Friday, October 31, 2008

THE GAMBLER’S PREJUDICE: WHY BARACK OBAMA WILL LOSE

Ranjan Sreedharan
05/Oct/2008

Now that the Democrats and the Republicans are both done with their national conventions, and Barack Obama and John McCain have been formally anointed as candidates for President by their respective parties, it is time to look ahead and make concrete predictions. Here is mine. Barack Obama will lose.

Having said as much, it is not that I am unaware of what the opinion polls have been saying ever since campaigning began. As a matter of fact, the polls have gone through a full circle. For a long time, it was Barack Obama who had the clear lead, though never decisive, peaking with what was, by all accounts, a well-received convention speech (the “post-convention bounce”). And then it was McCain’s turn to take the spotlight with the surprise nomination of Alaska governor Sarah Palin as his running mate. Palin’s convention speech literally set the house on fire and suddenly there was both energy and enthusiasm in the Republican campaign. White women who had enthusiastically supported Hillary Clinton were now literally to be seen deserting Obama in droves and flocking to the McCain-Palin ticket in what came to called the “Palin bounce”.

Since then, Palin’s lustre has dimmed somewhat and with the economic woes overtaking the nation, and with John McCain declaring that the economy was fundamentally strong on the very day that the storied Lehman Brothers went under (and just a week after Fannie Mae and Freddie Mac had to be bailed out by the federal government), Barack Obama has once again moved into the position of front-runner. Since then, with the stock market suffering serious erosion, and with Wall Street woes moving into the Main Street, he has actually consolidated his position, so much so that in some of the critical, so-called “swing” states which have traditionally voted Republican, he is actually ahead in the polls by a whisker.

Okay, so what are my conclusions? To begin with, I believe that despite all her recent troubles, Sarah Palin continues to be a smart choice who makes it more likely that Obama will lose. At the same time, my conclusion that Obama will lose predates Palin’s nomination because, to begin with, this is an election where a sizable (in terms of statistical impact, if not in absolute numbers) section of the mainstream voters (read the white voters) are actively in search of reasons to not vote for Obama. In fact, they appear to be in a quest for plausible reasons (not necessarily substantial one’s) to not vote for him because they do not want to appear as racist, as much in their own eyes as in the eyes of others around them.

The other factor at work here which is also the title of this article is what I shall call “the gambler’s prejudice”.

In making predictions about the future movement of prices in the stock market, analysts often make use of a tool called technical analysis (where you plot the price movements on a chart and draw conclusions based on the pattern) as also one called fundamental analysis. The movements in opinion poll ratings on account of a well received convention speech or the selection of a glamorous running mate are the equivalent of short term movements in the stock market that can be predicted by technical analysis. However, without getting distracted by the short term spikes, I believe there is a case for making predictions based on more long term and fundamental factors.

Imagine you are a gambler who has had a lucky and successful career so far but now have fallen on hard times. Increasingly, the bets are not coming off and the loss of money that began as a trickle has turned into a flood and you are on the verge of losing the shirt off your back. You had always possessed a great technique that enabled you to outsmart your opponents. But now, it seems they have finally cottoned on to you. So, these days at the table, more often than not, they win and you lose.

Now imagine further that two your friends come to have a word with you. The first one is indignant at the plight you have got yourself into.

“What have you done to yourself? Don’t you know gambling never did anyone any good? What made you think you could be different. Take my advice. You have to kick this habit at once and start rebuilding your life the hard way, brick-by-brick.”

The second one is more sympathetic. “You know, I’ve been watching you play for a very long time. You have always been very good. It’s just that in recent days, you have not updated your technique. I believe you only need to refine your technique and maybe, be a little less aggressive. I assure you, it’ll all come back to the good old days.”

So, whose advice do you take? Here is my conclusion.

Up to, and until the point you have actually lost the shirt off your back, your instinct will always be to go with your understanding friend No.2. But, if you have actually lost the shirt off your back, you will go with your indignant friend No. 1. However, even as you do so (because you have no other choice), you will all the while hate him and hate his guts in telling you so much to your face.

So, to sum up -- and just in case the analogy did not fall in place -- here it is. You are America now fallen on hard times and called upon to make hard choices. Your friend No.1 is Barack Obama and the friend No.2 is John McCain. For Barack Obama to win, America on the day of the election, must appear a gloomy place looking ahead to seriously bleak prospects. Anything less, and John McCain will be president.

Well, you may ask, with Wall Street and the banking sector on the verge of a meltdown and foreign policy in serious trouble with two unfinished, unending wars, isn’t America already in a deep hole? The answer to that is it’s not what you and I believe that matters but what the people of America believe to be true. And here is some news relevant to the point. Even in these bleak times, one out of every three American believes that Dubya is doing just fine. They approve of his Presidency. And then, there are many more who believe, that after the “surge”, America is well on course to “victory” in Iraq.

Other than making you wonder where these folks get their news from, it is also a pointer to a seldom realised truth about democracy. This is a political system that actually gives you the right to cherish your own delusions, the right to be in denial and the right to construct (and inhabit) alternative versions of reality.

That so many in America are so clearly unhinged also suggests that when this democracy gives way finally (in the none-too distant future) to a non-democracy as the leading superpower of the world, there really is no reason to fear the worst.

When communism in the erstwhile USSR collapsed, Francis Fukuyama talked about the ‘end of history’ with the liberal-democratic model having emerged for all times as the final resting place in the political evolution of the nation-states of the world. I believe there is now a serious case for the “reopening of history” and to start talking about the impending decline of the democratic powers and their substitution by enlightened autocracies, as in China, Singapore … hmmm… Russia etc.

That, however, will be the subject I propose to deal with in a future article, hopefully, before the Chinese have taken over.

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