Krugman’s blog, 2/2/16

There were three posts yesterday.  The first was “Post-Iowa Notes:”

Well, in my pre-Iowa notes I called the Republican primary right:

I know what will happen on the Republican side: someone horrifying will come in first, and someone horrifying will come in second.

Let me add that someone horrifying also came in third. Marco Rubio may seem less radical than Cruz or Trump, but his substantive policy positions are for incredibly hawkish foreign policy, wildly regressive tax policy, kicking tens of millions of people off health insurance, and destroying the environment. Other than that, he’s a moderate.

On the Democratic side, I was glad to see Nate Cohn, who’s a professional here, reach the same conclusions I got in my amateur analysis: this still looks like Hillary Clinton for the Democratic nomination.

The point is not just that she eked out a very narrow win in Iowa, which is important mainly for limiting the doomsaying spin the media were so eager to deliver. It is that this situation doesn’t look at all like 2008.

People tend to forget that the 2008 primary was quite close all the way through; Clinton actually got more votes than Obama, but lost the delegate count through careless organization that won’t be repeated. And the crucial role of Iowa there was that it persuaded African-American voters to switch en masse. It’s hard to see that happening this time.

That said, Sanders is tapping into something that moves a lot of Democrats, and which Clinton needs to try for as well. Can she?

Certainly taking a harder line on the corruption of our politics by big money is important — and no, giving some paid speeches doesn’t disqualify her from making that case. (Cue furious attack from the Bernie bros.) Substantively, her financial reform ideas are as tough as his, just different in focus. What is true, though, is that simply by having been in the world of movers and shakers for so long, Clinton can’t project the kind of purity that someone who has been an outsider (even while sitting in the Senate) can manage.

The bigger problem, though, to my mind at least, is the ability to deliver a message of dramatic uplift, the promise that electing your favorite candidate will cause a dramatic change in the world. How do you do that if your reality sense tells you that only incremental progress is possible, at least for now? You probably can’t. (I’m pretty bad at the uplift thing myself). To be blunt, I think Sanders is selling an illusion, but it’s an illusion many people want to believe in, and there’s no easy way to counter that.

In the end, again, Clinton’s tell-it-like-it-is approach will probably be enough to clinch the nomination. And then she’ll be in a very different position, running as the champion of real if limited progress against, well, look at those top three on the other side.

The second post yesterday was “Iowa As A Media Focal Point:”

The outsized role the Iowa caucuses play in the nomination process is, as almost everyone acknowledges, sort of stupid. But where does it come from? The immediate answer is that it’s about the news media, which seize on the Iowa results and use them to tell narratives that can, in turn, have a huge impact on fundraising and later voting.

But why is this small, peculiar contest so influential in setting narratives? The answer, I’d say, is that Iowa acts as a Schelling focal point.

Schelling’s original examples involved something like two people told to find each other in New York. You might think this would be impossible, but people often succeed by choosing a psychologically salient time and place — say, the Empire State Building at noon. What’s interesting about this is that they may not even perceive this meeting point as a choice: person A has to do it because he or she thinks person B will do it, and vice versa.

How does this apply to news coverage and punditry? Well, it’s obvious that the media have strong herding instincts; almost everyone wants to be somewhere close to the middle of the pack, telling the prevailing narrative. But there are many narratives that could, in fact, prevail. Partly that’s because such narratives can be self-fulfilling, and partly it’s because actually being, you know, right isn’t that important compared with being on top of the trend. So anything that gives special salience to a particular narrative can produce convergence on that narrative, even if everyone realizes that what’s going on is basically stupid.

Thus, should Rubio’s third-place finish in a small state really have caused him to shoot up so dramatically in market estimates of his probability of winning the GOP nomination? No, yet that’s what happened.

Meanwhile, on the Democratic side, the results were in all important respects a tie — but Clinton was a whisker ahead. Did that whisker matter? I’m pretty sure it did, a lot. If Sanders had come in even slightly ahead, the news would have been full of Clinton-is-doomed reports. Instead, the coverage has, as best I can tell, been rather subdued. Everyone knows that a fraction of a point in the vote makes no objective difference; but everyone also knows that “Iowa almost tied!” isn’t the same kind of focal point for Clinton doom stories as “Clinton defeated!” And so the coverage is radically different — and the betting markets have treated Iowa on the Democratic side as a non-event.

Intellectually, I find this fascinating. But it’s one heck of a way to choose the future of the world’s greatest nation.

Yesterday’s last post was “My Head Stagnates:”

I did an interview on NY1 about Bob Gordon’s Rise and Fall of U.S. Economic Growth. My segment starts at 9:11.

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