A Center-Left coalition is poised to win; But victory is not assured.

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Last year I launched an experiment in prediction. Instead of trying to predict who the successful Democratic nominee would be or which candidate would win, I framed my predictions in terms of three scenarios for successful electoral coalition. …


By Rick Pasquier, Partner at Practus, LLP

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The U.S. Department of Labor (the “DOL” or the “Department”) issued a release dated June 30, 2020 in which it proposes amendments to the “Investment duties” rule under Title I of the Employee Retirement Income Security Act of 1974 (ERISA). Many early commentators believe that the practical effect of the proposed changes will likely be to discourage pension fund managers and advisors to those funds from selecting investments using criteria that that incorporate express environmental, social and governance (commonly known as “ESG”) considerations. …


What Can We Expect?

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SEC Chairman Jay Clayton has continued to engage with investment advisers, fund sponsors, academics, investor advocates and environmentalists on the problem of environmental, social and governance (often referred to as “ESG”) disclosure. His position until now has been of respectful listening and issuing advice that any changes should be within the context of the SEC’s long-standing approach to “materiality” in its integrated disclosure system, which he contrasts with a more prescriptive “one-size-fits-all” approach advocated by some critics and like that recently enacted by the European Union.

In early March, the SEC asked for comments on the “Names Rule” under the Investment Company Act of 1940 (the “1940 Act”). Chief among its questions were those seeking input on the extent to which investors rely on fund names in making decisions and the extent to which more guidance on use of ESG words in fund names would be helpful to investors and capital markets generally. To date the Commission has received 47 written comments (including one by this author) representing a variety of industry groups, law firms, academics and activists and filed notice of one private meeting between SEC Commissioner Hester Peirce, her counsel and representatives of BlackRock. …


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When I was a General Counsel, I worried a lot about the records that my organization was creating. I implemented programs to streamline these records and make sure that people were aware of what they were creating, what they were saving and for how long. The rules-of thumb were pretty basic. “Think first before creating a record.” “Pick up the phone before writing an email.” “Scrutinize your address lines to make sure you weren’t including more people than necessary.” “Don’t describe events inaccurately, even in the most casual email.” …


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When I began my odyssey in election-year prediction in August 2019, I was convinced that the key elements of US economic and policy elite were willing to allow a shift in the center of gravity of US politics to the Center-Left. They would do this if they concluded they had to to build an electoral coalition broad enough reach out to voters outside of the top 10% in income and wealth. To do anything less would be to leave these folks politically homeless and allow the the forces of Right-Nationalism that had transformed the Republican Party to squeak through to another electoral college victory. This narrow victory would be even easier for the Right-Nationalists if enough economy-minded upper-middle class suburban voter were willing to vote for President Trump in the general election. The trouble for the Wall Street and Beltway crowds, and the academics and journalists who provide much of the intellectual weight behind elite opinions, is that the Right-Nationalist coalition is willing to back Trump even as he unravels the key underpinnings of the rule-based international order. This rule-based order has underpinned US dominance of the international system since the 1940s and is an important source of legitimacy for an economic system that has so disproportionately benefited those around the world with the educational and financial resources to capture the benefits. The largest concentrations of these folks in the United States are on the “coasts.” …


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Photo by Jason Leung on Unsplash

When I began this experiment in prediction in August 2019, I believed that the most likely scenario to emerge from the 2020 election would be the shift of American politics to the Center-Left. I saw this a as a way for internationally-minded elites to dump Trump and shore up the rules-based-international order. The coalition would unite traditional business leaders with scientists, environmentalists and other academically-trained experts who understood that in order to win in a two-party system with an electoral college, substantial efforts would need to be made to address the sources of anxiety suffered by people in the lower 80% in socio-economic terms: health care, stagnating living standards, immigration, automation etc. I saw the way that ideas coming out of the Sanders campaign and left-wing proposals for a Green New Deal seemed to be establishing the talking points for the campaign agenda of most Democratic candidates. Moreover, legions of credentialed experts seemed to be on hand to validate the case for these far-reaching proposals. …


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“Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back”

John Maynard Keynes

Back in the 1980s, the Austrian political economist Joseph Schumpeter suddenly came back into fashion. As neoliberal reforms were introduced under the Carter and Reagan Administrations to “unleash the dynamism” of markets and private enterprise, journalists and trained economists grew fond of quoting Schumpeter’s mantra about the need for “creative destruction” to push the engine of economic growth forward. Schumpeter’s ideas were used to justify scaling back the scope of antitrust enforcement so that innovation could be encouraged among the “winners” in a competitive economy. …


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It certainly seems like there is a great deal going on in politics. Impeachment investigations, polls, debates etc. But the daily flood of news masks a certain stability in the current race for President. Every day there are multiple “blockbusters” about the impeachment investigation, and indeed we know somewhat more about the circumstances around the President’s call with President Zelensky of Ukraine. But the overall political landscape remains strikingly the same. The President remains popular with his base which is between 35–40% of the national electorate and possibly bigger pockets of support in key swing states such as Ohio, Pennsylvania and Florida. There is no sign that he will be challenged for the nomination from within the Republican Party. One has to continue to believe, therefore, that the chances of President Trump being re-elected remains very high. Given the President’s level of support among likely Republican voters, the chances that the Republican-controlled Senate will remove the President has to be seen as vanishingly remote. In previous posts, I predicted Trump’s chances of consolidating his Right-Nationalist Coalition was somewhat less than 50/50 but very close. Most recently I have put this likelihood at 46%. …


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Photo by Louis Velazquez on Unsplash

What a difference one week makes! The media dialog about the 2020 Presidential race had been all about weighing the probabilities of the Democrats nominating one of its two progressive candidates and the degree to which this increasingly likely scenario would affect the Democrats’ chances to beat Donald Trump, recover ground in the Senate and maintain their control of the House of Representatives. The leak of the existence of a whistleblower complaint to the Washington Post now has replaced this speculation with a wholly new question. How likely is it that the Democratic majority in the House will impeach the President on the strength of the revelation that Donald Trump had sought the help of the President of the Ukraine to investigate corruption involving Joe Biden in 2016? This reframe of the 2020 election, if it sticks, will have consequences that are impossible to predict with precision but certainly shifts probabilities I previously assigned to the three main scenarios. …


Voters may not vote on policy and economic issues and instead view their choices through a larger cultural narrative, but the return of economic uncertainty and Elizabeth Warren’s recent surge means a Center-Left victory still should be seen as more-likely-than-not in 2020.

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Photo by Markus Spiske on Unsplash

Back in July I published my predictions for the 2020 US elections. I predicted that a Center-Left Coalition had a slightly better than 50/50 chance of victory in November 2020 but that Trump and the Republicans still had very strong chances to pull an upset and win the Presidency and hold the Senate on the strength of a Right-Nationalist coalition. I also came clean on the type of evidence I used to reach this judgment and, by extension, the type of evidence that I would look to when I updated my “priors” on the probabilities of the three scenarios I identified coming to pass. Since then, I slightly reduced the chances of a Center- Left victory to less than 50 percent and essentially even with the chance of a Trump re-election. …

About

Richard Paul Pasquier

Partner at Practus, LLP, a law firm. Rick advises clients on issues at the intersection of business strategy, law and political economy.

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