News from the Votemaster

Fiorina Offers a Way to Reach Women

Carly Fiorina's performance in Wednesday's debate gives Republicans hope that they can close the gender gap at least a little bit. However, they should not get their hopes too high. While she is an excellent public speaker and debater and quick on her feet, she is also a hard-right candidate and has positions directly opposed to what most women want. She is anti-abortion and against Planned Parenthood, for example. When women discover this, she is going to fade. It is also doubtful if she can get the nomination, since her party is loaded with older Southern men who seem to salute every time Donald Trump says something terrible about women. Will all the people cheering Trump really vote for Fiorina in the primaries? In the online polls we listed yesterday, the big winner of Wednesday's debate was Trump, not Fiorina. It will be interesting to see what scientific polls say next week.

In the general election, Fiorina will be dogged by her tenure at Hewlett-Packard where she fired 30,000 people. Workers who are currently unemployed or who are underemployed are not going to look favorably on that. What about investors? They love it when a tough CEO cleans up the mess and produces a lean and mean company. Except Fiorina didn't do that. The company's stock dropped 65% during her tenure (during which period the S&P 500 dropped 15%). The day she was fired by the board the stock shot up and the company's capitalization went up by $3 billion. When Fiorina ran for the Senate in 2010 (and was crushed by Barbara Boxer), Arianna Packard urged voters to oppose her with: "I know a little bit about Carly Fiorina, having watched her almost destroy the company my grandfather founded." In her defense, Fiorina says that revenues went up while she was boss. That is true. However, profits didn't and that is what investors care about. She was able to raise revenues by buying a competing PC manufacturer, Compaq, which had lots of sales. However, Compaq was making no money on them. That is why Compaq was for sale. If you want to get into the details of her business record, look here.

Given that running H-P is her only "achievement," this is going to be a tough sell in the general election. Most likely, she is the new Michele Bachmann, but much smarter. She will have a little bubble, but eventually it will burst. Basically, with Jeb Bush floundering, the Republican establishment is trying to figure out which horse to bet on and she is at least a possibility, but not a good one.

If you are looking for a well-thought out review of the debate by a conservative professor, here is one from the National Review. If you are a Republican, you'll probably like it. If you are a Democrat, it is still useful to know what smart people on the other side are thinking. The New York Times also has a post mortem, candidate by candidate.

Betting Market: Rubio or Bush Will Be the Republican Nominee

A new betting market, Predict It, is indicating that Marco Rubio and Jeb Bush are the top contenders for the Republican nomination. Like the Iowa Electronic Markets that we discussed on Wednesday, this is a market where you can place political bets with real money. If you buy, say, 100 shares of Marco Rubio, currently priced at $30, and he is nominated, you get $100. If he is not nominated, you lose your stake. Here are the prices as of this morning. As an aside, Rubio went up $1 after the debate and Bush dropped $5 (for 100 shares).

Rank	Candidate	100 shares
1	Marco Rubio	$30
1	Jeb Bush	$30
3	Carly Fiorina	$23
4	Donald Trump	$19
5	Ben Carson	$18
6	Ted Cruz	$14
6	John Kasich	$14
8	Scott Walker	$12
9	Rand Paul	$10
9	Chris Christie	$10
11	Lindsey Graham	$8
11	Mike Huckabee	$8
13	Mitt Romney	$6
13	Rick Santorum	$6
15	Bobby Jindal	$5
16	Paul Ryan	$4
17	Sarah Palin	$2
17	Susana Martinez	$2
17	Mike Pence	$2
17	George Pataki	$2
21	Rick Perry	$1

If you change your mind during the race, or if circumstances change, you can sell your contract at the then-current price. In other words, it works like any other futures market. As new information comes in, prices change and investors switch their positions. You can also buy contracts on something not happening, such as Bush not getting the nomination ($70). Generally the "yes" and "no" contracts add up to $100 (for 100 shares). While we are generally not in the business of giving hot stock tips to investors, a contract of 100 shares on Sarah Palin not getting the 2016 Republican nomination is a real steal at only $98.

Walker Reassures Nervous Donors

After two mediocre debate performances, former high flyer Gov. Scott Walker (R-WI) is trying to keep his donors from fleeing. Walker's pitch is that sooner or later the voters will realize that they need someone who has experience running a government, and that's something he's good at. It will be a steep climb for Walker to get back on top again. He bet the farm on winning Iowa and now he is 10th in the Hawkeye State. The second debate created a new problem for him, with Carly Fiorina now being the flavor of the month. Everyone is all excited about a female candidate, making it harder for Walker to get the attention he desperately needs to keep the money flowing. His problem isn't the caucuses per se, it is keeping the campaign funded for the next 4 months. If he runs out of money, he will probably have to stop since he is not the kind of guy who will simply go door to door in the snow for months, as Mike Huckabee did in 2008 and Rick Santorum did in 2012.

Clinton to Give Keystone Pipeline View Soon

Yesterday in New Hampshire, Hillary Clinton said that the construction of the Keystone Pipeline is one of her favorite issues—but she wouldn't say whether she was for it or against it. In a nutshell, this is her problem with a sizable chunk of the Democratic Party. She is too cautious and many people think she doesn't really stand for anything. It is like saying: "Wait, when I get the focus group results back, I'll let you know what I really think." She could probably defend either a yes or a no and get some credibility with the left wing of her party. If she is for it, the argument is that making the U.S. more self sufficient in energy means fewer wars in the Middle East about oil. That would sell. If she is against the pipeline, she could say it is for environmental reasons. But not having an opinion is where Sen. Bernie Sanders trumps (sorry) her. Sanders is against it and has always been against it. Clinton doesn't seem to realize that her sitting on the fence doesn't really help her.

Can Anything Be Done about Unlimited Dark Money in Politics?

Thomas Edsall has an interesting money-in-politics story in the New York Times. He points out that there have been five eras in the regulation of campaign finance:

• Before 1972: There were campaign finance laws but no one enforced them
• 1972 - 1980: Legal limits were set on campaign contributions and the F.E.C. was created to enforce them
• 1980 - 2002: An F.E.C. advisory exempting local grass-roots activity led to unrestricted soft-money donations
• 2002 - 2010: The McCain-Feingold Act attempted to regulate campaign contributions
• 2010 - 2015: The SCOTUS Citizens United decision allowed independent groups to raise unlimited funds

One of the effects of both lax enforcement of the law prior to Citizens United and the actual law afterwards is a transfer of power from the political parties to ostensibly independent groups that don't have to disclose their donors or activities. Many millionaires and billionaires make large contributions to such groups, with no accountability to anyone. These groups are forbidden by law from coordinating with campaigns, but in many cases the person running the "independent group," called a super PAC, is often a close associate of the candidate, so enforcing the independence is completely impossible.

Edsall is fairly pessimistic that this situation will change much in the near future. He does suggest that the best way to try to salvage something from a bad situation would be to change the law to allow unlimited donations to political parties in return for complete transparency. Such a change would funnel more of the money to the parties and thus strengthen them, while reducing the flood of dark money to unaccountable groups somewhat. But it is not much.

A different approach, which he does not mention, is greatly strengthening the system of public financing of campaigns. For example, the law could say that any candidate agreeing to public financing would be entitled to matching funds for donations up to, say, $1000. The matching could be $20, or $50, or $100 for each dollar the candidate raised in small donations, thus encouraging people to make donations up to the limit. Another reform would be to change the law to require that all groups receiving political donations to report all the income, including details of who gave what, and how every penny was spent. Democrats introduced bills in the House and Senate to this effect in 2010 but Republicans defeated them.

Will Apple Upend Politics?

Apple has permanently changed other industries. Could it upend politics as well? Probably not intentionally, but maybe as a side effect. Last week Apple CEO Tim Cook introduced the new Apple TV with the comment "The future of TV is apps." (Amazon and other companies have similar devices, but for simplicity let's focus on Apple, which has a track record of destroying industries.) Here is what Cook meant. The Apple TV is a just a small computer—think of it as an iPad that uses a TV set as the display. Like all mobile devices, it runs apps, some of which are preinstalled and some of which you can download from the app store. You need an Internet connection for it (wired or wireless) but do not need a subscription to cable TV for content. Some of the apps are for games, but many are for displaying video content. There are (or will soon be) apps for Netflix, Amazon Prime, Hulu, ABC, NBC, Fox News, YouTube, YouPorn, Major League Baseball, etc. and hundreds more. Some of these will display content for free (e.g., Fox News), others will be pay per view (e.g., the heavyweight boxing championship), pay per month (e.g., Netflix), or pay per year (e.g., Amazon Prime). What these pay services have in common is that they generally don't have ads.

Suppose Cook is right and in 10 or 20 years almost everyone gets television via Apple TV, Android TV, Amazon TV, Windows TV, or one of the others and most people cancel their cable content subscription and watch paid content to avoid all those annoying ads. Now imagine you are running a political campaign and have thought up all kinds of dastardly ads showing your opponent for what he really is—a lying, cheating, sleazy, swindling, child molester. But there is no place to run your ad since everyone is watching television on apps that don't show ads. Or maybe only poor people use ad-supported apps. How does a future Carly Fiorina reach rich people to tell them she will cut their taxes more than a future Jeb Bush?

You might think "people will never pay for TV" but it has already happened. For decades starting in the 1940s, TV was free. You just set up the rabbit ears on top of the TV set and in came television—for free. Then cable TV happened and people started paying a fairly hefty monthly fee to receive the signal, albeit with more channels and less noise (in an electrical engineering sense). So the possibility of most people ditching cable TV subscriptions for subscriptions to one or more apps to get rid of commercials seems like a logical next step.

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---The Votemaster