Why I Shorted Hillary Clinton

Six months before the election.

In the six odd weeks since the Nov. 8 election, the news media has presented a chaotic post-mortem of what exactly happened in this election. Mostly, they are focused on the unfathomable: how did Hillary Clinton lose? Sexism? Comey? Russian hackers? Putin?

But a number of election analysts saw the problems of a Clinton candidacy from afar. In the spring of 2015, I personally told a group of Silicon Valley liberals that Clinton was probably the weakest candidate the Democrats could choose in the current anti-establishment political climate. Democrats and Republicans alike were openly lamenting even the idea of another Bush-Clinton election.

More damning was the hard electoral evidence already out there on the Democratic agenda under Obama: the loss of the House and Senate, and more than a dozen governorships and state legislatures. How could these facts be ignored? I have discovered in our polarized politics that people don't really listen to reason, they merely believe. And then they are faced with disbelief at the outcomes. (Scott Adams calls it cognitive dissonance.)

For most of 2015, the primary season was unclear, though most expected the party choices of Clinton vs. Rubio, Walker, Christie, or Bush would play out. Certainly very few--neither myself nor anybody I know--gave Trump even a remote chance of gaining the nomination. The GOP field of intended candidates became a parlor joke of seventeen dwarves crowding the stage. Liberals could not believe any of these could match up to Hillary on the national stage. They reverted to praising her extended political resume, as if that mattered. (Obama, for instance, probably had the shortest resume in modern presidential history.)

I maintained that Hillary had the highest negatives of any possible Democratic nominee and that after this became apparent following the DNC in August, panic would set in. I was off by a month because of someone nobody saw coming: Donald Trump.

After the first few primaries, Trump's success gave new life to the fantasies Democrats were spinning. After all, Trump had the highest negatives of any candidate in modern history. At the time I tended to agree that a face-off between Clinton and Trump was a bit of a wild card and that by conventional politics, Clinton would seem to be favored. On the Republican side, opinion pollsters and media pundits all discounted Trump's chances, but his primary wins rolled on. It was about March when I had the epiphany that past history was no guide to the future - this time was different. The anti-establishment wave that had been building since 2000 had finally begun to crest over "politics as usual."

Ignoring this anomaly, liberals actually began to desire Trump to be the Republican nominee and conservatives secretly wondered if he wasn't a Clinton shill. But still, I suspected none of what Trump did would accrue to Clinton's benefit in this election cycle. It was in March, after observing the odd traction of Bernie Sanders, that I laid some wagers betting against a Clinton presidency (note, not FOR Trump or any other nominee, but solely against Clinton for the Democrats). Part of the reason was I felt the confidence of Clinton supporters was emotionally driven, so I got incredible odds that made the bet a no-brainer: 10 to 1, when the betting lines were closer to 4 to 1. I could have laid off this bet on the other side and enjoyed a riskless arbitrage, but I was fairly convinced, as a political scientist who had studied the data on the last 4 presidential elections, that any Clinton-Trump contest would be pretty much a toss-up and I liked the risk-return payoff.

When Trump's support seemed to be bleeding working-class union voters from the Rust Belt, I was more convinced. But not my liberal Democrat friends. They cited endless poll numbers to support their beliefs, trusting in data from 538. I merely asked that since the polls, including those by 538, had been wrong for almost 9 months, why exactly should they be accurate now? Then they resorted to Electoral College math, but I replied that swing states with slim margins can flip rather easily. A month to two weeks before the election, with Clinton enjoying a 3-6 point lead in the polls I offered to double-down on my wagers against Clinton but got no takers. Apparently, confidence was growing a bit shaky. Trump support never seemed to go away despite the bashing he received in the media.

On Nov. 7, a friend who trusted my objectivity asked me who I thought would win. I said, although traditional measures point to a narrow Clinton win, traditional measures have failed and thus the outcome was still a 50-50 toss-up in my mind. I definitely liked my bet. On Nov. 9, we woke up to a new political reality, but the point is that we should all have seen it coming.

Here is a quote from the Economist assessing the election:

Republicans have long held the edge in America’s wide-open spaces, but never has the gap been this profound: a whopping 80% of voters who have over one square mile (2.6 square km) of land to enjoy to themselves backed Mr Trump. As the scatter plot below demonstrates, as counties become increasingly densely populated, fewer and fewer vote Republican. American politics appear to be realigning along a cleavage between inward-looking countryfolk and urban globalists.

The problem here (see italics) is that this tension in American politics is nothing new. In fact, it's more than 200 years old. Regional differences have always existed but have become acute at certain times in our history. The urban-rural polarization is particularly sharp today because the parties have divvied up the polity with targeted policies: Democrats target identity groups that mostly live in urban areas and Republicans target everybody else (see this 2006 op-ed on the 2000/04 elections). The divide is compounded by urban media that targets political biases to its main audience: urban liberals. So urban media elites told their liberal urban audiences what they wanted to hear, rather than objective truth. I'm sure liberal reporters like E.J. Dionne, Juan Williams, Meet The Press, the NY Times op-ed page, etc., believed it themselves.

So, now the disillusioned are catching up with reality. Here's Conan O'Brien stating the obvious:

“I really believe nobody knows anything right now,” says Conan O’Brien. "I really think the whole mantra that everyone must have, not just in this medium but in the world in general, is that no one knows anything.” Trump’s victory has landed a blow to the country’s notions of certainty. “I would say we’re not seeing the death of certainty,” O’Brien said. “But certainty has taken a holiday right now.” Plenty of certainty, now discarded, was generated in 2016. Our cozy silos of belief and customized group assumptions gave us our most brutal campaign in years. “Everyone has their own street corner,” O’Brien said.

As I stated above, partisan preferences have become less about reasoned policies and compromises and more about pure belief systems. Facts that don't fit beliefs get tossed aside. If you believe Hillary lost because of Putin, or Comey, or sexism, or racism, or Electoral College math, you're sinking into quicksand of your own making. Winning a majority of almost 85% of the 3141 counties across the nation is a significant statistical feat that can't be explained by any single factor. From where I sat it had little to do with Trump, who merely road the wave. Rural and suburban America can never be dismissed by either party. Hillary Clinton was the weakest candidate in the post-war era, by far. If I could see it, so could you.*

*BTW, I'm not clairvoyant or particularly gifted with political genius. Using traditional electoral measures I bet on Romney over Obama for an easy win in 2012. But we can learn from our mistakes.