GOP Most Likely to Repeat Popular-Minority Victory in 2020. NewsWire

NEWSWIRE: 9/30/19

• According to a new paper, the chances of an “inversion” in close presidential elections—when the popular-vote winner loses the electoral vote—are high and growing. The Electoral College is designed to deliver such a result in close elections, and the current odds favor Republicans, who are now expected to win elections in which they narrowly lose the popular vote 65% of the time. (Vox)
• NH: In 2016, Donald Trump won the presidency in the Electoral College despite losing the popular vote by 2.1% (2.9 million votes). At the time, the media widely commented on how "improbable" and "unlikely" this outcome was--since it depended on Trump winning an inside straight of Midwestern states by small margins even while losing several large coastal states by large margins. But was this outcome really so unlikely? A team of UT economists thinks not. In a wonkish paper ("Inversions in US Presidential Elections: 1," for those of you with an NBER subscription), Michael Geruso et al. calculate the odds of victory in every U.S. election since 1836 using a variety of election models.
• Their first major conclusion is that an electoral inversion (when a candidate loses the popular vote but wins the election) is a lot more probable than most people think. Specifically, they calculate that in any election in which the popular-vote margin is less than 2%, the likelihood of an inversion is around 40%.
• Just look at the record. We've had 48 elections since 1828. (Let's not count 1824, in which John Quincy Adams won the whopper of all inversions: He lost the popular vote to Andrew Jackson by over 10% of the popular vote but got elected anyway in a "corrupt bargain" in the House of Representatives.) Anyway, in those 48 elections, 11 have been decided by a popular vote margin of less than 3%. And of those 11, at least 4 were inversions: Rutherford B. Hayes in 1876; Benjamin Harrison in 1888; George W. Bush in 2000; and Donald Trump in 2016. That's 4 out of 11, or 36%. And it may be 5 out of 11 (see discussion below), which works out to 45%.
• Why are inversions so likely? It's partly built into the Electoral College system, namely, the provision that each state gets two extra electors regardless of its population. This advantages small states and drives a possible wedge between the popular vote and electoral vote. And it's partly the result of nearly every state's tradition (Maine and Nebraska are the only exceptions) of awarding all of its electors to the popular-vote winner in that state. This advantages candidates that win many states by small margins. By running Monte Carlo simulations, the authors show that this system guarantees a substantial unpredictability of outcome when the national popular vote is close.
• The authors' second major conclusion is that this uncertainty typically tilts to the advantage of one or the other political party in each era. And in the modern era--basically since the 1970s or 1980s--it has tilted to the advantage of the Republican Party. The GOP today tends to dominate the small states. And its opponents are mainly concentrated in a few particular states, especially large states like California and New York, where their votes are wasted in fruitless overkill.
• According to Nate Cohn in the New York Times (I discussed his piece in my podcast), the GOP may be in an even better position to achieve an inversion in 2020 than in 2016. That is because Trump's biggest recent declines in popularity are in the heavily Democratic states he will almost certainly lose anyway--and because he may be losing some of his edge in heavily red states like Texas he is likely to win anyway. Trump's approval rating in marginal Electoral-College swing states like Wisconsin is a lot closer to 50% than it is nationally.
• As luck would have it, all four "official" inversions since 1828 have been won by Republicans. This was even true in 1876 and 1888 when the voting patterns tilted more in favor of the Democratic Party. But maybe we shouldn't trust the official count. Brian Gaines at UI Urbana-Champaign has persuasively argued that the popular vote count in 1960 (a cliffhanger, in which Kennedy is typically attributed a popular-vote margin of only 0.17%) has been miscounted. A more sensible attribution of votes in Alabama, where voters still labored under a complex "long ballot" system, would have put Nixon ahead in the popular vote--though of course he still would have lost the election. In which case we can chalk up at least one inversion in the Democratic column.
• Many progressives have argued for decades--and since 2016, more than ever--that the Electoral College system is unjust and that America should get rid of it. IMO, this all depends on how you think about it. If you evaluate the Electoral College abstractly as a method for assessing the popular will in national elections, then yes it seems arbitrary and unfair. On the other hand, if you look at it historically as a compromise by which independent states ceded part of their original sovereignty in order to create a federal union, well, then it seems more reasonable.
• It is often said that accidents of ancient history shouldn't matter now that the United States is a unitary national republic. But judging by the growing political divide between red and blue states (see "Middle-Ground Counties in America are Disappearing Off Election Maps"), we appear to be getting less united and less unitary with each passing year.
• The number of vaping-related illnesses surged 52% in just a week, with 805 cases of lung injury now confirmed across 46 states. The national conversation about the potential health risks of vaping has escalated with dizzying speed, with lawmakers now rushing to bring down the hammer on e-cigarettes. (Centers for Disease Control and Prevention)
• NH: Juul is reeling. Already in our July report (see "Fear Over Teen Vaping Increasingly Leading to Bans"), we reported that the American public was alarmed by the rapid growth in e-cigarette use by teens and was turning decisively in favor of banning or at least restricting their use. In response, Juul was backpedaling fast on its aggressive lobbying and marketing campaigns.
• Now comes a flood of worse news. The CDC is now monitoring a widening epidemic of lung disease associated with vaping, including 805 cases of lung injury and illness and 12 confirmed deaths. Each week, the toll is surging higher--no doubt because doctors and users are becoming more aware of the danger. Then came the disclosure by the University of Michigan (which previewed its upcoming 2019 Monitoring the Future data) that teen vaping has surged even higher this year than last. In 2019, fully 25% of high school seniors have used a vaping product in the last month. (See the second chart below.) The share of Americans who think that vaping is "very harmful," which was 38% in June, jumped to 58% in September. Meanwhile, the share saying that e-cigarettes are "less harmful" than tobacco cigarettes declined from 36% to 22%. (See the third and fourth charts below.)
• Public officials are now moving beyond bans. They're starting criminal investigations. Federal prosecutors in California have started a probe of Juul Labs. The FTC is investigating whether Juul has improperly marketed to minors. FDA acting commissioner Ned Sharpless, on the defensive in House committee hearings, claims to be reconsidering tighter regulation and admitted that all e-cigarettes are technically "illegal" because the FDA has never ruled on their safety. North Carolina has followed a civil lawsuit. New York and Massachusetts are launching their own investigations. And several other state AG's are networking with the FDA. 
• Juul is now in full-speed retreat. Last week, Juul CEO Kevin Burns resigned, effective immediately. The company also announced that it had voluntarily stopped all media advertising and would cooperate fully and without objection to any new FDA regulation. It probably doesn't matter that the illnesses and deaths may be attributable mostly to off-label THC pods, especially those that contain Vitamin E oils. Right now, the public has in its crosshairs the deep-pocketed company whose marketing made addictive vaping hugely popular among youth. The optics are horrifying: 80% of the vaping victims are under age 35. Full stop.
• Altria (MO), which bought a 35% stake in Juul last year and hitched its wagon to the e-cigarette hype, has seen its price sink by 30% since April (while the S&P 500 rose slightly). I have long argued that if Big Tobacco does have a viable long-term future (see "Does Big Tobacco Have a Long-Term Strategy?"), it lies in targeted exports--not in any realistic prospect of sales growth in high-income markets. Altria thought they saw an opening. But that clearly hasn't worked out for them.

• Income inequality in America has grown to its highest level in 50 years, according to new Census data. The gap between the rich and the poor continues to expand, even as median household income has climbed to a new high in the midst of the nation’s longest economic expansion. (The Washington Post)
• NH: I always like to keep an open mind. But the tendentious slant of this story so reeks of negative headline-picking--I guess because it seems to reflect poorly on our current president--that I have to protest.
• Let's start with the basics. Yes, as a general proposition, it is true that household inequality by income and wealth has indeed been increasing in the United States since (at least) the late-1970s. And it's unlikely that the structural drift has changed much during the Trump years. But we also know that, superimposed of this long-term trend, inequality tends to worsen early in the business cycle (when low-skilled employment and wages sag) and tends to improve late in the business cycle (when low-skilled labor markets tighten).
• According to the Census Bureau, in its annual CPS publication intended to best summarize changes in U.S. household living standards, that is exactly what we have been seeing over the last couple of years. For those who missed it, please refer to Income and Poverty in the United States: 2018, released just two weeks ago. In that report, the Census researchers look at the annual equivalence-adjusted Gini coefficient.  (Gini coefficient is a standard measure of inequality; "equivalence-adjusted" means adjusted to household family size, as is done with the poverty line.) The researchers found that, by this measure, inequality has declined over the past two years: from 2016 to 2017 and from 2017 to 2018. They also find, last year, that the income share of the lower three quintiles gained and that of the highest two quintiles lost. All of these changes were statistically significant.
• I reported on all this last week: See "The Share of Uninsured American Levels Out After ACA." I also remarked with amazement on how the major media failed to report this news.
• Only now we do get major inequality headlines. This WP headline reads: "Income inequality in America is the highest it’s been since Census Bureau started tracking it, data shows." Whence this news? From an occasional note from the ACS (American Community Survey), another Census survey designed or calibrated not to measure national trends but rather to report on changes in individual states and communities. ACS reported a one-year growth in the Gini coefficient that was only barely statistically significant and was not adjusted for household size. Nonetheless, this was the news that the WP decided to grab and run with.
• If the WP reporters have some well-reasoned justification to prefer the ACS report over the annual CPS publication, they should tell the rest of us. They should also be consistent. Last week I pointed out, simply for comparison, that yearly ACS figures show no rise in the percent of uninsured Americans in 2018. But--and I note this with amusement--the WP said not a word about the ACS figures in their uninsured Americans story. Here they preferred the annual CPS report, which showed a significant rise!
• Of the roughly $250 billion in defaulted loans that Americans hold, student loans make up a record share of the pie: 35%. Surprisingly, it isn’t young people who are driving the increase, but older adults: Serious delinquency rates among 40- to 49-year-olds have jumped in recent quarters. (Bloomberg)
• NH: Don't get me started on student loans. And please forgive my rant last week on this topic (see "High Cost of Education Can Put Families Into Impossible Binds"). This is an economic and political powder keg, and pretty soon it's gonna blow.
• The big bottom line of this Bloomberg story is that student loans are now the dominant cause of serious or "derogatory" delinquency--greater than home primary mortgages and HELOCs combined. What's more, yes, the biggest recent rise is among over-30 age brackets, those who can least afford the financial drag. Despite record low-interest rates and a record-long economic recovery, total serious delinquencies are higher as a share of all lending than they were in 2006.
• What's worse, as ably reported in another Bloomberg article, student borrowers are already assisted by so many repayment limitation programs (payments on student loans “are easy to put off” says a U.S. budget committee analyst) that a very large share of them are actually accruing more principal over time. Over the last few years, in fact, new borrowers entering repayment owe more on average at the end of two years than they did when they started repaying. Across all student loans, amazingly, borrowers are only paying back on average one percent of their debt every year. So what... they're looking to be debt free on average in the year 2119?  To quote Pete Buttigieg, talking about his and his husband's $130,000 in student debt, "Is the only real solution debt forgiveness or death?"
• My point is: None of this is going away. It's just sitting there getting bigger. Sooner or later, probably sooner, the next recession or the next pivotal election will make some sort of across-the-board debt forgiveness a political imperative. Which is fine, except for how it lets the higher ed monopoly off the hook for jacking its prices so high, swallowing all the revenue, and then driving this debt locomotive off the cliff.
• Millennials still love Bernie Sanders, but this time around he’s sharing the spotlight with a handful of other anti-establishment candidates. Calls for structural reform have become widespread across the field, with Millennials also gravitating toward messaging from Elizabeth Warren and Andrew Yang. (The New York Times)
• NH: In 2016, when the choice was between Hillary and Bernie, the choice between stasis and change seemed clear enough--and Bernie monopolized the youth enthusiasm on and off the college campus. In 2020, the newness factor has worn off and there are lots of other young and/or progressive candidates in the race. Bernie is no longer the only candidate promising to topple the plutocrats or repudiate student debt.
• The single biggest new youth magnet is Elizabeth Warren. Her support base is pretty evenly distributed by age and gender, and Sanders--whose support skews young--continues to outpoll her among Millennials. But her progressive enthusiasm is equal to Sanders', and her rising advantage in overall numbers suggests that many young people are turning to her--or are at least prepared to if Sanders falls out. Warren does especially well among Democrats who are "liberal" (as opposed to moderate or conservative), who are "very interested" in politics, who are affluent, and who have college or advanced degrees. Sanders does better with noncollege and working-class Democrats.
• Another big youth magnet is Andrew Yang. Yang's support, while low overall, is hugely skewed to wonky young males--basically, the esports crowd. (Sanders does relatively better among young women.) Speaking of young women, let's not forget Beto O'Rourke, who--dating back to his Senate campaign in Texas--has always polled very well (again, in relative terms) among Millennial and Gen-X women.
• Another surprise is Pete Buttigieg. He's gay, progressive, exquisitely articulate, and young: In fact, he's the only bona fide Millennial running in 2020. Yet Buttigieg polls better among older Americans (over 55) than among Xers or Millennials. He also polls relatively well among the educated, affluent, and white--and worse than any other candidate among African-Americans.
• The following Politico surveys reflect the relative strength of eight candidates with different demos (as of the week of September 22). They pretty much speak for themselves.

• Internet culture has been overtaken by “VSCO girls”—that is, beachy, bubbly, Birkenstocks-wearing, eco-conscious teen girls. One quality that distinguishes them from previous waves of “it girls” is their association with brands; rather than standing out, being a VSCO girl is all about fitting in. (CNBC)
• NH: You could say that VSCO--appropriately, the name of an app for editing iPhone pix just so--is what passes on TikTok and Instagram for the vanguard of the Homeland Generation. And yes, it's all about self-consciously striving not to stand out so that you fit in. The branded accessories are all politically correct yet also universal, unadorned, and uniform. The overall effect is upbeat yet "basic." It's meant to be instantly recognizable on social media.
• According to one trend forecaster, "Basic for the VSCO girl is seen as aspirational because they’re adopting the basic elements of style and behavior that their millennial predecessors might recognize. They wear it like a badge of honor.”

• The nation’s white working class is smaller than ever: It has shrunk from 70% of the population in 1975 to 40% today. The declines have been sharpest in the Northeast and West; the only region where this group remains the majority is in the Midwest. (Federal Reserve Bank of St. Louis)
• NH: While this is an interesting study, based mainly on Fed SCF data, it could have been better written. Its title reads "The Decline of the White Working Class." But the authors don't clearly define "white working class." They seem to be referring to all white non-Hispanic households without a four-year college degree. They also never pin down exactly what they mean by "decline"--a decline in relative numbers or a decline in relative affluence? In fact, they mean both.
• So why is the white working class declining? Well, in the first quantitative sense, it is declining because a shrinking share of all Americans are white--or choose to identify themselves as white. And, of this declining share, there is a further decline in the share who do not have a four-year college degree. So that's the answer to the numbers question.
• As for the decline in relative affluence, the authors here focus on two major trends. First, there is the steeply widening income and wealth gap between whites with and without four-year college degrees. Second, there is the gradually closing income and wealth gap between whites and nonwhites without four-year college degrees. All of these trends are summarized in the chart below. Note that the white working-class share of the U.S. population is declining and that its share of total income and (especially) wealth is declining ever faster. In 1989, it held roughly 45% of America's household wealth. By 2016, that was down to barely 20%.
• There's a whole cottage industry of conspiratorial books that try to explain what has happened to America's traditional working class. If you want a purely economic explanation, go the Brookings Institution. If you want a deeper cultural explanation, you might want to try Charles Murray's Coming Apart: The State of White America: 1960 to 2010. In 2020, we may get to learn which end of the political spectrum will get to write the next chapter of this story.

 

• Lack of education is a major hurdle standing in the way of China’s transformation into an advanced economy. Only 30% of the working-age population has a high school education, far below the 78% average in other developed economies. (Bloomberg)
• NH: Americans are often intimidated by China. They know all about China's turbo-charged, no-recession economic growth over the last 30 years. They see the gleaming infrastructure of Shanghai and the speeding bullet trains to Lhasa. And they are unnerved by the PRC's 2025 goal for dominating global high-tech manufacturing.
• What Americans lack is perspective. Despite urban affluence, China remains overall a struggling middle-income economy. At $9,600 (at U.S. exchange rates), its per-capita GDP ranks number 67 among nations--just over Turkey and Brazil and just under Mexico and Malaysia. In terms of its human development index (which combines living standards with longevity and education), China ranks number 86, just over Ecuador and just under Algeria.
• This Bloomberg article reports on the research by Yu Bai et al. in The Journal of Contemporary China, which takes a closer look at China's secondary school ("high school") completion rate. Using the best census estimates available, the authors conclude that China's secondary school completion rate for the age 25-65 population is only 30%. This is not only much lower than the rate for any high-income country, but it is also lower than the rate for any comparable middle-income economy. For example, Mexico is at 34%, Turkey is at 36%, and Indonesia (which just graduated from lower- to middle-income status) is at 31%.
• To be sure, China is working hard to raise the completion rate--and these rates are considerably higher for the youngest age brackets. In the 25-34 age bracket, the rate is 47%. And for those around age 20, it may be 60% or higher. Yet other middle-income economies show similar improvement: In Brazil, for example, the rate is 61% for 25-to-34-year-olds. More importantly, China's rapid pace of advance necessarily implies a huge education deficit among older workers. Over age 45, less than 20% of Chinese have completed high school.
• The cohort lag in education attainment doesn't just impede economic productivity. It also impedes efforts to improve educational quality. After all, you can force every kid to go to school, but if you have no educated teachers to teach them, quality has to suffer. The authors note that a large share of China's high schools (especially in rural areas) are essentially vocational training centers with little attention to academic skills.
• Bottom line: Substantial improvement in society-wide levels of education takes time. The authors note that, historically, economies that have moved from middle-income to high-income status already had high rates of educational attainment in all age brackets. South Korea, Taiwan, Singapore, Israel, and Ireland all graduated into "high income" status in the late-1980s or early 1990s. Their average rate of secondary school attainment at the time of graduation: 72%. That's way above where China is today.
• Emboldened by the president’s support, a growing number of states are introducing Bible literacy classes in public schools. Those promoting the classes say that the Bible is a cornerstone of cultural literacy, but critics contend that they are just a thinly veiled way to promote Christian values. (Christian Science Monitor)
• NH: No doubt most of the legislation and curriculum will follow the familiar red state-blue state divide. But I can imagine that, even in the toniest blue-state school districts, Gen-X parents will be sympathetic to the argument that biblical literacy plays an important role in cultural literacy. Scholars universally acknowledge that the King James Bible--no less than the works of Shakespeare, Marlowe, Spencer, and Milton--helped to give shape and syntax and cadence to the English language. Why would any English speaker choose to remain ignorant of it, regardless of which religion he or she practices? It's about as crazy as studying Arabic language and literature while carefully avoiding the Koran.
• From 2000 to 2017, childhood mortality rates fell in all low-to-middle-income countries except for Syria. The widespread declines reported by the Bill and Melinda Gates Foundation are the result of efforts to fight child poverty, deadly diseases, and malnutrition, though wide disparities still persist within and between countries. (The New York Times)
• NH: The impressive fall in child mortality throughout nearly the entire less-developed world reflects diverse drivers. In some regions, we see greater affluence. Elsewhere we see more political stability or rising educational attainment. Simple low-cost measures to improve hygiene and treat diarrhea and infections have had massive returns. One wonders how accurate these figures are for sub-national regions--when we still don't have recent overall population numbers from some of these countries.
• Still, the basic findings of this study are no doubt correct. Over the long term, these large hikes in childhood survival rates will act as a boost in the fertility rate and slow the expected deceleration in global population growth--unless, of course, higher living standards work to suppress fertility even more. See "Africa Expected to Carry World Population Growth" and "UN Projects the World Population Will Stop Growing by the End of the Century."

DID YOU KNOW?

Take This Stand (But Not That One). Whether it was Walmart limiting ammunition sales or SoulCycle’s chairman raising funds for Trump, brands of all kinds have made headlines for their political stances in recent months. Taking a stand is often now seen as good business. But according to new Morning Consult data, brands speaking up on social issues is a hit-or-miss proposition, with the likelihood of success varying across issues and generations. Consumers across the age spectrum favor brands that advocate for civil rights, the rights of racial minorities, and reforming the criminal justice system. But Gen Xers and Boomers frown on companies supporting a candidate of either party, while Millennials are more supportive of those that favor Democratic candidates. Criticizing President Trump is also dicey territory: Millennials would like brands that did this more, but Xers and Boomers would like them less. The one sentiment that does poorly among all generations—and which brands would do well to avoid—is supporting stricter abortion policies.