OK, so maybe money matters maybe

I am generally of the opinion that big money will not matter that much in determining the winners in American presidential politics. Because each party wins about half the time, we would expect rational people (and corporations, although I guess they are now people too) to support both parties; higher spending overall will not necessarily mean higher spending by one party relative to the other. Plus, because presidential politics rely on so many macro issues, and the candidates become very well known by the time the election comes around, the benefits of the extra marginal dollar become quite small.

And yet, I can’t ignore Mitt Romney’s ad blitz in Florida and its effectiveness. After reading the piece in the NYTimes this weekend following Romney’s campaign, you would think that the reason Romney is doing better in Florida is because his campaign told him to “unleash” his aggressive side and start attacking Gingrich. But actually, it just means he outspent Gingrich 5:1. We can look at isolated examples where the bigger money candidate lost (Boxer in CA, Kerry in 2004). But the asymmetry of the Florida election suggests that the age of superspending is just beginning and it will have consequences. It also suggests that because the Establishment can’t rally around a candidate in the way they used to (for fear of incurring Tea Party wrath), their circling of the wagons will just involve tens of millions of dollars.

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In defense of: Romney’s time at Bain

OK, this will not be a full-throated defense. Instead, it’s more of a complication of the narrative being pushed by both Democrats and Romney’s Republican rivals. I hate to say that I’m agreeing with Michael Steele here, but I do agree that our moral qualms with Bain Capital and its business may end up implicating a lot of capitalism as a whole. (Unlike Steele, I don’t think this is entirely a bad thing, but let’s start here.)

Bain Capital, Romney’s company, has the M.O. of a lot of private equity firms: they invest in a variety of companies, lay off workers, slim down unprofitable assets, and groom them to be resold.

As with a lot of companies, if they can make more money elsewhere, they will. Capitalism is about making profits for individual companies, and we should expect companies to lay off workers if that makes the more profitable. Industries shift and costs fall elsewhere; that’s just the cost of capitalism. Each entity, acting in its own self-interest, makes decisions that impact the broader web of goods and services. Bain wasn’t playing the system, manipulating currency markets, or performing rent-seeking behaviors per se. Instead, it was just doing what one expects firms to do.

If we don’t like it, we can try to ameliorate these decisions: better education systems, better unemployment benefits, better job retraining, more government jobs to which to shuttle some of these excess workers, etc. We may also build a system that makes companies contribute more to the costs of terminating workers. But the core problem itself — that private equity firms buy up (often failing) businesses, lay off a bunch of workers, and make a profit off of it — is a core problem of capitalism, not just of Mitt Romney.

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OFFICIAL IOWA CAUCUS PREDICTION THREAD

Hello, folks.

As Stendhal guessed in his last post, vacation time did indeed coincide with a dwindling of blog posts to zero. But we’re back, and ready to get things rolling again. Preposterous though it may seem, the Iowa caucus is on January 3, i.e. next Tuesday, i.e. 5 days from now!

So what do you think will happen? If you read this blog, we require that you post a prediction. If you don’t, then we’ll… do nothing about it. But come on and join the fun! Here’s my rundown of the also-rans:

Cain – Withdrew from the race. Name might still appear on the ballot, though? Expect a low single-digit but nevertheless hilarious turnout for him.

Huntsman – Whether he might become a viable national candidate for the nomination remains to be seen. I guess not, but even if he is, he will do poorly in Iowa. It has one of the most conservative GOP bases, and he all but conceded it months ago and essentially has not campaigned there.

Bachmann – Her campaign is in disarray, her campaign manager has defected to the Paul campaign, and her peak was months ago. She’s toast.

Gingrich – Peaked too soon, it seems. I never understood his bounce in the polls, and I’m going to assume that his high unlikability will make it difficult for him to win any elections.

Perry – I’m unsure where I stand on my most disliked candidate. The consensus is that he peaked too soon and disastrous debate showings have doomed him. However, he does have a ton of money in his campaign, and his social stances are well in line with Iowa voters. I suspect this will land him somewhere in the middle.

That leaves us with the candidates I expect to finish in the top 3: Romney, Paul, and… Santorum.

Romney: The consensus from months ago was that Romney could survive a poor showing in the conservative state, as long as he followed it up with a convincing win in the more moderate New Hampshire, and then continued to pick up votes as the weaker candidates dropped out and he would emerge as the consensus pick. However, now it seems he is in it to win it in Iowa.

Paul: Expect a full freak-out if he wins. But he really might! His supporters are among the most passionate, and Nate Silver points out that some polls might be underestimating his support. He did well in the Ames straw poll, nearly winning it, and with as many candidates in the field as there are, he might emerge victorious.

Santorum: Hell, why not? Every other candidate has had the anyone-but-Romney surge except poor Rick and Hunstman, so why not Rick, and why not now? He has basically lived in Iowa for months, and has campaigned in all 99 of its counties. His conservative social values are most in sync with what Iowa GOP voters want, too. He’s not nearly as likable, but he might end up as this year’s version of Huckabee.

Final prediction:

1) Rick Santorum

2) Mitt Romney

3) Ron Paul

4) Rick Perry

5) Newt Gingrich

after that… who cares?

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