Although I’m not an economist, I work in the part of Political Science just across the border and have many good friends in the economics profession. So just as they are, I am swept up in the excitement of the pending announcement of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (otherwise known as the Nobel Prize in Economics). There are a lot of great candidates this year including Jean Tirole, William Nordhaus, Paul Milgrom, Tom Sargent, and a whole host of my Princeton colleagues. But recently a dark horse candidate has emerged who now seems likely to win in a walk. So I’m conceding the inevitable. The 2009 Nobel Prize in Economics will go to Barak Obama.
Consider the following:
Whereas Tirole, Nordhaus, Milgrom, and others have made important and fundamental scholarly contributions to economic theory and policy analysis, only Obama has the audacity to hope for better economic policy in the future. Can he design a health care system that covers everyone and saves money? Yes, he can! Can he reengineer the financial system to eliminate systemic risk, protect consumers while maintaining the benefits of modern finance? Yes, he can! Can he reduce greenhouse emissions without reducing jobs and economic growth? Yes, he can! What actual economist would dare say those things? For his vision alone, he deserves the prize.
Obama has never been associated rational expectations theory or the efficient markets hypothesis. In fact, he’s turned his administration into one big Behavioral Economics Seminar.
I’ve heard rumors that Obama still plans to broker a peace treaty between Paul Krugman and Bob Lucas. Unfortunately, the track 2 negotiations seem to have broken down.
The Scandinavians could really stick it to George Bush by giving Obama two Nobel Prizes.
Arlen Specter’s relationship with the right-wing of his party never been good. But he’s managed to keep the conservatives sufficiently at bay to win five Republican Senate primaries. But as the Republican Party becomes more conservative and retreats from the Northeast, his position became untenable. Even if he had been able to move right to fend off his second consecutive primary challenge from conservative Pat Toomey, he would have been extremely vulnerable to a Democratic candidate in the general election. So his decision to switch parties is not terribly surprising.
The big question today of course is the extent to which Specter’s switch will affect the success of President Obama’s legislative agenda. Of course, as many have already pointed out, the switch plus the probable seating of Al Franken would bring the Senate Democrats to the magic filibuster-proof majority of sixty.
But because there is no guarantee of Democratic unanimity on many of the more controversial aspects of the president’s agenda, the effect of the switch ultimately depends on how much Specter moves to the left as he tries to position himself within his new party. Keith, Howard, and I once published a paper that among other things estimated how much party switchers shifted on the liberal-conservative continuum. We found that on average party switchers moved 28 percentile ranks on a liberalism scale. Thus, a Democrat at the 40th percentile on liberalism would move to the 68th percentile. In the 110th Congress, Specter was the 55th most liberal member of the Senate. With the addition of new Democratic senators, he is probably the 62nd most liberal. Consequently, if he shifts the average amount, he’ll be the 34th most liberal. Such a move would put him solidly within the Democratic fold near Herb Kohl and Diane Feinstein. He would probably rank more liberal than his fellow Pennsylvania Democrat Bob Casey (even on issues other than abortion).
That’s just the average effect. There are reasons to suspect that Specter might go even further left. After all, he has to make party activists forget that he voted for the Iraq War, supported Bush’s judicial nominees, and was Anita Hill chief inquisitor (memories are long for these sorts of things). He has to avoid a serious Democratic primary challenge, and he has to raise a lot of money from groups and individuals who have pumped millions into past attempts to defeat him. So Obama just doesn’t get an extra vote for his agenda, he gets an easy vote.
Saxby Chambliss won reelection in the Georgia Senate run-off by a somewhat surprising margin 57-43% margin over Democrat Jim Martin. Some random thoughts:
I wouldn’t yet call it an “Iron Law,” but there seems to be an emerging pattern of the newly elected president’s party losing in run-off elections. Of course, the closest parallel was in Georgia in 1992 when republican Paul Coverdell beat incumbent Democrat Wyche Fowler following Bill Clinton’s presidential victory. Of course, there are big differences between the two cases. First, Chambliss, unlike Coverdell, won the plurality of the votes in November. Second, Clinton, unlike Obama, won Georgia’s electoral votes. So Chambliss’s victory is not nearly surprising as Coverdell’s was.
Political scientists and economists such as Alberto Alesina, Howard Rosenthal, and Mo Fiorina have offered a “balancing” explanation as to why the new president’s party performs poorly in these special elections and in midterm elections generally. The basic idea is that most voters are more ideological moderate than the two parties and therefore would like to balance them through divided government. Such balancing is hard to do during a presidential election due to the uncertainty surrounding the presidential contest. If a voter splits her ticket to obtain balance but guesses wrong on the presidential race, she’s only made matters worse. But in a special or midterm election, voters have a clear opportunity to promote balance by voting against the president’s party.
There may be other explanations as well for the presidential slump. Perhaps there is buyer’s remorse. Probably not the case here. Obama seems just as popular now as when he was elected. Perhaps winners get lazy and losers get fired up. Because it was a fairly exhilarating victory for the Democrats and a very disheartening loss for the Republicans, this doesn’t seem that plausible either.
Much of the focus on the runoff centered on its potential to create a “filibuster-proof” Democratic majority in the Senate. I’ve been fairly skeptical that getting to 60 is somehow magical. Yes, 60 is better than 59 and 60 may be more better than 59 than 59 is better than 58. But I don’t think there was nearly so much riding on this race as some have suggested. First, the academic literature on the Senate has failed to find a discontinuous advantage in reaching the filibuster margin. The best book on the subject (written by Eric Schickler of Berkeley and Greg Wawro of Columbia) finds that many important piece of legislation pass with a less than 60 vote margin (in other words, the opponents of legislation often fail to fully exploit there opportunity to obstruct). Second, it seems plausible that Maine’s Olympia Snow and Susan Collins will be almost as reliable a vote for Obama’s initiatives than the southern moderate Martin.
A lot of heavy hitters campaigned in Georgia during the runoff (Bill Clinton, Al Gore, Sarah Palin, etc). But the heaviest hitter of them all, President-elect Obama, sat this one out except for making some radio ads. This contrasts to Bill Clinton’s extensive activities on behalf of Fowler in 1992. I have lots of hypotheses (but alas little data) as to why Obama stayed in Chicago. The first is that he believes the “balancing” theory and didn’t want to remind voters of this opportunity. The second is that he agrees with me about relative unimportance of the 60th vote in the Senate (or he knows something about the Minnesota recount that I don’t). The third is the most plausible. He’s worked very hard in his transition to live up to his post-partisan promises. Travelling to Georgia in the midst of an economic crisis to give a partisan political speech would have undone much of this.