Ask the Blogger had another bumper crop of personal finance questions, which I promise I'll get to! But this week, a special election edition*.
Dear Blogger:
What would happen if Mitt Romney won on election day? How would his policy be different from Obama's?
Romneycurious
Dear Romneycurious:
It is traditional in this most solemn of seasons for pundits to ritually proclaim that the challenger is a radical revolutionary who will overthrow everything that has gone before him. This makes good television. The truth, which is that the Republic will probably keep plugging along no matter who is in office, does not.
Despite what you may have heard from commentators like President Obama, this is especially true of Mitt Romney. During the debates, Obama instructed us to look at Romney's base-pleasing stump rhetoric from the primaries, rather than his considerably more moderate stances in the general election. The real Romney, he implied, was a deep radical who would unravel the New Deal, unwind Roe v. Wade, and enact legislation that harkens back to a best-forgotten era, such as the neolithic.
This is, of course, good politics, but it would be silly to actually take the president's advice, since we have a considerably better guide to how Mitt Romney would behave in office: how he did behave in office. He was, you may recall, governor of Massachusetts for a little while. And there he governed like a boring center-right moderate technocrat, not a fire-breathing tea-partier who wants to cut taxes so that husbands can use that money to barricade their pregnant wives in the kitchen.
You could argue that for all their dislike of each other, Romney and Obama are united by a shared faith: that if you put a bunch of really smart people from all the best schools into a room together, those people can make everything work better. Particularly everything that involves money. To be sure, they differ in the respect that they accord businessmen; Obama only seems to like them when they're manufacturing twee eco-friendly products that run on moonbeams and dewdrops. Romney, on the other hand, loves them so much that it's sort of surprising to learn that his family consists of regular persons, not corporate ones. But the material differences in their policies would probably not be that noticeable unless you happen to own an energy company.
Their shared faith in technocracy is not the only reason for that. The other reason you shouldn't expect much in the way of radical new plans is that we are now officially out of money. The recession is still grinding down tax revenues, and the bills for long-promised entitlements are coming due. There's no cash in the till for big tax cuts or new spending. And while there might be some shift in emphasis as to how we ultimately resolve our budget crunch, Obama does not have negotiating room to raise it all with a massive tax on Warren Buffett, and Romney is hardly going to get much support for turning Social Security into a free coupon for half-priced beverages at Denny's. The zone of possible agreement is actually pretty small, and either man is going to find himself stuck with a solution that neither he, nor you, will very much like.
The big differences I'd expect to see are on Supreme Court justices, and to a lesser extent, on implementing ObamaCare. The rest is small details.
Dear Blogger:
Who is going to win tomorrow?
Looking for Nostradamus
Dear Nostry:
In the immortal words of Nobel-Prizewinning physicist Niels Bohr, "Predictions are hard, especially about the future." But I can tell you one thing with certainty. Tomorrow, Romney will win.
Or Obama will win.
Or maybe they'll tie.
As someone recently pointed out on Twitter, I think we can conclusively rule out the possibility of time travel, since otherwise, some enterprising future citizen would have come back to stop George Lucas from making the Star Wars prequels. That means that there is no way for us to find out who is going to win until, well, they've won.
However, we can guess. As an avid fan of James Surowiecki's Wisdom of Crowds, my favorite method of guessing is . . . to look at other peoples' guesses. And as an avid fan of Robin Hanson, I think the best guesses happen when money or something equally important is on the line. As of this writing, the odds on Intrade's prediction markets give a 2/3 chance of another 4 years for Obama, and a 1/3rd chance of a Romney presidency. Lacking any better information, that's my best guess too.
Dear Blogger:
I am just starting a new job, and I make around $60,000. These next years are very important to me - need to improve my bank balance, buy things, etc.
Of the two candidates, who would be better for my income? I have concerned about the lack of optimism in the country. I suspect Romney will bring the American optimism. Also, I am concerned about the US leadership abroad. Obama has been traveling around the world and his Sec. of State is a celebrity. I suspect they will bring good fortune for us.
Clear Eyes, Full Hearts
Dear CEFH:
You will be pleased to hear that the president has, at best, a marginal impact on the economy. The effect on global public opinion seems to be larger, but not that much larger. And it's far from clear that changes in global opinion are much help in, say, increasing our export opportunities, or decreasing terrorist attacks. Americans tend to radically overestimate the benefits of "soft power" or "leading by example". To the surprise of many Americans, foreigners have independent lives which do not revolve around us. Being mostly concerned with their own affairs, not ours, and they are not going to do just what we would like no matter who is president.
Unless you work in a handful of industries such as solar panel manufacture or hedgefunds, currently receive Medicaid in one of our stingier states, or plan to make a really eye-popping amount of money, your income is probably about equally safe under hypothetical Romney and Obama administrations. You might have to pay for health insurance under Obama and not Romney, but then, that insurance might shield you from bankruptcy. And even there, the differences are not certain, as ObamaCare will prove very hard to repeal if Romney even tries.
Dear Blogger:
Why is there no socialism in the United States?
Secret Agent Man
Dear SAM:
What a deep question you ask. It has so many answers--indeed, it is so many questions. If you want to know "Why did America never fall to socialist revolution while others did?" well, good question. It has been pondered by many analysts, not least of whom were the communist organizers who resolutely failed to organize anything as large as a Memorial Day Parade. As far as I can tell, they mostly had to content themselves with infiltrating municipal transit unions, and sitting through tedious organizing sessions in badly lit Upper West Side apartments where half the time was spent arguing about who was bringing coffee to the next meeting.
I have heard that Lenin chalked up the failure of socialism to the fact that by 1915, the average American industrial worker had indoor plumbing and electric lights. In this argument, America simply lacked a working class that was quite immiserated enough to embrace socialism--and by the time we had one, socialism had been revealed as a fairly expensive way to go broke.
Other analyses have focused on our relatively dispersed political system, our resolutely bourgeois character, and the availability of consumer credit to satiate the masses with radios and refrigerators. All of which is a fancy way of saying "I don't know".
On the other hand, if you're asking "Why don't we have a Socialist Party?" the good news is that we do. In this age of consumer choice, you can pull the lever for the Alexander/Mendoza ticket in Colorado, Florida, and Ohio. Of course, given the unlikelihood that this will do much--other than pleasing their mothers--you could also just practice your golf swing.
Dear Blogger:
I am very worried that my candidate will not win tomorrow. Can you put my mind at ease? Should I buy gold ingots? Move to Canada?
Sleepless in Seattle
Dear SIS:
You have fallen prey to a disease that roars to epidemic status about every four years: the delusion that who occupies the Oval Office matters so much that you will suffer drastic upset if your candidate loses. There are millions of people in this country who act like a burr has been strapped under their saddle every time their party loses the presidency . . . a burr that will constantly chafe them until--oh frabjous day!--the Oval Office is liberated. Alec Baldwin even famously threatened to move to Canada, though he ended up moving only as far as an NBC sitcom. You can insert your own joke here.
This is all folly. As I mentioned above, the current contest is between a center-right technocrat and a center-left technocrat, not between Moloch's Minions and the Seraphic All-Star Squadron. Moreover, think about what percentage of your life you actually spend worrying about things that the government does, or controls. I would wager that it is well under 20%.
Cast your mental eye over the stuff that actually keeps you awake at night: Does your boss like you? Will you find love? Will your husband ever lose the pregnancy weight? Are your parents still compos mentis? Is that crazy kid of yours going to graduate from eighth grade and eventually wend his way to college? How are you going to pay for a new boiler and a new roof if they both go at once? Why do your knees ache every time you climb stairs?
Which of these problems would the president fix? Oh, you can name things--maybe ObamaCare will make knee replacements cheaper (or impossible to get); maybe college will be cheaper under Romney, or Obama's policies will mean your kid is eligible for better student loans. But this is small ball compared to the major issues in your life, which boil down to: do people love me? Am I respected and secure? Will I be happy?
The government does not love you, and never will. It doesn't even like you. Feelings of like and love are things that attach to individuals. And as PJ O'Rourke once noted, individuals are not available as a group. They only come packaged in individual-sized portions.
Even the bits of government that you probably intereact with every day, like the highways, are mostly taken care of at the state and local level. And I guarantee that neither candidate is going to rip up your commuter route and replace it with a unicycle track.
In other words, no, you shouldn't move to Canada. My mother comes from a part of New York that is essentially Canada, just the other side of Lake Ontario. True fact: they get 10,000 inches of snow every winter. Their snowblowers are powered by jet turbines. Canadians themselves are lovely people with a fine country, but they have made an unfortunate life-choice, geography-wise. Don't you make the same mistake.
If you really need something to let you sleep at night, you could try hedging your net psychic wealth, which is to say, bet against your candidate on a prediction market like InTrade or Betfair. That way, if he wins, you get the psychic joy of a victory. And if he loses, you get a big bag of money with which to drink your sorrows away.
Unfortunately, such betting is currently illegal in the United States, so I cannot officially advise such a course. If you want to hedge your psychological well-being, you might have to move to Canada.
* I've taken a bit of license with the questions. Some of these are as asked; others are summaries of questions I've been asked in person, in comments, and via email about whether, frinstance, folks should buy gold as a hedge against another four years of Obama. Hey, if the candidates can do it, why can't I?
