Welcome to the sixth issue of The Outsider Perspective, brought to you by The Beltway Outsiders.
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This week I wrote an extensive treatment on the Brexit vote in the UK and what it could mean for the US election. I’m going to touch on the Brexit vote again today. But I do recommend reading my piece. I touch on just about every myth, narrative, and idea I’ve seen attached to the Brexit vote. This upcoming week I’ll be touching on the Evangelical meeting held with Trump.
Today, I’ll be covering Brexit and how it shows how far gone American progressives have moved from their liberal foundation, Dodd-Frank’s harm to the American financial sector, and finally I examine what needs to go right for Trump to win.
American Progressives are no longer liberals
One of the more curious narratives I noticed while watching the Brexit coverage was how vitriolic American progressives were over the Leave campaign’s victory. Progressives attacked Leave campaigners as racists, nativists, and xenophobes. Progressives exalted the European Union in staggering ways. Barely anyone in the EU has positive view of the EU, yet the American left raises it up as a beacon of hope. As I mentioned in my piece, the EU is one of the least democratic institutions in Europe.
To me, it underscores how out of touch progressives have become with liberalism. When America was first founded, liberalism was the animating ideology driving the founding generation. It stood for rights, liberty, and ordered government. You don’t see the first signs of modern conservatism until Edmund Burke writes on the differences of the American and French Revolutions.
Modern progressives would have stood staunchly with the King in both the American and French Revolutions. All you have to do is compare their treatment of the status quo EU with the push for self governance. Progressive’s focus on the economics benefits of ceding more and more power to the EU is astonishing. They would have seen the American and French Revolutions as unnecessarily upsetting the world order. Whatever the opposite position is from self-liberty, you can be sure modern progressives are in that position. And in the process, progressives have rid themselves of liberalism.
Dodd-Frank continues to kill competition in the financial industry
GE Capital announced it had been granted removal from the list of businesses and firms deemed “systemically important financial institution.” These institutions, after the Dodd-Frank Act was passed, were called to be “too-big-to-fail.” In exchange for following extensive and ever growing regulations, they would be bailed out by the government. MarketWatch provides a list of all the institutions deemed to-big-to-fail, meaning we would bail them out in the event they failed in some capacity. Senate Democrats on the Finance Committee called this event a sign that financial regulations are working. I would disagree, it’s a sign regulation is hampering capital markets – meaning there are fewer institutions capable of doling out money to businesses for start-ups or expansion.
To understand why I say this, you have to understand how GE Capital got their tag removed so they didn’t have to follow the regulations: they sold off $200 billion of their assets. They now have around $50 billion in assets remaining. Democrats and pro-regulation spin call this: smaller, better, and safer investment firms. Less is consolidated in big firms so we don’t have to worry about them failing.
It sounds great in theory until you realize: Dodd-Frank has been instrumental in killing off other sources of capital. Since the passage of Dodd-Frank in June 2010 (1 year after the recession officially ended), small banks and community loan institutions have been closing at a rate of around one a day. There were approximately 7500 institutions with under $1 billion in assets in 2010. Since then, we’ve lost 1,574 small banks and their services. This reduction in services is leaving individuals and businesses with fewer and fewer places to go for capital and credit for start-up or regular business expenses.
Combine this with Dodd-Frank encouraging larger institutions to decrease in size, pushing places like GE Capital to wind down their business ventures, and you see capital markets getting squeezed at both the top and bottom. Consumers and businesses have fewer and fewer options. In other words, far from making the world less dependent on too-big-to-fail institutions, Dodd-Frank regulation and Democrats are killing off competition and making us MORE reliant on to-big-to-fail institutions.
The reality of the situation is this: Democrats are cheering regulation that is destroying banks and firms in communities while pressuring large institutions to shrink down. This is a full scale assault on capital. It should not be of any surprise to see stagnant growth year after year when Democrats are taking the seeds away from businesses to grow. We need more institutions to spring up and grow, not fewer.
How Trump can win the election
Trump is down in the polls and losing by every single metric we have to measure campaigns. This is a fact. There is no spinning it or sugar-coating. Trump is currently losing the election and there is not a single metric that says otherwise.
Yet, I do believe there are ways for him to win. But in order to do so, he needs a number of assumptions about the election to be upended. Those assumptions are coming from an increasingly loud echo chamber saying it’s impossible for Trump to win. Sean Trende refers to this as the “unthinkable bias,” which is that people are saying something is impossible because it’s never happened. This is a blinder to facts and data that could point the other way. These are the same people who said Leave would lose the election. Hence I why I believe it’s important to rethink Trump’s odds.
First, he has to beat the polls on a state level, not nationally.
The most important polls in an election are not the big national polls. Those are the least important and only drive national news narratives. The most important polls are individual state polls, particularly the battleground states. The most accurate polls are going to include the Libertarian and Green Party candidates on their ballot choices. It is highly likely both candidates will be on the ballot with Clinton and Trump. Which WILL draw support away from the two major parties.
Both Sean Trende and David Byler over at Real Clear Politics have been studying the state polls and noticed there is a potential discrepancy between the state and national polls. Notably: While Trump is behind in the battleground states, he is not as far behind as he is in the national polls. Meaning, there is less ground to make up. Trump needs this discrepancy to continue. Eventually he needs to be able to win the battleground states and hope that the national polls are off from state polls.
Second, Trump needs his support in the polls to be understated.
In my piece on Brexit, I noted that one of the things people could take away from the election was the potential for a Shy Tory vote, as observed in the 1992 election in the UK. This is when people lie or do not inform pollsters of their real voting intentions because they’re embarrassed of their vote. The Shy Tory factor did not come up in the Brexit vote, most polls showed that a close race. But it could be a factor in the US Presidential Election with Trump’s unfavorables sky-high. People would be afraid to tell others of their voting plans. Since 2012, conservative support in the polls has been underreported in the polls. We’ve seen this in the US, UK (pre-Brexit), and Israel.
Shy-Trump supporters, if following the Shy Tory theory, could add around 2% to Trump’s poll totals (following strict Shy-Tory calculations). This does not shift the national polls, but it does place nearly every single state poll average into a dead heat, well within the margin of error. Battleground states are key. Trump must win places like Florida and Pennsylvania.
Third, Trump needs this to be a 20% election
Nate Silver’s model currently pegs Trump at 20% odds to win the race. A lot of this is dependent on polling right now, which has Trump at significant headwinds. This means, if you ran an election simulation 100 times, you’d expect Clinton to win 80 times and Trump 20. But these headwinds can shift. And, I expect them to shift.
Trump received a bump in the polls after he won the nomination in Indiana. He was effectively tied with Clinton for a very brief period of time. He’s been dropping like a rock since tying Clinton in the polls. BUT, if Trump wins the nomination in Cleveland, avoiding a delegate coup, he will receive a second boost. Every candidate typically gets a boost after their nomination at the party convention. The party voters coalesce behind the candidate. This surge never lasts, but it should bring Trump within striking distance again. Trump MUST capitalize on his surge and push his campaign forward. In other words, Trump needs the perfect storm of a 20% odds win.
Why is all this possible?
Because while Trump is losing, he’s not losing as bad he could be. Trump and Clinton are historically bad candidates. Clinton is the worst traditional candidate in several generations. She makes Bob Dole in 1996 seem spry. Trump only being down in the national polls by an average of 6 points is a testament to Clinton’s weaknesses as much as it is Trump’s weaknesses. The $1 million question isn’t: “Why is Trump down?” it’s “Why isn’t he down by an average of double digits everywhere?”
Because Clinton is a historically weak candidate.
There is plenty of room to attack Clinton. She is running a highly convention and traditional campaign. 2016 has been a different year. Clinton is running an almost identical campaign to the Remain camp in Britain. It is very possible that style of campaigning loses again. Remain led many polls until the end, when things tightened up in the final 2-3 weeks of heavy campaigning.
None of this is to say Trump will win or even be the nominee. He has a paltry campaign that has a laughably small presence in all the battleground states. And this ignores his campaign being broke. He has no way of targeting voters right now to pull his supporters out. He MUST fix this. Big data operations are the wave of the future and the future is now. But the headwinds can change, and they likely will. The most important polls to come out will be after both conventions are over, the bounces fade, and we get a good look at both campaigns with their chosen running mates. We have a long road ahead to November. And if the second half of 2016 is anything like the first, we’re in for a wild ride.
Quick slants and Must Reads
Foreign policy news
What I’m reading
This book spread by word of mouth through the NFL and other sports teams had their players and staff read it. Both the New England Patriots (during their last Super Bowl win) and the Seattle Seahawks (in 2015) had their staff and players read the book. It has since spread through other high performance fields.
Holiday’s book identifies how obstacles in our lives are not merely obstacles, but opportunities to grow beyond ourselves. He follows a Stoic philosophy and follows the principles of the Stoic philosophers. The book itself is not philosophical, but touches on practical steps in overcoming obstacles and making those obstacles strengths.
What I’m listening to
Podcast: Reuters War College: Why do people blow themselves up? Not for the reasons you think.
This is a podcast with Roger Griffin, an expert on terrorism. He speaks about the reasons groups like ISIS can use “suicide” bombers and why the West’s concepts of this tactic are wrong.
What I’m watching
Nabeel Qureshi, a favorite author and speaker of mine, is Christian who converted from Islam. He now works for Ravi Zacharias Ministries. I’ve previous written a book review on one of his works. In the short video below he answers a question he gets often: Is Islam a religion of Peace? He explains what he originally believed and why he now believes that is not the case.
Thanks for reading!