Ben Tseng

Takes on the election 1. To a first approximation, Republicans lost this hard because voters lost confidence in the Trump administration, not because of a positive agenda from the Democrats. Favorability of the Democratic Party was negative (-5). But Trump told voters to “vote like he was on the ballot”, and they did. The NBC exit poll found that 37% of voters approved of Trump, and 63% disapproved (-26). There’s just no winning the national environment with these margins. 2. There were essentially two major issues that voters cared about: 1) cost of living and 2) government corruption, both of which ~90% of voters said were “crucial or a major factor”. AI was not *that* big of a deal in this election - 56% said it was “crucial or a major factor”, but it’s really hard to disambiguate what voters feel about AGI and catastrophic risks (if anything) from ordinary median-voter NIMBYism around data centers. (It will, however, likely be a huge deal in the 2028 election when the impacts of AI become much more visible). Immigration was also not that big of a deal. Voters actually slightly favored Rs on immigration (+2), probably thanks to lasting backlash from the Biden administration’s laxity on border enforcement. It's unclear to what extent the war with Iran contributed aside from it raising the price of gas. 3. Data centers are probably not over. In fact data center ETF $DTCR was up nearly 2.5% today! It’s hard to understand why this is the case, but one hypothesis is that markets think ultimately, elites’ recognition of the immense economic and national security importance of data centers will override voters’ desire not to build them. 4. On cost of living in particular: one of the most important questions now is to what extent Dems will embrace economic slopulism (think rent control, broad asset taxes, and subsidizing demand) vs. “abundance liberal” policies like building more housing, cutting regulations, and embracing economic growth. 5. Thermostatic backlash is real. Voters hate incumbents. Political majorities shift constantly. The blue wave of 2008 was immediately followed by the red wave of 2010. Anyone predicting a durable multi-decade supermajority for Democrats will likely end up being wrong. 6. “Woke is back” is exactly the wrong lesson for Democrats to take from this, and Ro Khanna posting “DEI is back” doesn’t help. Using transgender issues as a proxy for “woke”, 52% of voters said trans rights have gone too far, compared to just 26% who said they haven’t gone far enough. Deep-blue Washington voted to ban trans athletes in girls’ sports, and Colorado voted to ban trans surgery for minors. Successful Democrats mostly avoided culture war issues. 7. Similarly, a lot of moderate or even right-leaning downballot measures passed, even in blue states. Eight states voted to require voter ID. North Carolina voted to cap state income taxes. California’s billionaire tax is on track to fail by nearly 11 points. Wisconsin voted to ban DEI in state government. Voters largely do not like left-wing ideas. 8. On the other side, “Demographics is destiny” (i.e. America needs to be a white nationalist/nativist country and heavily restrict immigration) is the wrong lesson for Republicans. White voters shifted 13 points to the left. Whites under 30 shifted 30 points to the left. Hispanics and other non-white groups shifted massively towards the right in 2024, and can be encouraged to do so again. 9. Moderates outperformed; radicals underperformed. Dems won by 13 points nationwide. Roy Cooper won by 19.6 in North Carolina (where Trump won by 3.2 in 2024). Jon Ossoff won by 18 in Georgia, where Trump won by 2.2. Abdul El-Sayed in Michigan and Troy Jackson in Maine, both Bernie-backed supporters of Medicare for All, abolishing ICE, and wealth taxes, both underperformed the national margin. In fact, Maine shifted slightly rightward. Dems were able to win deep red states like Iowa, Kansas, and Mississippi by running moderate, Republican-presenting, pro-border-security candidates. I suspect this is the main reason markets are up today. (For some intuition on how insane it is for a Dem candidate to win in Mississippi, Trump won Mississippi in 2024 by a larger margin than Harris won California!) 10. One of last night’s biggest winners was Florida’s Republican governor, Ron DeSantis. Under his tenure, Florida has gone from slightly red-leaning to reliably red. Republicans swept every statewide office, kept every House seat, and kept their majority in the State House and supermajority in the State Senate. In January, Florida will be the only one of America’s ten most populous states to have a Republican governor. DeSantis is genuinely smart and nuanced, lacks the baggage of figures like Vance and Rubio who are associated with the Trump administration, and did a great job as an administrator running Florida (see its high rate of domestic migration, zero state income tax, very low debt per capita, high education rankings, state budget surplus, etc). I would be unsurprised if he decided to run for President in 2028. 11. The other biggest winner was Jon Ossoff. Ossoff is a young, handsome, charismatic, moderate white male who won by 18 points in a state that went +2.2 for Trump in 2024. He achieved this in large part by focusing relentlessly on the two issues that mattered: the Trump admin’s corruption and the cost of living. He may very well be the Democratic frontrunner in 2028 (although, of course, it's far too early to make confident predictions about these things). 12. The biggest loser of all last night was Israel and the US-Israel relationship. Israel’s popularity in the United States has been in a steep, secular decline for years. Just 13% of Democrats and 54% of Republicans have positive views on Israel, and this is heavily skewed by age - younger voters are much more likely to oppose Israel. With Democrats taking both houses, it’s unlikely America’s level of political and military support for Israel will last for very long. 13. Gerrymandering doesn’t work under sufficiently strong margins for the opposing party. In political science, this is known as “dummymandering”. Dems are on track to flip 7 of North Carolina’s 14 House seats, shifting the balance of power from 10-4 Republican to 11-3 Democratic. 14. Trump quickly conceded that his party lost and he would be open to working with the Democrats. This was a positive update on Trump’s tendency toward authoritarianism. Many mainstream Republican figures, like JD Vance and Ted Cruz, quickly posted somewhat genuine mea culpas. There was a lot less coping than I expected. It’s possible that the loss had to be very painful for them to learn from it, and we wouldn’t have seen the same if Dems had won only 51 Senate seats. 15. Elections are truly a ton of fun to monitor live. There’s nothing like it. And prediction markets beat mainstream media in terms of timeliness and accuracy by FAR. 16. There’s a good chance none of this matters that much. Trump is still the president and still has veto power. Voters might turn on the incumbent Democrats in 2028. And historically, real GDP growth isn’t that different during eras where Ds controlled Congress vs Rs. Much of your probability mass should go towards “nothing ever happens”.