Friday, August 27, 2004

A Random Walk to the White House

If you turn on any business oriented news show, or pick through the money section of a paper, you will see folks prognosticating on why a particular stock went up or down yesterday, and why it will go up (or down) today. None of these people are right, or if they are right, they are right by luck, because stock movement is random in the short term, and tied to earnings growth in the medium-to-long term.

This means, among other things, that it is pointless to try and make money off short term price fluctuations. It also means that short term dips and rises don't tell you very much about the broader underlying economy. Actually, even medium term stock activity may not tell you very much about the underlying economy, because the stock market and the economy as a whole are different, though related, things.

This good New Yorker article discusses how much of a similar sort of randomness decides elections. Here is a nice para discussing how informed voters actually are:
Converse claimed that only around ten per cent of the public has what can be called, even generously, a political belief system. He named these people "ideologues," by which he meant not that they are fanatics but that they have a reasonable grasp of "what goes with what"-of how a set of opinions adds up to a coherent political philosophy. Non-ideologues may use terms like "liberal" and "conservative," but Converse thought that they basically don't know what they're talking about, and that their beliefs are characterized by what he termed a lack of "constraint": they can't see how one opinion (that taxes should be lower, for example) logically ought to rule out other opinions (such as the belief that there should be more government programs). About forty-two per cent of voters, according to Converse's interpretation of surveys of the 1956 electorate, vote on the basis not of ideology but of perceived self-interest. The rest form political preferences either from their sense of whether times are good or bad (about twenty-five per cent) or from factors that have no discernible "issue content" whatever. Converse put twenty-two per cent of the electorate in this last category. In other words, about twice as many people have no political views as have a coherent political belief system.
They can, however, dash something off the top of their head if asked, or pull some lever if they stumble into a voting booth. And just like people wandering up to the bar to order a drink, "five per cent, enough to swing most elections, decided the day they voted".

The assertion in the next section, I find naive:
All political systems make their claim to legitimacy by some theory, whether it?s the divine right of kings or the iron law of history. Divine rights and iron laws are not subject to empirical confirmation, which is one reason that democracy?s claims have always seemed superior. What polls and surveys suggest, though, is that the belief that elections express the true preferences of the people may be nearly as imaginary
It is impossible to select true preferences through an election because of Arrow's Incompleteness Theory that shows how polled preferences are, among other things, necessarily transitive. In practice, elections introduce competition into ruling and channel those competitive emotions in the relatively benign practice of running for office. The enable a strong state (by conferring legitimacy and sublimating violence) but, with a strong constitution, also restrict its size.

The author wants to believe that some sort of quality decision making is at play in elections, and puts forward the notion that the great unwashed (when they bother to vote at all) look to the elite for which way to go. The "elite" in this case are those who care and have consistent, well thought out ideological positions.

The elite, the article argues, have become polarized.
?The simple truth is that there is no culture war in the United States?no battle for the soul of America rages, at least none that most Americans are aware of," he says in his short book "Culture War? The Myth of a Polarized America" (Longman; $14.95). Public-opinion polls, he argues, show that on most hot-button issues voters in so-called red states do not differ significantly from voters in so-called blue states. Most people identify themselves as moderates, and their responses to survey questions seem to substantiate this self-description. What has become polarized, Fiorina argues, is the élite. The chatter among political activists, commentators, lobbyists, movie stars, and so on has become highly ideological. It's a non-stop 'Crossfire,' and this means that the candidates themselves come wrapped in more extreme ideological coloring [even if they themselves are no more ideological than before]

Are the elite more polarized? Maybe. Is this a good or bad thing? Unclear -- diversity of opinion may help people make better decisions, and a unanimous "elite" opinion may reflect delusional groupthink as much as a well-informed consensus. Most importantly, I think a polarized elite should put paid to the notion that simply educating and informing people will reduce difference in views, by definition the "elite" are educated and they still don't agree.

The core decision in the US 2004 election may be "do you or do you not believe that the US is at war against Islamic terror?" Those who do not may (sadly) be given an opportunity to reassess their position. In any event, the 2004 result will be the toss of a coin regardless.

(And lastly, enjoy the rantings of a man who clearly has not been laughed at enough, at least, not to his face. While we shared a school, I enjoyed his snappy dressing and avoided his classes. I'm sure he dresses just as well at Princeton -- they're welcome to his threads.)


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