"Predicting Versus Modeling"
There’s debate raging on several blogs and also sporadically on an email list that I belong to about macroeconomic conditions versus campaign effects that I think is tending to confuse a few things. In particular, I hear a lot of the detractors of fundamentals-based models throwing around terms like “determinism” and “predictable.” The question of determinism is, honestly, metaphysical in nature. Insofar as the American economy is the result of a deterministic process, then conduct of Barack Obama’s re-election campaign is also the result of a deterministic process. Both the economy and the campaign are complex sets of human interactions. Similarly, the economy itself is not predictable. This is an important point. Back in November 2007 people knew that the economy was headed for a rocky period as construction slowed, but there was no way to know for sure whether things would improve or deteriorate over the next year.
Another thing I would say is that while the economy is clearly the most enduring “fundamental” out there, people should separate the possibility that non-economic fundamentals matter from the existence of campaign effects. Look at, for example, 9/11. That clearly caused a huge spike in Bush’s approval ratings. I think we can infer that had a similar-scale terrorist attack occurred in the September immediately before a presidential election that it would have had a large impact. But this is still “fundamentals” rather than “campaign.”
I would characterize the difference between the views this way. Conventional political journalism tends to take the fundamentals — the state of the economy, and the ups and downs of world affairs — as in some sense “given.” We’re supposed to believe that the political outcomes are driven by what the candidates say about the outcomes. Like if George McGovern had just been better able to relate to the hippie-averse working class the voters would have overlooked the strong economic growth and declining rate of U.S. military deaths in Vietnam. My view is the reverse. That the major party nominees we’ve seen have all been reasonably skilled politicians who’ve already advanced to a senior level in American politics and been vetted by the other elites in their parties, and that they all run well-funded campaigns staffed by veteran political operatives. It’s precisely because the politicians and the campaign operatives are all skilled and hard-working that the fundamentals make the difference. If the Republicans nominate Michele Bachmann, she’ll lose regardless of the state of the economy which is why they won’t nominate Michele Bachmann. The problem is that we tend to look at candidates who were beaten by objectively bad circumstances, and read things into them. Under different circumstances, people would have written articles about how a Midwestern war hero turned Vietnam-critic like George McGovern was exactly the right guy to bridge the hippie/hardhat divide in the Democratic Party.
So nothing is “predictable” about the 2012 campaign but what’s unpredictable about it is that we don’t know what will happen between today and election day. It’s also quite possible that the fundamentals will give us a close election, in which case we’ll all be glad the candidates hired so many people to write speeches and cut ads. To say that the campaign operatives earn their wages at the margin isn’t to knock their work. The difference between winning and losing is a big deal.