Yesterday your humble blogger gave a talk about the state of the 2012 presidential race to a group of
really rich people international institutional investors. At the end of the talk, the convener asked for a show of hands about who they thought would (not should) win the race, and an overwhelming majority said Obama. In talking to the organizers, I learned that this was the sentiment of other groups of overseas bankers that had met earlier in the month. Indeed, there was apparent surprise at the suggestion that Mitt Romney could actually win.
Why did this sentiment exist? I don't think it had much to do with ideology -- we're talking about the global one percenters here. Based on my conversations, I think it was based on a few stylized facts:
1) The U.S. economy is outperforming almost every other developed economy in the world;
2) They assume that in times of uncertainty, Americans will prefer the devil they know rather than the devil they don't;
3) President Obama's foreign policies seem pretty competent;
4) Mitt Romney's policy proposals either seemed really super-vague (this will be an American Century) or, when specific (designating China as a currency manipulator) made him seem like an out-of-date clown.
So, consider the following a Global Public Service Announcement from the hard-working staff at this blog:
Dear Rest of the World,
Hey there. I understand that the overwhelming lot of you believe Barack Obama will be elected to a second term. I can sorta see that, as that is the current prediction from recent polls, some of our prognosticators and prediction markets. If you look closely, however, none of these predictions are very strong. Or, to put it as plainly as possible: there is still about a 50/50 chance that Mitt Romney will be sworn in as president in January 2013.
I can hear your derisive snorts from across the oceans. Ridiculous! Surely Americans would reject such ludicrous ideas as a trade war with China. Surely Americans understand that their economy has done pretty well in comparison to the rest of the world. Surely Americans can see that many long-term trends are pretty positive.
Valid questions. To which I must respond: The overwhelming majority of Americans do not give a flying f**k about the rest of the world.
Really, they dont. Take a look at these poll numbers about priorities for the 2012 presidential campaign, and try to find anything to do with international relations. There ain't much. It's almost all about the domestic economy.
See, most Americans don't compare the U.S. to other major economies -- they compare the U.S. now to, say, the U.S. of 2005. And things don't look so hot based on that comparison. As for the notion of a trade war with China, go read how Americans feel about absolute vs. relative gains with China -- they'll superficially welcome a trade war, when they bother to even think about it. Which they don't.
As for foreign policy or counterterrorism, yes, you could argue that the Obama administration has been pretty competent. But, again: Americans. Don't. Care. If anything, the foreign policy competency removes the issue from the campaign, and just concentrates the minds of everyone on the state of the domestic economy.
The fundamental fact of this election is that the American economy is pretty sluggish, voters blame the incumbent when that happens, and the incumbent happens to be Barack Obama. Indeed, it is only because Obama is seen as pretty likable -- and that voters do still tend to blame George W. Bush for the current situation -- that this race is even remotely close.
I'm not saying Mitt Romney is gonna win. If the economy picks up over the summer, Obama should win pretty handily. However, you, the smart money, should think about it this way: what are the chances that between now and November, none of the following will happen: another Euro-implosion, a rapid deflating of the China bubble, or a war in the Middle East? If you're confident that these events are not in the cards, bet on Obama. If any of them happen, all bets are off.
Will it matter to you? Think of it this way: compare and contrast who Mitt Romney would pick as the next Fed chairman versus Barack Obama. And plan accordingly.
Enjoy the summer! All the best,
Daniel W. Drezner
Am I missing anything?