INSIGHTS: THE CASE FOR A NATIONAL POPULAR VOTE
By Guest Columnist Pat Rosenthiel:
CEO, Ainsley Shea, a Twin Cities based business consultancy – and senior consultant to National Popular Vote. He has served Presidents in campaign and policy roles. His friends call him Rosie and he can be reached at firstname.lastname@example.org or followed on Twitter @foundersfriend.
With less than two weeks before the 2016 presidential election is decided, voters in 29 states have been completely ignored by both party’s candidates for president. More than half of the public presidential events during the current campaign have occurred in just four states.
If the events and the corresponding ad spend were about traffic jams and/or buying attack ads, it would not be a significant problem. But the travel and ad spend are a proxy for political influence and clear evidence that the interests of battleground state voters are far more important than the interests of fly-over state voters.
Plain and simple, the state-based winner-take-all system influences presidential agendas, and presidential agendas have a significant impact on policies pursued and enacted by the federal government.
Think about Mr. Trump’s message in the current campaign. He promised to keep his hands off Social Security and Medicare – two sacred cow issues for the baby-boomer vote in the critical swing state of Florida. Mr. Trump promises steep tariffs on automobiles should the big three continue to move production into Mexico – all in an effort to flip a “blue wall” state like Michigan or Pennsylvania and improve his “Electoral College” math.
I personally engaged in efforts to pass Medicare Part D for the Bush Administration in an effort to fulfill campaign promises made to the voters of the I-4 corridor of Florida and No Child Left Behind in an effort to give mini-van driving moms in Hamilton County, Ohio the “education president” they desired.
Reasonable people can be found on all sides of these issues, but it is the interests of persuadable voters in battleground states that drive them as preeminent agenda items for American presidents.
Research from Hudak and others indicate that battleground states are twice as likely as fly-over states to get federal disaster declarations; they receive 8 percent more federal grants and considerably more exemptions from no-child left behind.
It does NOT have to be this way.
The United States Constitution gives the various state Legislatures the exclusive power to determine how electors will be awarded from each of the states. Article II; Section 1 says, “Each state shall appoint, in such Manner as the Legislature thereof may direct, a Number of Electors…”
The state-based winner-take-all laws currently in place in 48 states and the District of Columbia cannot be found in the Constitution, nor were they ever debated at the Constitutional Convention. They were adopted over time, so the North and South could rely on slates of electors in the lead up to the Civil War. This made a great deal of political sense then – it was a rational system to advance the political power of the various states at the time.
What we have left is an irrational system where four out of five states are using their state power to make one out of five states all powerful with the President. The Electoral College is not broken, the way the states are using the Electoral College is.
I support the National Popular Vote Interstate Compact (nationalpopularvote.com).
The proposal asks the “Legislatures” of each state to award their electors to the candidate who wins the most popular votes in all fifty states and the District of Columbia. The plan only takes effect when states with 270 or more electoral votes have passed the legislation (a majority of the Electoral College, and enough to elect the president).
National Popular Vote has been enacted by eleven states with 165 electoral votes. It has been passed by 34 legislative chambers and enjoys bi-partisan support across the country.
By guaranteeing a majority of the Electoral College to the candidate who wins the most popular votes in all fifty states, National Popular Vote is the only way to do four things:
- Preserve the legislative power to award electors, an important principle of federalism.
- Guarantee the presidency to the winner of the national popular vote.
- Right size the political influence of battleground states vis-a-vis fly-over states.
- Make every voter, in every state, politically relevant in every presidential election.
Visit nationalpopularvote.com. Watch the videos, read the myths and apply your experience as a citizen, public policy professional and/or political leader. If persuaded, write your legislator. Ask them to enact the National Popular Vote bill.
Let’s make 2016 the last presidential election where 4-out-of-5 voters, in 4-out-of-5 states are virtually ignored.
ON THE ECONOMY: DOWN, DOWN,THE FIELD
By John Dunham:
Managing Partner, John Dunham & Associates
Down, down the field goes old Syracuse. Just see those backs hit the line and go thro.’ Down, down the field they go marching, fighting for the Orange staunch and true. Rah! Rah! Rah! Vict’ry’s in sight for old Syracuse. Each loyal son knows she ne’er more will lose. For We’ll fight, yes. we’ll fight, and with all our might for the glory of Syracuse. My wife’s alma mater was Syracuse University, and their fight song, written by Ralph Murphy and composed by C. Harold Lewis, is more upbeat that the football team has been in recent years. It is also more upbeat that the American economy, which is, well going down down.
Back in April or May of last year, I was being interviewed by Reuters and I said that the next President of the United States would be facing a recession probably before inauguration. In effect, I predicted that the economy would be in recession by the fourth quarter of 2016. I made this based mainly on historical trends – essentially recessions happen about every eight years – and the fact that American policy since even before the last recession was extraordinary anti-growth. It is extremely difficult to predict exactly when the next economic downturn will occur. Any economist that says they accurately predicted one was simply randomly lucky. Even so, I am standing by my forecast and do believe that the current economic cycle has peaked.
Let’s examine the evidence.
Restaurant Sales: Restaurant sales as a percent of total food sales have been rising pretty steadily ever since Delmonico’s (considered the first true restaurant in American) opened in New York City in 1837. This does not mean that there are not cycles in restaurant sales though. We find this indicator to be like a canary in the coal mine when it comes to the business cycle. When people feel worried about their jobs, or they see business starting to level off, one of the first things that they give up is opulent dinners.
Looking at restaurant sales as a percentage of food sales over the last few economic cycles, growth tends to stop, about a quarter prior to the start of a recession, and then begins to fall during the downturn. They then turn quickly upward as the recovery begins. Following the last recession, restaurant sales continued to lag food sales for about a year, and then began to grow at an average rate of about 2.6 percent during the recovery. This has flattened over the course of 2016, and although September and October data are not yet available, anecdotal reports suggest that sales have virtually stopped growing. If this is indeed true, then it is a good sign that a downturn will occur within a few months.
Business Initiation: Usually after a recession, the army of unemployed workers take to the field and many start new entrepreneurial ventures. In fact one of the great things about recessions (from an overall economic perspective) is that they free up resources from poorly operating companies or from what economists call mal-investments, to be used by new, and more productive, ventures. This did not happen at all following the last business cycle. In fact, except for 2013, the last eight years have been the worst for business initiation since the 2001 recession. We have discussed on these pages why the American regulatory environment is a likely contributor to this.
Even though the business creation cycle has been pathetic over the past 8 years, a cycle has occurred none the less. Data for 2016 is not available but looking at the trend suggests that net business creation is falling, and in the last part of 2015 it was below 10,000 net new establishments per quarter. This is the level of business creation that generally signals a recession is near – and that was almost a year ago.
Labor Unrest: Those who can do, those who can’t teach, and those who won’t work for labor unions. As well as entrepreneurs and managers understand the complexities of business, those who work for labor unions (note I did not say union members) don’t. When times are at their best, most managers know that they should start preparing for the next downturn. When times are best, unions want to extract as much as possible, so periods of greater union unrest are generally indicators that things are about to turn. Unionization outside of government is way down in America, but union activity is not. Bureau of Labor Statistics data on strikes and idle days suggest that strikes peak in the year prior to a recession year. This happened in both 1989 and 2000, and while 2007 was not preceded by a peak in work stoppages, they did fall dramatically following the start of the recession. Overall strike activity has been mild since the end of the last recession, but there was an uptick in 2015 after two very calm years.
Another place where there has been a push to raise minimum wages at both the state and federal level. The Democrat Party platform has a $15 minimum wage in it. Fourteen states enacted an increase in 2016 and many more are considering such an increase. Leaving aside the problems that this will cause for consumers and future job growth, the high level of this activity is another harbinger of a business cycle downturn.
The Unemployment Rate: What goes up, must go down, and this is not just true of Spinning Wheels. One might also say, what goes down will eventually go up. The lowest the reported national unemployment rate has been in the past 50-odd years has been 3.4 percent, and the average has been 6.1 percent and unemployment reaches a low point about three to 6 months prior to the start of the next downturn. While there are legitimate issues that have been raised about the reported US unemployment rate, it is a statistic with a long history, and there is no reason to suggest that the reported rate of 4.7 percent in May was close to, if not at, the bottom of the current business cycle. Since then unemployment has been ticking up, something that indicates the end of a business cycle.
International Trade: In spite of what both candidates for President are claiming in their rhetoric, international trade is one of the reasons for economic growth. Closed economies simply do not grow – did you ever hear of North Korea? Trade collapsed during the last recession as it was truly a worldwide downturn. It has never recovered. Even so, trade goes through cycles just like everything else in the universe. Although world trade did not dip prior to the last US recession (at collapsed during it) it did do so the year prior to the 1981, 1990 and 2001 recessions. The index of world trade has now been falling since 2011 and reached a 35-year low point in 2015 (2016 data are not available). This is not a good sign of a dynamic growing market either at home or abroad.
Productivity: Since I am not a Keynesian, and do not believe that eating one’s young is a good thing, I understand that productivity (economists say total factor productivity to make it sound complicated) is the most important thing in an economy. We don’t live like monkeys, or medieval serfs, or even our grandparents because over time, we have learned how to generate more stuff with fewer inputs. There was an economist named Thomas Malthus who lived back in the early 1800s. He gave the profession the name the dismal science because he insisted that population growth would soon outstrip the supply of food. This never happened, and today even the least well-off Americans eat better than most people did during Malthus’s time. All of this was because of productivity – because we learned to producer more with less. Business cycles are mirrored in productivity cycles. Productivity growth tends to start to decrease a couple of years before the end of a business cycle – it grows most rapidly coming out of a cycle – and while it never really spurted after the last recession, productivity has been falling consistently since mid-2015 once again suggesting that the business cycle has topped out.
Wages: As we reported last month, the Census Bureau released the latest US wage growth figures and they were remarkably strong in 2015. While there are some legitimate issues with the statistics, the fact is that wage growth accelerates through the course of a business cycle and we expect to see wage growth peak right after GDP growth does (it is a slightly lagging indicator we would say). So strong wage growth is another sign that the business cycle is peaking or even past its peak.
It’s a fools errand to suggest exactly when a business cycle will reach an inflection point, but the evidence points to the fact that we are either there or are coming close. Without some sort of exogenous change to the economic machinery – the discovery of free energy, a major technological breakthrough, alien landings, Kim Kardashian finding a real purpose – the cycle will occur soon. Down, down the field we will go.
The Monthly Manifesto is published by John Dunham and Associates, 32 Court Street, Brooklyn, NY 11201 as a service to our clients and friends. For more information relating to the content or for a free consultation on how we can assist your company or organization with your issues please contact us at 212-239-2105, or click the button below…