- Reader Case: Military Family Nearing FIRE - October 15, 2021
- It Just Got Easier to Have Your Student Loans Forgiven - October 11, 2021
- Reader Case: Can I Retire on an Office Administrator’s Salary? - September 27, 2021
Are you ready, America?
Tomorrow, voters officially go to the polls and after that, everything in the world’s largest and most important democracy changes. It wasn’t that long ago (thought it FELT like ages) since Trump’s come-from-behind upset victory over Hillary Clinton in 2016 turned the entire world upside down and sparked our national addiction to Twitter and Xanax.
The similarities between that election and this one are striking. Like then, every credible poll is predicting not only a Democratic victory, but a landslide. Like then, an established Washington insider with decades of experience is running against a blow-up-the-establishment bomb-throwing outsider who revels in not even caring about political norms. Like then, the general consensus was that while the Republican nominee had a surprisingly loyal base of supporters, there was no way he was going to prevail.
The general consensus was, of course, dead wrong.
So that brings us to tonight’s question. Will the consensus be dead wrong again?
Now, just to be clear, I am not a political analyst, and this is not a political blog. This is a finance blog, and from a FIRE perspective, there are things to like about both possible outcomes. A Trump victory would be a continuation of his “stock market first” style of leadership, which will make all our investment portfolios very happy. And a Biden victory would mean the preservation, and likely expansion, of Obamacare, extending coverage to an estimated 25 million people, and fortifying a health insurance system that provides affordable health insurance for people even if they don’t have jobs, which as we wrote in our book is an important pre-requisite for anyone planning on retiring early.
The outcome of this election that would be very bad for not just the FIRE community but literally every American, would be a contested election in which the results are close, accusations of vote stealing and vote suppression are lobbed by both sides, and culminating in a civil war where jack-booted government troops clash with protesters in the streets.
Last time, the loser of the popular vote won the election, and in a magnanimous gesture, the outgoing leader respected the traditions of democracy and peacefully handed over power. This time? The current leader is openly saying he won’t respect the outcome of an election that he doesn’t clearly win.
America is sitting on a powder keg. And because America is the current super-power, the world is, by extenstion, sitting on that same powder keg. That being said, the polls are predicting it will be a decisive victory. So do we believe them? Or do we think there’s going to be another massive upset coming?
Well, as FIRECracker will confirm, I have, along with many of you, been glued to the political chatter coming out of the USA these past few months, and while I’m not by any means an authority on American politics, I have observed a few things.
And here they are.
Poll Quality Has Improved Dramatically
Every time I cite polls to people, the first reaction they have is “The polls were wrong in 2016! So you can shove those polls where the sun don’t shine!” And they aren’t wrong. Polls did heavily predict a Hillary win in 2016. But here’s where the story wrinkles little bit.
Polls in 2016 were actually fairly accurate.
National polls, specifically, predicted a 3% Hillary Clinton advantage in the popular vote. After all votes were counted, Hillary Clinton won the popular vote by 2%. That’s pretty damned good.
The problem was that state-by-state polling wasn’t done nearly as accurately back then. And that turned out to be a fatal mistake.
Because the USA doesn’t award the presidency based on popular vote, but rather the strange and confusing system known as the Electoral College, it’s possible for the president to be decided not by who won the most votes, but by who won the majority in certain states. That’s what happened in 2016. Trump didn’t win the popular vote, but he won the majority in the right states so he got declared the winner.
Pollsters got sufficiently chastened by that experience, and they aren’t making the same mistake twice. Besides publishing the typical national polls that show Biden way ahead, they are deep-diving into each individual swing state. They have changed their methodologies to better capture Trump voters. They are polling far more people. And they have become much more hesitant to publish polls that haven’t been double- and triple-checked.
As a result, the quality of state-level polls has increased dramatically.
And how do we know? Because the state-level polls that were published during the 2018 midterm election correctly predicted the “blue wave” tsunami that ended up retaking the House of Representatives for the Democrats. The pollsters have fixed the problems that embarassed them four years ago. So I have a much higher degree of confidence in them now.
There Aren’t As Many Silent Trump Voters
The Shy Trump Voter. The Embarassed Trump Voters. The Silent Majority. These words have been bandied about by both parties and the media over recent days. But what do they mean?
For pollsters, they are the boogeyman that screwed them over last time and made them look like idiots. The ones that lied over the phone and caused them to falsely claim that the election was Hillary’s for the taking, an election in the bag. The ones who, when asked, would you vote for Trump or Clinton, demurred and said “ehhh, I’m not sure” when they clearly intended to vote for Trump.
Here’s the thing. Those people weren’t invisible. They got counted. Just not in the way you thought they were.
In November 2016, two weeks before the election, 40% of people intended to vote for Trump, 46% of people intended to vote for Clinton, and 14% were “undecided.”
Undecided, by the way, means when the pollster asked point-blank who the person was going to vote for, they said “not sure.” And pollsters took a look at that undecided column and figured, “half will vote for Clinton and the other half will vote for Trump.” That’s how they figured the election would go for Clinton.
Turns out, they were wrong. Those 14% of “undecideds” turned out to be mostly secret Trump supporters, as evidenced by that group breaking heavily in Trump’s favour, resulting in his upset victory.
Today, the numbers are very different. Nationally, 53% of people support Biden, and 44% support Trump. The undecideds only constitute 2%. Even if all of them broke for Trump once again, that’s not enough make much of a difference. The silent majority simply doesn’t exist.
Democrats Still have PTSD from 2016
Democrats are still reeling from the results four years ago. Back then, they were confident about their chances. Smug, even. No way America could elect someone like Donald Trump. Remember the “Bernie or bust” people?
Today, all that optimism is gone. Democrats, the media, even the candidate himself is projecting “Yes, we’re ahead. But don’t let your foot off the gas for a second.”
Here’s a story that illustrates this.
Early on in the Democratic primary, one of the organizers got on stage to test the mike before the actual politicans arrived. After the usual “Test, test, 123” stuff, he decided to have some fun with the crowd. He asked “Hey, out there, who’s for Elizabeth Warren?”
A cheer rose up from a corner of the room.
“How about Bernie Sanders?”
A bigger cheer from another corner of the room.
“How about Joe Biden?”
“OK, OK,” the organizer said. “How about this. If Joe Biden becomes the Democractic nominee, who here is going to vote for him?”
A giant cheer, from every single person in the room, shook the walls.
When Trump crows at his rallies that Biden’s voters aren’t enthusiastic about their candidate, he’s not wrong. They aren’t that enthusiastic about Joe Biden. But what they are enthusiastic about is kicking Trump out of office. And that’s why they’re voting in droves this year.
Trump & The Pandemic
All of this might be pretty reassuring if we were talking in a normal election year.
However, this is not a normal election year.
We have two giant unknowns, two unmodellable factors, influencing this election. And they are of course the current president and the pandemic.
The pandemic, of course, has made it harder to vote because of social distancing issues. Already in early voting, photos of voters stretching out around the block have appeared, and stories of voters waiting for hours to cast their ballot are rampant.
And then there’s President Trump tweeting conspiracy theories about rampant voter fraud, sabotaging the mail system, closing poll locations, and generally trying to make it as difficult to vote as possible.
We don’t know what effect these two factors will have once all the dust settles, though I’m not convinced it will have the effect Trump thinks it will. On mail-in ballots and early voting which are heavily favoured by Democrats, he can yell and scream all he wants about how they’re rigged, but those votes have already been cast and he can’t stop them from being counted. But if he restricts the number of polling places and makes it harder to vote in-person, wouldn’t that just screw his own voters over?
The majority of Republican voters plan to vote on election day, so if you combine all of them showing up at once to way fewer polling stations, you’re going to create massive lines that will dwarf what we’ve already seen in early voting. Remember, these are the people who couldn’t even be bothered to wear a mask during a pandemic. How do you think they’ll react when they learn they have to stand in line 12+ hours to vote?
This is Democracy’s Time to Shine
It’s easy to look back and the past four years of hyper-partisanship and extreme polarization and become cynical about democracy. But remember that the genius of democracy is not that it always produces the right answer to every question. No system of government can do that.
The genius of democracy is that when a leader has worn out their welcome, they can be replaced in an orderly and peaceful way. In other countries, if the people want to get rid of the guy at the top, they have to either assassinate him or start a civil war. Not in a democracy.
In a democracy, if the people want to get rid of the guy at the top, they vote. And when they vote, the leaders of both parties listen, and respect the will of the electorate.
That’s really what this election is about. Regardless of who wins, will the political system work as designed and guarantee a peaceful transition of power?
I am a firm believer in the power of democracy, and for better of worse America is the guiding light for the rest of the world to follow in this regard. America shows the world how to run fair and free elections, how to elect a government, and how to peacefully transition from one leader to the next. We look to you to be our example.
So if America truly is the greatest democracy in the world and a shining beacon of global leadership deserving of its superpower status, then now is the time for America to put their money where their mouth is and prove it.
Godspeed, and Good luck.
Hi there. Thanks for stopping by. We use affiliate links to keep this site free, so if you believe in what we're trying to do here, consider supporting us by clicking! Thx ;)
Build a Portfolio Like Ours: Check out our FREE Investment Workshop!
Earn a 1.25%* everyday interest rate. No Everyday Banking Fees: Open up an EQ Bank Savings Plus Account! (Canada only, excluding Quebec)
Travel the World: We save $18K a year by using AirBnb. Click here to get $40 off your first booking!
Don't Pay FX fees: We used the Scotiabank Passport Visa Infinite card to eliminate foreign exchange fees around the world! Plus, get 40k points in the first year, and free airport lounge access too! Click here to sign up!
Earn 15% Cash-back: Earn an extra 15% back for a limited time with a Tangerine World Mastercard! Click here to sign up!
*Interest is calculated daily on the total closing balance and paid monthly. Rates are per annum and subject to change without notice.