I want Rahe to be right but the bookmakers’ odds give me pause.
It’s possible that these market odds are overly influenced by inaccurate polls. The odds certainly respond to polling data. However, the bookies have a very good record of predicting election results.
On Intrade, before November 2004, Bush’s odds only went as low as 50% a couple of times and always bounced from there. Obama’s odds are behaving like that now. If Obama’s numbers sink below 50% and stay there I’ll feel a lot better. As of now there is much reason to worry.
If the USA today were the USA of 1980 I would agree with Rahe. I remember the run up to the 1980 election and the conventional wisdom that Carter would win. At the time I was afraid that he would. I asked a wise older friend of mine, an immigrant from Eastern Europe, what he thought would happen. “Reagan will win in a landslide”, he said. My friend was reasoning as Rahe is. And of course Reagan did win. But much has changed since then. A larger proportion of the US voting population is poorly educated and a larger proportion is dependent on government. Rush Limbaugh has been arguing that increasing dependence on government insulates an ever larger fraction of the electorate from the consequences of Obama’s poor economic policies. Consequently, the argument goes, Romney cannot afford to run on Obama’s economic failures alone and may have difficulty winning in any case. This seems plausible.
“Don’t get cocky” is good advice. So is, “Be very afraid”. Let’s hope the market odds shift to support Rahe’s prediction.