The Iowa by Election of 2009.

The Democrats just won by a margin of 107 votes, an off-year special election in Iowa’s House district 90. The race was interesting and maybe even important because off year elections allow you to take the temperature of politics or better said see what direction the political wind is blowing.

This race was also interesting because it’s the first contest after the Iowa Supreme Court ruled that gay marriage in Iowa is legal because it is a constitutionally protected civil liberty. Because it is the first test of how the gay marriage issue might play out “outside” groups poured huge amounts of money into the race. The National Organization for Marriage was especially prominent and pro gay marriage groups also opened their wallets more than you’d expect in such a basically insignificant contest.

So what does the victory of the democrat tell us?

First, it tells us that the gay marriage issue, which was the prominent campaign theme, was not enough to swing this election.

Second, it tells us very little about support for gay marriage because although Republican Stephen Burgmeier was the recipient of the anti gay marriage largesse, Democrat Curt Hanson was actually also not a supporter of gay marriage. So the choice was between two candidates opposed to gay marriage one of which was the clear standard bearer of that cause (Burgmeier) and the other candidates emphasized other issues more. Let it be said that outsiders actually stoked the emphasis on gay marriage. Burgmeier himself may not have made that the central storm of this race. That too is a lesson to take away from this election.

Third, the Republican should have won the race because when there are open seats the “out” party in that jurisdiction (District 90) has the best chance of winning.

Fourth, judging from the private reaction of Republicans with whom I have spoken this was a big disappointment for the GOP.

Fifth, this race has put front and center the question of whether gay marriage is a “good” issue for Republicans to run on in 2010. As we know several Republican contenders for governor have said this would be their lead campaign issue. On the other hand Rep Steven King has decided NOT to run for governor and many INSIDERS have told me it’s because he believes that he could not run for governor successfully on his anti-illegal immigration and anti-gay marriage positions. Illegal immigration has shrunk as a hot button since the recession and other issues such as jobs and health care costs are more urgent for Iowa voters in 2010.

Sixth, the pending announcement that former Gov. Terry Branstad will run for governor has underscored the necessity for the GOP to use its former winning strategy of walking down the political center as the most successful road to political office. Both Branstad and Gov. Robert Ray were very successful by concentrating on non-divisive issues and harvesting majorities of voters in the state. There is no indication from GOP contests in the near past that moving to a more conservative corner of the political spectrum is a winning move. So, the race for the vacant seat in the 90^th district adds fuel to the internal struggle within the GOP in Iowa and is giving some new life to that “bigger tent” of GOP leaders, candidates, and voters who are not solely concerned with the divisive social issues.

Seventh, the race suggests that the GOP needs to re-examine its bigger course. The party is running behind both “no-party” and the democrats in registered supporters and has lost some 100 thousand adherents and now trails in third place. Although not framed in these “political science” terms the GOP in Iowa appears to have moved into the quadrant of “ideological political party” where it adheres to clear and hard positions on social issues regardless of what are the high intensity concerns of Iowa voters. Although admirable for its clarity and integrity this is the position taken by “Parties of Principle” (the Libertarians, Greens, Socialists) whereas elections in the United States are only won by “Parties of Pragmatism” (The Democrats and Republicans).

Pragmatic parties (and candidates) adjust their message and position to meet the salient interests of voters in order to gain a majority (or plurality) of those voters and win the election. Parties of Principle do not yield on their positions regardless of the mood and demand of voters and therefore only win when and if their hard position actually fits the current concerns of the electorate.

The 2008 election was lost by the republicans in part because of the true believers on the conservative right especially media celebrities like Rush Limbaugh, Michael Savage, Glenn Beck, Sean Hannity, Laura Ingraham, and others. They attacked republican candidate Sen. John McCain for not being conservative enough, forced him into choosing Sarah Palin as his running mate, pushed McCain far right on issues all of which put him too far to the right (into the former Barry Goldwater end of the spectrum) and lost him the vital independents that both parties need to “peel off” if they are to win elections.

Conservative Republicans seem to have forgotten that no true conservative has ever successfully won a national election. Ronald Reagan, the former democrat and tax-raising Governor of California never was identified with the divisive social issues which color the current party, George H. W. Bush was a moderate by any definition. George W. Bush was a hard-core hawk and NeoCon on defense but campaigned as a “Compassionate Conservative.”

This race is a very interesting case study of how al these issues come together and it forces the GOP and its candidates to study the results. On the other hand for supporters of gay marriage and for Democrats in Iowa the race is a cautionary tale because the Democrat who won is NOT a supporter of gay marriage. Thus, that issue will still simmer in 2010.

©2009 Steffen Schmidt, Prof of Political Science, ISU. Reprinted with permission from syndication @ http://www.insideriowa.com, Iowa’s Internet Magazine.

Economics is Dead. Now What do We do?

Politicians and Leaders Depend on the Experts. What if They are Wrong?

Steffen Schmidt

Politicians and policy makers depend on good, hard information. Otherwise their decisions will be as much “policy garbage out” as the “garbage in” data on which they made the decisions.

Sometimes politicians and leaders have a predisposition to do what they would like because they have a preferred direction in which they want to go regardless of facts. Thus they will look at reality through the lens of their preferred course of action. British Prime Minister Neville Chamberlain (1937 to 1940) needed to believe Hitler because it was his deep desire not to have to confront Germany or divert resources to military spending. Thus he signed the Munich Agreement in 1938, conceding the Sudetenland region of Czechoslovakia to Germany. The rest is history.

Pres. Bush and Vice President Cheney wanted to believe that Saddam Hussein had weapons of mass destruction so they filtered out information to the contrary and decided to invade Iraq.

Now lets look at the decisions leaders have to make on the economy.

In 1824 the Supreme Court strengthened the federal government's power to regulate interstate commerce with its decision in Gibbons v. Ogden, which involved the authority to license shipping. The way Trusts concentrated wealth and economic power in the hands of a few business tycoons so alarmed the American public that Congress passed the Sherman Antitrust Act in 1890. Theodore Roosevelt was elected to the presidency in 1904 on a Trust-Busting platform. President Franklin D. Roosevelt's New Deal legislation effectively made the federal government the nation's chief regulator of business and the economy.

Then starting in the 1980’s we started deregulating business big time and ignored these historical reasons why business had been regulated in the first place.

Paul Krugman writes in a recent Op Ed piece (New York Times September 2, 2009), “It’s hard to believe now, but not long ago economists were congratulating themselves over the success of their field. Last year, everything came apart. Few economists saw our current crisis coming, but this predictive failure was the least of the field’s problems. More important was the profession’s blindness to the very possibility of catastrophic failures in a market economy.”

http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html

This is a serious disaster for policymakers. The problem is they now have nowhere to turn for accurate information to guide them on economic policymaking – taxing and spending to be precise. Economics has failed them and us.

And, this is not just a national or international problem. In Iowa government (and the rest of the economy) depends on three people who gaze into their statistical crystal ball and make economic forecasts. They are the Revenue Estimating Conference in the Iowa Department of Management.

“State general fund revenue estimates are generated by the Iowa Revenue Estimating Conference (REC). The REC is comprised of the Governor or their designee, the Director of the Legislative Fiscal Bureau, and a third person agreed upon by the other two members. The current membership of the REC is Charles Krogmeier; Dennis Prouty, Director of the Legislative Fiscal Bureau; and David Underwood, retired CFO and Treasurer, AADG, Inc. in Mason City, Iowa. The REC meets quarterly, generally in July, October, December, and April. The Governor and the Legislature are required to use the REC estimates in preparing the state budget.”

How accurate are their predictions?

Here is what radio Iowa reported about a readjustment of estimates on Friday, March 20, 2009.

Down, down, down: state tax revenue estimate drastically reduced

The Revenue Estimating Conference just met and the three-member panel has voted to reduce its estimate of state tax revenues for the current state budgeting year by $129.7 million. Their guess for next year has been reduced by $269.9 million. It will mean layoffs in state government according to the governor's chief of staff (who is one of the members of the Revenue Estimating Conference).

To me the operative terms in this story are “their guess.” One definition of the word “guess” is “an estimate based on little or no information.”

I guess (oops!) this could also mean that it could be “…an estimate made on the basis of malfunctioning macroeconomic models,” as Krugman would point out.

For us as Iowa farmers, professionals, business people, taxpayers, bankers, stock brokers, real estate developers, doctors, academics (especially university presidents), and so forth this failure of economics is no less a problem. We are now faced with a world in which we actually have no idea what lies ahead economically because the fundamental “wisdoms” of the economics and business professions were proven to be nothing more than fancy statistical smoke and mirrors. Ask long as the trajectory of change was incremental or decremental (i.e. slightly up or down) the models and wisdom of “the Dismal Science” held up. As soon as the future was not merely a slight adjustment of the past it all went wrong. Ask 5 economists a question and the joke goes you’ll get 6 different answers. That never happens in “real” science.

A quick read of the excellent Krugman article suggests that we desperately need to devise new ways of making fiscal and monetary policy as well as investment and regulatory decisions. With the Great Recession of 2009 the Great Discipline of Economics may also have been discredited.

Turns out they were mostly the Great Wizard of Oz and we have now peeked behind the curtain.

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©2009, Steffen Schmidt, Prof of Political Science, ISU. Reprinted with permission from syndication @ http://www.insideriowa.com, Iowa’s Internet Magazine.