Adam Smith Blog

Where Donald Trump lost the debate

THE microphone had been tampered with. The moderator, a registered Republican, was horribly unfair. So went Donald Trump’s dismissal of his poor performance against Hillary Clinton at the first presidential debate on September 26th.

Amid this frenzy of blame-casting, Mr Trump, ever Schrödinger’s candidate, also declared himself the debate’s winner. Readers of his constantly whirring Twitter account and watchers of the sympathetic hosts on Fox News were told that Mr Trump had been anointed the winner by several unscientific online surveys. Polls conducted after the debate with statistically sounder approaches disputed this. In one conducted by Echelon Insights, a Republican-aligned analytics firm, 48% of voters declared Mrs Clinton the winner, compared with just 22% who favoured Mr Trump.

If Mr Trump made a poor impression on voters during the debate, the press coverage after it surely made things worse. The Internet Archive, a non-profit project, tracked which segments of the debate were replayed on influential American television shows. Sure enough, all three of the most transmitted moments paint Mr Trump in a poor light: critical…Continue reading

What explains today’s falling interest rates?

SOMETHING is amiss in global bond markets. This month, Sanofi, a French drugmaker, and Henkel, a German manufacturer of detergent, both issued bonds with a negative yield. Investors will make a guaranteed cash loss if they hold the assets to maturity. In July, Germany became the first euro-zone government to issue debt that promises to pay back to investors less than the sum it raised from them. More than a dozen rich-country sovereign bonds now have negative yields. The debt-laden are delighted with the persistence of low rates. But savers are increasingly grumpy. Economists are simply baffled.

The current combination of low nominal and real interest rates is unprecedented. Mervyn King, a former governor of the Bank of England, and David Low of New York University have estimated a real interest rate for G7 countries, excluding Italy, using data on inflation-protected bonds going back to the mid-1980s. It shows a steady decline over the past 20 years. From 1985 to 2008, real rates fell from above 4% to around 2%. Since the start of 2008, real long-term rates have fallen further, and faster, to around…Continue reading

Crime in America’s big cities is almost universally falling

DURING the presidential debate on September 26th Donald Trump, the bombastic Republican nominee, was asked by the moderator how he might heal the divide between African-American communities and the police. “We need law and order”, he replied, “We have a situation where we have our inner cities, African-Americans, Hispanics, are living in hell because it?s so dangerous. You walk down the street, you get shot.”

At first glance Mr Trump could be forgiven for thinking the situation is dire. Fresh data released by the FBI on the same day as the debate show that America’s murder rate increased by 10% in 2015 compared with the previous year. The violent-crime rate was up by 3%. Despite this uptick, the longer-term trend is far rosier. The prevalence of murder has halved since the early 1990s and, with the exception of last year’s figures, violent crime remains at its lowest level since 1971. Property crime fell over that period, too.

Mr Trump’s concerns about inner cities also look overblown. Of the 15,696 murders last year, 4,054 were committed in one of…Continue reading

A record audience is expected to watch tonight’s presidential debate

SOME 100m people are expected to tune in to the first presidential debate between Hillary Clinton and Donald Trump tonight, according to industry analysts. That would make it the most watched presidential slugfest to date.

Such spectacles have always drawn huge numbers of viewers. The first televised debate, between John Kennedy and Richard Nixon in 1960, was watched by 70m people. Kennedy had told his aides that the debates were “the one way to break through” in what was a tight race. At first Nixon said no (actually, “No damned debates!”) but eventually relented. The debate highlighted the growing importance of television in politics: Nixon was deemed by radio listeners to be the better candidate, but those watching on TV felt he had performed badly, which some political pundits say lost him the election. With Nixon’s poor performance in mind Lyndon Johnson decided not to debate Barry Goldwater in 1964 and risk denting his big lead in the polls (Johnson was ahead by 65% to 29% in mid-September). Nixon ruled out debates when he was…Continue reading