 trillion rather than $7.2 trillion. Moreover, the post-COVID balance sheet expansion was $1.7 trillion, not $3.0 trillion. (moneyandbanking.com/commentary/202…) Presumably, the latest stimulus package ($900 billion) will draw down much of the Treasury account. If I have it right, this has been accommodated in advance by Fed purchases. End update

These policies represent a complete repudiation of assumptions which were considered unquestionable by the political class until relatively recently: that budgets should be balanced, and that public debt is always undesirable.

Even the most widely-accepted modifications of these assumptions are now problematic. A standard view is that budget balances should be stable over the course of the economic cycle. If measured appropriately, this entails a stable ratio of public debt to national income.

But where should this ratio be set?

Read More »