As I write this, the results of the Presidential election are not yet known. But there are some things that we can already glean from this year’s elections.
One of the more distinct items is the urban and rural divide. If Presidents were elected by land area, Republicans would always win because of their rural strong hold. On the other hand, urban areas obviously have more people and they tend to vote more Democrat. This is nothing new, but it shows how each side has become further entrenched in their tribal ideology; neither President Trump nor Vice President Biden were able to convince the other side to give them any leeway. Democrats have a credibility problem in rural America. They appear disconnected from rural values when so much of their conversation falls around policing farting cows.
Some farmers have such a negative view of Democrats that they believe markets are certain to fall if Biden is elected. This is an exaggeration, as markets will still trade fundamentals.
Popular vote vs. electoral college
The other thing that appears certain is that the Democratic candidate will again win the popular vote despite losing (or almost losing) the election. In 2016 Hillary Clinton had three million more votes overall than President Trump. As I write this Wednesday morning, Biden currently has 2.6 million more votes than President Trump with 86% of the vote calculated. However, this is irrelevant as that is not how we elect our Presidents.
Despite what we are led to believe, we are a republic and not a democracy. The difference being the electoral college, made up of state electors, are the ones who determine who is President rather than by popular vote.
The origins of the electoral college are rather shameful; however, it has evolved to the point today where it has helped shift the balance of power as to not be as heavily concentrated in major population centers. In other words, it gives rural, less populated states more clout than a pure democracy, whereas a one person-one-vote system would disenfranchise them.
I do not know if the forefathers saw the rural/urban division becoming what it is today, but they ended up protecting smaller, less-populated states with the present government structure.
This was the only reason President Trump won in 2016 but may or may not be enough for him to win in 2020.
What about other countries?
Brazil is a democracy. Everyone is required to vote there and without proof that they voted, people are denied government services or legal processes such as titles, passports and such. Poor people have to vote in order to qualify for welfare.
Election day there is like another national holiday as services shut down to make sure people can vote.
Brazil is a poor country. One of the downsides to this system is that populist candidates can influence the vote due to the large number on welfare. They vote according to who is giving them government support, as opposed to who is the best candidate.
The Brazilian farm sector loves the current President, Jair Bolsonaro, as he has taken a hard stance against corruption and helped direct more funds towards infrastructure projects.
Before President Trump, we had trade agreements with other nations which took decades to develop. The U.S. ag export sector benefited greatly from these agreements. Trump renegotiations have added tremendous uncertainty and volatility, specifically related to China. That will not go away if he is reelected.
The objective of these trade wars is that we will be better off in the long term. After several years, this still has not happened. China’s ag purchases have picked up in the second semester but that is also because its economy has recovered much quicker than ours. They have been more successful at rolling out policies to suppress the coronavirus.
A Biden Presidency does not necessarily mean the Phase I China trade agreement becomes undone. I suspect China will want to wiggle out of it regardless who is President. So whoever wins will need to keep their feet to the fire.
Matthew Kruse is President of Commstock Investments, a commodity brokerage firm with offices in Iowa, Missouri, Kansas and Arkansas. He can be reached at [email protected] or 712-227-1110.
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