Ignore the Republican hype, Obama's odds are as strong as ever

When right-wing spinners try to attack mathematics itself, you know they're running scared.

Republican Mitt Romney has been hyping the idea that his campaign has Big Mo since the first presidential debate in which he introduced the world to his inner moderate, and conservative pundits have done their best to lend credibility to the hype. 

The National Review said this week it's not a win for Romney that's in question but the size of the win. Dick Morris, in the Hill, proclaimed: "Here comes the landslide." (Never mind, as the Guardian noted in August, that Morris is almost always wrong.)

To someone paying attention to the polls, this might be incredible if it weren't so predictable. The Romney campaign has taken a page from the Karl Rove playbook. The brain behind President George W. Bush's reelection believed hyping a win at the end of the 2004 race would lead to a win, because most voters like to back a winner. 

And yet polls released Wednesday suggest President Barack Obama has leads in enough swing states to win the required 270 Electoral College votes. In fact, even if Romney won every state Bush won in 2004 he'd still lose if he doesn't win Ohio, and the odds in that state are getting longer. A new poll has Obama ahead by five points. But conservatives and Republicans have never been ones to let polls bother them. Indeed, the best thing to do when the messenger arrives with bad news is kill him. 

One such messenger has been Nate Silver. He's the wunderkind of data analysis over at the New York Times who predicted 49 states out of 50 in the last presidential election. What he says matters, and what he has been saying, for months, is that the polling data has been steady and that, from what he can tell, the president, as of Friday, has an almost 84 percent chance of winning. Romney? Just over 16 percent. 

Moreover, Obama has a more than 17 percent chance of winning 330 Electoral College votes while the odds of Romney getting the minimum, 270, is just over 0 percent.

That's got to hurt. No wonder Republicans and the pundits who support them are peeved. For both, Silver's calculations suggest a painful and foregone conclusion. 

The math doesn't lie. Not if it's done right. The president has been leading his challenger for months, with the exception of a couple of weeks after the first presidential debate in which Romney's numbers rose and Obama's numbers sank, so the final outcome of the election will likely reflect those long-term trends.

Even so, Republicans and pundits are taking shots at Silver. Joe Scarborough, a the popular TV host on MSNBC and an esteemed Republican pundit who is not a fan of Romney, said: "Anybody that thinks that this race is anything but a tossup right now is such an ideologue [that] they should be kept away from typewriters, computers, laptops, and microphones for the next ten days, because they're jokes." 

David Brooks, a conservative columnist for The Timessaid: "If you tell me you think you can quantify an event that is about to happen that you don’t expect ... I think you think you are a wizard. That’s not possible. The pollsters tell us what’s happening now. When they start projecting, they’re getting into silly land."

Silver isn't biased. As Brendan Nyhan, in the Columbia Journalism Reviewnoted, the "the debate over both Silver himself and the specifics of his model misses the point. The best available evidence from both statistical forecasting models and betting markets suggests that Obama remains the favorite in the election." Even so, that's hardly going to stop partisan attacks by Republicans worried their hype bubble is being burst or by pundits fretting their market share is being threatened. 

Yet among all the polls released in the week prior to Election Day, one got little attention -- and it's one that would seem immune to accusations of bias. It was conducted three times this year by Gallup and it did not ask respondents who they believed should be president who they believed would be. In effect, the survey taps into the wisdom of crowds, thus obscuring any the potential for individual bias.

Of the 1,063 people asked (via land line and cell phone), 54 percent said Obama has better odds of winning while 34 percent said Romney has. This response, like the polling data generally this election year, has been remarkably steady. In May, Obama had 56 percent; Romney had 36 percent. In August, Obama had 58 percent; Romney had 36 percent. The only significant change was among those who had no opinion. In May and August, it was 8 and 6 percent, respectively. This time it was 11 percent. 

What's more, the survey found that even among Republicans, nearly 20 percent thought the president would win reelection while the view among independents was even more telling: a majority (52 percent) thought Obama would win. 

And Americans, when asked who was likely to win, not who deserved to win, are generally right. Gallup asked the same question in 1996, 2000, 2004 and 2008, and in each case, Americans accurately predicted the winner of the popular vote. 

Gallup noted: "Although Americans are not as optimistic on Obama's odds as various "prediction markets," such as Intrade.com, where the president has often been projected as having a probability of winning of more than 60 per cent, the prediction markets and the American public in general find Obama the favorite against Romney."

It worth remembering, too, that this poll was conducted on Oct. 27 and 28. That is, before Hurricane Sandy slammed into the Eastern Seaboard. After the storm, Obama made the odds of reelection look even better by merely looking presidential.

The implication is fairly clear: the final outcome of this election will probably – note that I said probably! – reflect the long-terms trends of the polling data collected over the course of this year. Obviously, anything can happen, and Silver and others like him are the first to acknowledge that. Yet the greater probability is in Obama's favor, and for all the hype being served by Republicans, and for all the desire by pundits to have a race that's down to the wire, the odds are simply not in their favor.

The president speaks at a rally in Colorado. Photograph: Getty Images

John Stoehr teaches writing at Yale. His essays and journalism have appeared in The American Prospect, Reuters Opinion, the Guardian, and Dissent, among other publications. He is a political blogger for The Washington Spectator and a frequent contributor to Al Jazeera English.

 

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation