Category Archives: POTUS2016

23/7/20: Globalization and Populism: A Recent Study

I recently came across a fascinating paper by Dani Rodrik, an economist always worth reading. The paper, titled "Why Does Globalization Fuel Populism? Economics, Culture, and the Rise of Right-wing Populism" (NBER Working Paper No. 27526, July 2020) argues that "there is compelling evidence that globalization shocks, often working through culture and identity, have played an important role in driving up support for populist movements, particularly of the right-wing kind."

Rodrik carries out "an empirical analysis of the 2016 presidential election in the U.S. to show globalization-related attitudinal variables were important correlates of the switch to Trump."

  • "Trump voters were more likely to be white, older, and college-educated. 
  • "...they were significantly more hostile to racial equality and perceived themselves to be of higher social class. 
  • "The estimated coefficient on racial attitudes is particularly large: a one-point increase in the index of racial hostility – which theoretically ranges from 1 to 5 – is associated with a 0.28 percentage point increase in the probability of voting for Trump (Table below, column 1). 
  • "By contrast, economic insecurity does not seem to be associated with a propensity to vote for Trump.

"The finding that Trump voters thought of themselves as belonging to upper social classes ... largely reflects the role played by party identification in shaping voting preferences. When we control for Republican party identification (cols. 2 and 6), the estimated coefficient for social class drops sharply and ceases to be statistically significant."

"Note, however, that racial hostility remains significant, although its estimated coefficient becomes smaller (cols. 2 and 6)."

The other columns in the table above examine attitudes towards globalization (columns 2-5).

  • "All three of our measures enter statistically significantly: 
  • "Trump voters disliked trade agreements and immigration; 
  • "They were also against bank regulation (presumably in line with the general anti-regulation views of (cols. 2-5) the Republican party). 
  • "These indictors remain significant in the kitchen-sink version where they are all entered together (col. 6)."

"In none of these regressions does economic insecurity (financial worries) enter significantly. This
changes when we move from Trump voters in general to switchers from Obama to Trump (cols. 7-12). ... financial worries now becomes statistically significant, and switchers do not identify with the upper social classes. "

"Switchers are similar to Trump voters insofar as they too dislike trade agreements and immigration
(cols. 9-11). But they are dissimilar in that they view regulation of banks favorably. Hence switchers
appear to be against all aspects of globalization – trade, immigration, finance. the regression."

Rodrik postulates "a conceptual framework to clarify the various channels through which globalization can stimulate populism" on both "the demand and supply sides of politics". He also lists "the different causal pathways that link globalization shocks to political outcomes". 

Rodrik identifies "four mechanisms in particular, two each on the demand and supply sides:

  • (a) a direct effect from economic dislocation to demands for anti-elite, redistributive policies; 
  • (b) an indirect demand-side effect, through the amplification of cultural and identity divisions; 
  • (c) a supply-side effect through political candidates adopting more populist platforms in response to economic shocks; and 
  • (d) another supply-side effect through political candidates adopting platforms that deliberately inflame cultural and identity tensions in order to shift voters’ attention away from economic issues."

The full paper, accessible at is choke full of other insights and is absolutely worth reading.

9/11/16: Bitcoin vs Ether: MIIS Students Case Study

Following last night's election results, Bitcoin rose sharply in value, in line with gold, while other digital currencies largely failed to provide a safe haven against the extreme spike in markets volatility.

In a recent project, our students @MIIS have looked at the relative valuation of Bitcoin and Ether (cryptocurrency backing Ethereum blockchain platform) highlighting

  1. Fundamental supply and demand drivers for both currencies; and
  2. Assessing both currencies in terms of their hedging and safe haven properties
The conclusion of the case study was squarely in line with Bitcoin and Ether behaviour observed today: Bitcoin outperforms Ether as both a hedge and a safe haven, and has stronger risk-adjusted returns potential over the next 5 years.

22/10/16: U.S. Election: Can There Even Be a Winner?

Despite offering, to many people, especially those tending to think of themselves as either 'liberal left' or centre to centre-right, the upcoming U.S. Presidential vote offers one alternative: voting for Hillary Clinton. It is an undesirable alternative for many of them. And yet, given the state of her opposition, it is (allegedly) the only one.

Hence, it is rare in the current political sh*t storm (which does not qualify for a mature debate) to see reasoned, well-argued analysis of the potential outrun of Hillary Clinton. And, hence, it is very important to try to understand such an outrun.

One of the best articles on the topic I have run across (no, I do not fully agree with it in its entirety, which, of course, does not subtract from its merits) is here:

There are serious and measured facts provided in the piece on, for example, Hillary Clinton's innate inability to inspire even her core constituency. And there are serious claims being made about incremental change potential from the Clinton Presidency, or at least a claim to such change as a mandate. There is a very important point of learning here for the Republican party, even though that point is not original and was, in fact, made by the previous Republican nomination contestant, Ohio Governor John Kasich.

But the most important bit remains as noted above: the devision, the gap, the chasm that separates American voters by socio-demographic lines: "White non-college-educated voters are going two-to-one for Trump, 62 percent to 31 percent, according to the ABC News-Washington Post poll. College graduates favor Clinton by more than 20 points, 55 to 34 percent. For the first time in more than 50 years, whites with a college degree are voting Democratic, 51 to 38 percent."

That is right: American society is now divided to the point of mutual aversion across the education line. And this is something that the next President will have to live with and deal with. Given that Hillary Clinton is failing to energize her own core constituency, what chance does she have in energizing two disparate demographics into finding a reconciling common ground? Recall that Hillary Clinton readily and cheerfully labeled a large strata of the American majority "as a “basket of deplorables . . . racist, sexist, homophobic, xenophobic, Islamophobic – you name it.”" Not a hell of a lot of confidence in her ability to heal the nation can be glimpsed from this statement.

And, as the author concludes: "Each of the last four presidents – George H.W. Bush, Bill Clinton, George W. Bush and Obama – promised to bring the country together. They all failed. There is little prospect that either Clinton or Trump – two of the most divisive figures in U.S. politics – can heal the divide. Two Americas, two interpretations."

And that sad prospect is way more significant, more important than the actual outrun of the November 8 vote.