Some initial thoughts on Trump’s victory

Donald Trump’s election as President of the United States last night was a surprising and historic event. I think a lot of people are surprised given UK bookmakers had him at 150 to one odds. I would say the shock politically ranks higher than Brexit given the 5 to one odds placed on that outcome. And frankly the US matters more economically and politically than the UK. I see this as a watershed moment that could have far-reaching implications for the viability of populist candidates and parties in European elections in 2017 and for economic policy changes as well. But before I get into those in a separate post, let me give you my initial thoughts on what just happened and why.

I’ll frame the shock value here – and how Trump’s victory dawned on me, because I think it goes to some of the undercurrents that are apparent not just in the US but elsewhere.

I was following the election last night as a participant in the live coverage at RT America. So I was following the numbers as they came out. Relatively early on, I had a sense that something was wrong – meaning the pre-election polls and even the exit polls were off. And just before 4PM ET, I tweeted a picture of Truman beating Dewey against the odds in 1948.

Harry Truman, 1948 pic.twitter.com/275NbAVUKl

— Edward Harrison (@edwardnh) November 8, 2016

It was a speculative tweet. But it captured my mood. And as the data came out in Florida, starting around 8PM (my tweet here), Trump’s path to the nomination became more apparent. By 845, it was clear to me at least that Florida was going Trump.

NYTIMES: “Our best guess is that Donald J. Trump is on track to win in Florida.” pic.twitter.com/2jJLSUGWvJ

— Edward Harrison (@edwardnh) November 9, 2016

But my view then was that Trump had to run the table to win – meaning the narrative I had in my head based on all the polls I had seen and the reporting of the race was that there were a limited number of states in play — and Trump had to win them all to win the electoral college. The first time I realized this narrative was faulty was when I saw the predictive outcomes on the NYTimes website for Ohio and North Carolina right about 9PM.

Florida, North Carolina and Ohio all still in play

— Edward Harrison (@edwardnh) November 9, 2016

Now, all of the media outlets were reporting as if Trump was in a hole. For example, Frank Luntz tweeted that Trump was hurting downballot candidates in swing states – and that the Democrats could take the Senate as late as 8:18PM.

Trump is hurting down-ticket GOP Senate candidates in Pennsylvania, New Hampshire, and North Carolina.

Significant harm. #ElectionNight

— Frank Luntz (@FrankLuntz) November 9, 2016

But by just before 9PM, it was obvious at least to me that the opposite was true. And that’s when I realized that Trump could win and that more states were in play – most importantly, Pennsylvania and Michigan.

For me, the election was over by 11PM.

UPSHOT:

92% chance TRUMP
SENATE 95% chance Republican
HOUSE 95% chance Republican

Republicans would have both houses and presidency

— Edward Harrison (@edwardnh) November 9, 2016

So what did I learn? The most important lesson I learned is that election polls and even exit polls are not necessarily reliable. We knew that from the Brexit vote. But here, the shift was MUCH greater – hence the 150-1 odds by bookmakers. And the question, therefore, becomes why. Last week I saw what I thought was why and it has stuck with me. I was watching the evening news in the Netherlands, Nieuwsuur. And they were interviewing a middle-aged American woman, asking her who she voted for. She said Trump, and then she giggled. The reporter asked her why she giggled. And she responded that she giggled because she didn’t like Hillary and couldn’t vote for her. I knew straight away that was confabulation – an excuse she made up on the spot because she was forced to supply a reason for something she did that she did instinctively without thinking. I thought immediately that the REAL reason she giggled was because she wasn’t SUPPOSED to vote for Trump — and admit it.

And that was like a light bulb that went off for me. It said to me that we should expect a LOT more votes for Trump than polls would suggest. Now, mind you I still didn’t think he was going to win, because I was anchored by the polling data at not even considering Pennsylvania, Michigan and Wisconsin as contestable. But they were – and the fact that they were is the biggest failing of pollsters in this election.

Let me leave you with this thought; the broadest measure of unemployment in the United States is 9.5%, near its highest levels in the last twenty years. There is absolutely no way in hell you can have full employment in a situation like that. In fact, this understates the distress in the US economy because of the unknown statistical factor regarding the quality of employment, something very difficult to quantity numerically. Yet, everywhere you look, we hear people telling us we’re at full employment and the economy is doing well.

So while the US economy is doing much better than it was seven years ago, it is not firing on all cylinders. This was the weakest recovery in Post-war history and many people are still hurting economically. This fact – and the reality that the media and policy makers have categorically refused to acknowledge it in full-throated terms is what sealed the win for Donald Trump – that and the weakness of the Clinton candidacy are what defined his victory.

I am going to leave it there for now. More later.