Editore"s Note
Tilting at Windmills

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February 4, 2008
By: Kevin Drum

BETTING ON HILLARY OBAMA....Obama supporter Mark Kleiman sent me an email this morning about my Intrade post from a week ago. At that time, Intrade bettors thought Hillary Clinton was more electable than Obama: they gave her a 66% chance of winning the presidency if she were nominated, vs. 47% for Obama.

So what do they think now? Answer: HRC has lost her edge among the punters. They give Hillary a 64% chance of winning if she's nominated and Obama a 69% chance. Click on last week's post for caveats, warnings, and methodology.

I have no idea what this means, if anything. But whatever concerns the Intrade crowd had about Obama's electability has apparently been assuaged. They're now betting — accurately, I think — that either candidate is highly likely to beat John McCain in November.

Kevin Drum 12:00 PM Permalink | Trackbacks | Comments (21)

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Or maybe they have no more of a clue than we do, the wisdom of crowds isn't what it's cracked up to be. Sometimes crowds can be nothing but foolishness raised logarithmically.

Posted by: bcamarda on February 4, 2008 at 12:08 PM | PERMALINK

bcamarda,

It depends on the composition and size of the crowd.

I am quite sure most people thought the Patriots would win last night, as well.

Posted by: Yancey Ward on February 4, 2008 at 12:13 PM | PERMALINK

They're now betting — accurately, I think — that either candidate is highly likely to beat John McCain in November.

I agree with you, Kevin. But then I also thought that the Super Bowl was an afterthought, and that the real contest was the AFC championship game. So much for that idea.

Posted by: junebug on February 4, 2008 at 12:15 PM | PERMALINK

I have no idea what this means, if anything.

I think it means that you haven't found anything interesting to post about yet today, Kevin. Maybe you should next discuss the results of CNN's current internet poll, "Will Natalee Holloway's murder ever be solved?"

Posted by: David in NY on February 4, 2008 at 12:16 PM | PERMALINK

Wow, what made them turn their projections around so quickly?

That is really an unusual (and unusually prompt) acknowledgement of a large error. Usually only fixers can get such game-changing predictions delivered.

Posted by: Swan on February 4, 2008 at 12:17 PM | PERMALINK

From recent polls, it appears that an electability gap may be opening up. The latest Cook-RT Strategies has McCain leading HRC 45-41, but Obama leads McCain 45-53.

Billary can't beat McCain.

Posted by: mikeel on February 4, 2008 at 12:36 PM | PERMALINK

You know I'd like to hear from Kleiman or any other Obama supporter just one plausible counter-argument to the claim that Paul Krugman made in today's column:

If you combine the economic analysis with these political realities, here’s what I think it says: If Mrs. Clinton gets the Democratic nomination, there is some chance — nobody knows how big — that we’ll get universal health care in the next administration. If Mr. Obama gets the nomination, it just won’t happen.
Because, you know, if you can't really answer Krugman's argument, what right do you have to call yourself "reality-based"? Why should anyone who is reality-based respect you?

Posted by: frankly0 on February 4, 2008 at 12:42 PM | PERMALINK

I've got a theory that the people who play InTrade are mostly gambling addicts and, thus, sports fans, and that they liked Obama's superbowl ad. I don't think anyone is going to go broke overestimating the shallowness of these betting markets.

I think the reason sports books are hard to beat is because there are sharks out there. Games are decided by a handful of players, and there's plenty of inside information, and immense amounts of money able to act on that information. Elections, not so much.

Posted by: Boring Commenter on February 4, 2008 at 12:42 PM | PERMALINK

If these markets are responsive they could be used to pay for negative advertising.

1) Borrow money
2) Short Obama, Buy McCain
3) Swift Boat Obama
4) Recover short
5) Use money to slander Obama again
6) Sell McCain and profit!

Posted by: B on February 4, 2008 at 12:47 PM | PERMALINK
I have no idea what this means, if anything.

It means that political gambling markets, like the stock markets, are driven very hard by instant reactions to the latest news. And Obama's press has been positive recently.

Posted by: cmdicely on February 4, 2008 at 1:09 PM | PERMALINK

I meant Obama led McCain 45-43 in the Cook/RT poll. Sorry for the goof.

Posted by: mikeel on February 4, 2008 at 1:18 PM | PERMALINK

If you combine the economic analysis with these political realities, here’s what I think it says: If Mrs. Clinton gets the Democratic nomination, there is some chance — nobody knows how big — that we’ll get universal health care in the next administration. If Mr. Obama gets the nomination, it just won’t happen.

There is "some chance" -- it may be exceedingly small but there is "some chance" -- of getting universal health care in the short term with Hillary's plan. He doesn't address, and Hillary supporters never address, the glaring flaw with Hillary's plan, namely that it assumes you can get blood out of turnips. The "solution" for people who can't afford health insurance is to force them to pay, and to garnish their wages if they can't.

As a plan to put in front of voters it's a non-starter. If you can't afford health insurance, our plan is to use the strong arm of the government to force you to pay for it! Brilliant. So Krugman's "some chance" here is true only in the sense that it's not necessarily zero. But what reason is there to think it's much better than zero?

In fact, Krugman comes close to admitting as much:


But while it’s easy to see how the Clinton plan could end up being eviscerated, ...

It would have been more accurate to say that it's hard to see how the Clinton plan could avoid being eviscerated. But for the Clinton plan, "eviscerated" is the best-case outcome. The worst-case outcome that he doesn't mention is that in the process of eviscerating it, fueled by voter outrage at this "if you can't pay we'll force you to pay" nonsense, is that you end up with nothing.

Krugman's response?


... it’s hard to see how the hole in the Obama plan can be repaired. Why? Because Mr. Obama’s campaigning on the health care issue has sabotaged his own prospects.

Note that he's assuming that health care reform has to be an all or nothing thing. If you like the way Hillary handled health care reform the first time around, making the same mistake again might make sense. That's what Krugman wants. He wants to make a huge bet that has "some chance" of winning big, and a bigger chance of ending up empty handed (AGAIN).

Why does he reject the possibility of gradual reform? Why does he reject a plan that is more pragmatic, and more realistic, that could actually accomplish something positive?

I wish the Democratic candidates had the guts to use the "tax" word. Paying for universal health care means some kind of progressive tax, eventually. Hillary is pretending that you can get blood out of a turnip in order to avoid using the word "tax". I doubt she or Krugman actually believe this will get anywhere; certainly Krugman is damning it with faint praise when he can't even suggest that there's a "good" chance that it would work or a "reasonable" chance that it would work, and the best he can say is that there's "some" (non-zero!) chance it might work.

Obama is working within the same "no new taxes" constraint, but within that constraint he is putting something that's practical and achievable on the table.

And also note that Krugman's argument against Obama's approach is that it is unlikely to lead to universal coverage immediately. Fine. But which of the two plans is the most realistic about making progress toward universal coverage so that we get there eventually? Better a small step, than another 15 year setback that just entrenches the status quo.

In this context, this is worth re-reading until it sinks in:
http://www.j-bradford-delong.net/movable_type/2003_archives/001600.html

y two cents' worth--and I think it is the two cents' worth of everybody who worked for the Clinton Administration health care reform effort of 1993-1994--is that Hillary Rodham Clinton needs to be kept very far away from the White House for the rest of her life. Heading up health-care reform was the only major administrative job she has ever tried to do. And she was a complete flop at it. She had neither the grasp of policy substance, the managerial skills, nor the political smarts to do the job she was then given. And she wasn't smart enough to realize that she was in over her head and had to get out of the Health Care Czar role quickly.

So when senior members of the economic team said that key senators like Daniel Patrick Moynihan would have this-and-that objection, she told them they were disloyal. When junior members of the economic team told her that the Congressional Budget Office would say such-and-such, she told them (wrongly) that her conversations with CBO head Robert Reischauer had already fixed that. When long-time senior hill staffers told her that she was making a dreadful mistake by fighting with rather than reaching out to John Breaux and Jim Cooper, she told them that they did not understand the wave of popular political support the bill would generate. And when substantive objections were raised to the plan by analysts calculating the moral hazard and adverse selection pressures it would put on the nation's health-care system...

Hillary Rodham Clinton has already flopped as a senior administrative official in the executive branch--the equivalent of an Undersecretary. Perhaps she will make a good senator. But there is no reason to think that she would be anything but an abysmal president.

If you want a re-play of this that sets the cause of health care reform back by another 15 years, vote for Hillary.

Posted by: bobb on February 4, 2008 at 1:19 PM | PERMALINK

There is no way Hillary beats McCain in November, because if Hillary wins the nomination, I am not voting for her.

Wake up, people. Don't make another Kerry mistake. Hillary will go down in flames because people will ... not ... vote ... for her ... in the general election. McCain will be the easy choice for most independents, not freakin' Hillary.

Don't be foolish. Don't make the Kerry mistake, again, or you will lose, again.

Posted by: BombIranForChrist on February 4, 2008 at 1:20 PM | PERMALINK

They're now betting — accurately, I think — that either candidate is highly likely to beat John McCain in November.

I agree. Things are going to be so screwed up with the economy and Iraq by election time that voters are going to recoil at *anything* that looks like Bush-again™.

Posted by: Doc at the Radar Station on February 4, 2008 at 1:20 PM | PERMALINK

The Intrade and Rasmussen markets heavily follow the polling trends.

And the polling trends do not look good this week in Hillary vs McCain matchups. But they look great for Obama in his McCain matchups.

The daily rolling matchup over at Rasmussen (scroll down to the middle of the article) now has Obama and McCain tied at 44, with Clinton behind McCain by EIGHT.

Posted by: Maxwell on February 4, 2008 at 1:27 PM | PERMALINK

Republicans don't even want to win the Whitehouse and I'm not all sure why the Dems want it.There is going to be one hell of a mess to clean up after the Boosh era.But it don't matter who the R's run they can not win the Whitehouse after what GWB did to this country.

Posted by: john john on February 4, 2008 at 2:21 PM | PERMALINK

I am now convinced that we can't determine who would actually do better in the general, so people shouldn't use that as a criteria to choose, i.e. you about as likely to incorrectly choose based upon this crieteria, as not. Let other considerations be your quide.

I'm of a similar opinion about healthcare. Any proposals will be heaviliy modified by other political players before being submitted. For this reason I give either of them about the same odds on healthcare.

On Iraq, I give Obama the advantage, because his election might be interpretable -at least partially as a mandate to get out.

I wish I was as optimistic as the surveyed group. I think our odds in the general are a lot less than 67%.

Posted by: bigTom on February 4, 2008 at 2:55 PM | PERMALINK

bigTom:

I am now convinced that we can't determine who would actually do better in the general, so people shouldn't use that as a criteria to choose.

Agree completely. Don't underestimate the motivated over-35 female vote if Hillary gets the nod, or the Bradley effect, for that matter. These polls don't measure the motivated or un-motivated base - I'm convinced if McCain wins the Republican nom., their base of evangicals/anti-illegal immigrant groups/fiscal conservatives won't be as motivated as the Democratic base to vote. The polls won't and don't reflect that. Vote for who *you* think is going to win - the lesson of John Kerry was, Democrats choose him because they thought he would be more electable - meaning they choose him not because they truly believed in him, but because they thought he was more electable in the general. This in turn resulted in a less-motivated base as compared to the Republicans. If you think Obama is better, then vote for him, but don't vote for Obama because you think he's more electable, or else the Dems will lose again.

Posted by: Andy on February 4, 2008 at 4:11 PM | PERMALINK

Boring Commenter,

I think the reason sports books are hard to beat is because there are sharks out there.

Huh? I hope you are not talking about bets on Football games. You are not betting against the house - you are betting against other betters. They try to set the line so that the exact same number of money is bet on either side. The losers give their money to the winners and also pay a 10% fee to the casino. That's how the casino makes money.

If the casino sets the line wrong then it is possible that more people will bet on one team, and if that team wins then the casino will have to pay something, but casinos try to average out any inbalances with bets placed with other casinos.

Posted by: Tripp on February 4, 2008 at 5:01 PM | PERMALINK

I follow both Intrade and the Iowa Electronic Market. I have been writing down the Iowa changes for over a month. In red, I note significant occurances, like primary results, etc.

At the same time, I keep a record of the ups and downs of my stock investments (all mutual funds.) It has been interesting to note that the market goes down, when Hillary is in trouble, and it picks up, when Hillary wins a primary--or does well in a debate, like she did last Thursday.

Today, the market dropped again.

Posted by: emmarose on February 4, 2008 at 7:34 PM | PERMALINK

It is too early to tell, but the early Tuesday exit polls seem to favor Obama. Also, the DOW dropped over 300 points today. So, my tracking records (see prior post) of the stock market dropping when Hillary does seem to continue. What does this mean for the country if Obama is elected?

Posted by: emmarose on February 5, 2008 at 7:16 PM | PERMALINK




 

 

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