Intrade, a prediction market, is currently predicting Obama’s odds of re-election at only 60%. It is really an amazing opportunity. 67% return, for a sure thing. Obama is a 60 cent dollar.
I think the vast majority of people use this criteria when voting: From most important to least.
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Charisma
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Age
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Race
4)Physical attractiveness
5)Who you would rather spend time with
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What type of cologne they wear
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Their policies
The order of the first few factors are debatable but the last factor that the masses will take into consideration are the policies of the candidates. Actually this is an oversimplification. It is the marginal factors that determine the outcome of the vote because competition between the candidates forces identical structural policies. Both candidates promise an ideal product, i.e. lots of wealth redistribution. In other words, when voting, people are choosing between a bottle of pepsi, or a bottle of coca cola. The product is virtually identical. So it’s all up to marketing to determine the choice. The analogy is actually not that accurate. Let’s change it to a bottle of coca cola(Obama) and a bottle of rancid sewage water.
Now let us compare and contrast the two great men(sarcasm) based on my perfectly accurate voting criteria:
Obama is extremely charismatic and he is a great orator. Obama is very sexy. He is young. He has a smile that will blow you away. Everyone loves him. Seemingly every celebrity supports and endorses him. Why? Because he is a celebrity himself. Is there a talk show he has not been on? His relative youth is clearly a benefit since it represents change, makes him relatable to the younger generations, conveys an ambitious attitude and it strengthens his general appeal. Obama is black. This may sound like a racist feature to point out but it is a reality that cannot be ignored. Ironically, with so much talk about racism this feature is actually a huge benefit to him. I remember, back in 2008, when people were saying things like “no one will ever vote for a black person”, “America isn’t ready for a black President”, etc. Of course it was sheer ignorance. It was obvious to me, at the time, that people preferred voting for someone who is black. As ridiculous as it sounds, it was clear that everyone was excited to help elect the first black president. It was portrayed as a struggle for a monumental achievement. Supporting anyone but Obama made it seem like you were a racist. Can you imagine McCain or Romney, white men, claiming that they are superior(Presidents) to Obama, a black man?
Mitt Romney is wealthy. If the economy weakens there will be resentment towards the well-to-do people. The anti-capitalistic mentality is so widespread that his income status alone could be a fatal weakness. Mitt Romney definitely looks presidential, but maybe too much like a plastic man. Regardless, he is at best like a nice-looking uncle. He is nothing compared to the dashing, seductive allure of Obama. Mitt Romney is old. His age symbolizes rigidity. It makes him seem senile, decrepit and plain-old boring. No one wants to think that their president needs to take a nap before addressing foreign policy.
People often mention the state of the economy being a determining factor of who gets elected. I think this factor is highly overrated. Franklin D. Roosevelt was re-elected during the Great Depression. If anything a weak economy could work in Obama’s favor, as people fearfully cling to the status quo.
Perhaps, the most crucial factor determining the outcome of the election is the fact that society is mostly comprised of democratic-minded progressive liberals, or whatever you want to call them. The Republican party is seen as an anti-abortion, anti-gay rights, anti-drug, pro-religion, pro-war and anti-progress party. These policies are merely superificial of course, and don’t mean anything significant in terms of actual policy. Regardless, it is this image that makes their loss inevitable.
What if Romney wins? What if pigs fly? What if Krugman becomes a libertarian? Claiming that it is a risky investment because Romney could possibly win is like stating that oil is a bad investment because turmoil in the Middle East could resolve itself. It’s never going to happen. What if Obama gets re-elected? What if the sun rises tomorrow? What if the force of gravity continues to operate? What if the sum of a triangle’s angles adds up to 180?
Think my analysis sounds childish, immature, and down right stupid? I don’t blame you. I agree. But of course, the analysis is a reflection of the views, emotions and behaviour of the vast majority of U.S. voters.
Warning: Our wise overlords in the government restrict the use of credit cards with Intrade, for our own safety of course. So I used a wire transfer, which is a hassle and incurs a transaction cost. Intrade has its own transaction costs. There is currency risk because the bet is held in U.S. dollars. There is inflation risk because you have to wait 6 months before the election. Intrade is only a clearing house so the counter-party risk exists only with Intrade itself and the Irish banks, but not with the trader. Intrade markets, even the most popular, are fairly thinly traded.