by Bill O’Grady | PDF

(NB:  Due to the Memorial Day holiday, the next report will be published on June 1.)

In our geopolitical outlook for 2020,[1] our most important issue was the 2020 elections.  In general, U.S. presidential elections are geopolitical issues because of America’s hegemonic status.  In an era where the U.S. is changing its position on hegemony, who resides in the White House may be unusually important.  Therefore, foreign governments have an incentive to affect the outcome in November.

Due to the importance of this issue, we have written a five-part report, broken into nine sections.  The sections are as follows:

1. The Basics of Public Finance: We look at the economics of public goods, the problem of free-riding and the role of the political process in allocation costs and benefits.
2. Understanding the Electorate: We examine the intersection of identity and class, which create groups, and introduce the Zeihan Grid to graphically show how they interact.
3. Party Coalitions: In a two-party system, parties are essentially coalitions of groups that change over time.
4. The Incidence of Current Policy: We show how the policies designed to dampen inflation have acted to harm the lower income classes.
5. The Role of Social Media: Media is always important to the political process and social media has changed how the parties act.
6. Who will win? We handicap the race between President Trump and VP Biden (spoiler alert—we are leaning toward Biden due to the current recession).
7. Foreign Behavior: This section examines the capabilities and leanings of major foreign nations with regard to swaying the election.
8. The Base Cases: We consider the outcome based on who wins the election.
9. Ramifications: We conclude with the likely market effects from the election.

Read the full report

[1] The 2020 Geopolitical Outlook, 12/16/19