US Elections

Even though U.S. election day is technically over, vote counting is still well underway.  There has been a surge in the use of mail-in ballots as people seek to avoid voting lines, even socially-distanced ones.  Notwithstanding this, polling stations are open and early numbers suggest record voter turnout.

The basics of the U.S. election

Although the media is largely focusing on the presidential race, there are also seats being contested in the Senate and the House of Representatives.  These seats are important as they mean that each party has the chance to control both the presidency and the two houses.  This would effectively give them total control of government for at least two years.

Even if a party loses the presidency, they can still exert a lot of influence as long as they control either the senate or the house of representatives.  Obviously, the more gains they make, the more influence they can exert.

Understanding the U.S. voting system

The U.S. actually runs two separate voting systems.  Senators and representatives are both directly elected by the people in their respective states.  Each state elects two senators, plus one representative per electoral district.  The number of electoral districts varies according to the size of the state.

The president, however, is elected by “electors” in an “electoral college” rather than directly by voters.  These electors are directly elected by the residents in their state.  The number of electors in each state is equivalent to their total representation in Congress. 

This means that each state is guaranteed three votes regardless of its size (two senators plus one representative).  The largest states have many more with California leading the way at 55.  Most of these states commit to giving all their votes to whoever wins the popular vote in their state.  A couple of states split their votes proportionally according to votes cast.

What this means in practice

What this means in practice is that a relatively small number of “battleground states” can have a very high influence over the outcome of the presidential election and the composition of the Senate.  The composition of the House of Representatives, by contrast, does tend to be an accurate reflection of the sentiment of the country as a whole.

What this means for the 2020 election

It is very risky to use national polls as a way to judge the likely outcome of a presidential election.  This lesson should have been clearly brought home in the 2016 election when national polls predicted a win for Hilary Clinton.  Clinton did indeed win the popular vote but the electoral college system ensured that Donald Trump took the presidency.

National polls are also of limited use in predicting which party will take control of the Senate.  This is because all states are allocated two senators so, again, certain states have more influence than their size would suggest.  National polls may, however, be a useful way of predicting which party will take the House of Representatives.

The outlook for investors

Whichever party wins control of government, it’s safe to assume that they’re going to want to continue to encourage investment in the United States.  There is really no reason to fear a sudden clampdown or expulsion from the country.  The differences between the two candidates are likely to make themselves felt in their choice of path towards growth.

If the Democrats win, then it seems likely that they will prioritize green energy and other sustainable growth measures.  They may also be more open to normalizing relations with China.  By contrast, if the Republicans win, there is likely to be much more emphasis on creating jobs in the U.S.A. even if there is an environmental penalty to pay for them.