Creative Class

That’s the title of an article in Slate by their business columnist, the insightful Daniel Gross. But in this case, he just doesn’t get it.

In the article, he explores the the phenomenon of “Bushenfreude” where angry yuppies who’ve hugely benefited from President Bush’s tax cuts are funding angry, populist Democratic campaigns.

I’ve theorized that people who work in financial services and related fields have become so outraged and alienated by the incompetence, crass social conservatism, and repeated insults to the nation’s intelligence of the Bush-era Republican Party that they’re voting with their hearts and heads instead of their wallets.

This is a popular discussion – why would people vote against their own economic self-interest? And the answer is, they’re not.

The reality is that some people have a longer and broader view than others. As a result, they are poster fodder for deferred gratification, investing in themselves through long and expensive schooling and punishing work hours. There is a theory that the ability to delay gratification is an important component of emotional intelligence and success in life.

My contention is that these clever people are looking at the devastation of the last eight years (the erosion of the U.S. global reputation, the housing crisis, the financial meltdown, the moral corruption), and they realize that their way of life is at risk. And the shiny bauble of a few tax breaks is not worth the price.

Somewhere in the back country, in a 14,000-square-foot writer’s garret, an erstwhile hedge-fund manager is dictating a book proposal to his assistant, a former senior editor at Fortune who just took a buyout, that explains why many of the wealthy choose to vote for a Democrat, in plain violation of their economic self-interest. Working title: What’s the Matter With Greenwich?

Funny, but the answer is obvious.

Best, Bert

The “Real Time Economics” blog in the Wall Street Journal has an interesting post matching state voting preferences (determined by current polls) to changes in home prices, changes in personal income, and the unemployment rate.

You can do a quick sort online, and a few points jump out right away…

• The six states with the lowest unemployment rate are all strongly Republican. Four of the six with the highest rate are voting Democratic.
• 10 of the 12 with the greatest gain in income are going Republican, while 10 of the 12 with the lowest income gain are voting Democratic.
• The home appreciation category is really interesting. 18 of the 20 states with the greatest losses in home prices are going Democratic. 16 of the 20 states that best maintained their home’s values are leaning Republican.

It’s tempting to look at that last category and translate the pain felt by homeowners into a desire for a new political ideology. Not so fast. The vast majority of the states (in those batches of 20) are voting the same as they did in 2004, so really it was a case of the blue states getting hit the worst by the recent housing downturn.

Using their data, I converted the polling data to a linear scale, and did some simple correlation analysis. The coefficient of correlation was roughly 25 percent for both the categories of unemployment rate and change in personal income. It rose to 45 percent for the home price change category.

I thought it might be interesting to look at the difference between states’ voting from 2004 to 2008 and created a category for the ‘delta.’ I was hoping for some big insight, but the results were disappointing. The correlation coefficients were actually less, so the big takeaway might be that there is a lot of inertia. Changes in economic conditions may take longer to make a large impact.

My spreadsheet is here for your own analysis.

Of course, the United States’ political landscape is narrowly divided into Red and Blue states, so even a small shift in voter sentiment is translated into a sea change.

Best, Bert