Biden has now officially withdrawn as the Democratic Party 2024 candidate, but intrigue is very much in play. Since Lambert will have much to say on this topic (and given the Sunday announcement, a lot more backstory and analysis is sure to emerge), for now we will focus on one proof that the party is still in considerable internal division: that there are visible splits on whether Kamala Harris should, invoking the new cliche, be the one to carry the torch.
Biden endorsed Harris in a tweet after he posted his resignation letter:
My fellow Democrats, I have decided not to accept the nomination and to focus all my energies on my duties as President for the remainder of my term. My very first decision as the party nominee in 2020 was to pick Kamala Harris as my Vice President. And it’s been the best… pic.twitter.com/x8DnvuImJV
— Joe Biden (@JoeBiden) July 21, 2024
The Clintons endorsed Harris:
Statement from President Clinton and Secretary Clinton pic.twitter.com/R7tYMFWbsu
— Bill Clinton (@BillClinton) July 21, 2024
By contrast, Obama, who unlike the Clintons was a lead Biden defenestrater, has not. His statement, courtesy CBS:
We will be navigating uncharted waters in the days ahead. But I have extraordinary confidence that the leaders of our party will be able to create a process from which an outstanding nominee emerges.
Aiee!
Obama does not take positions like this casually, so I assume he will not be easily moved.
Pelosi has not yet endorsed Harris, and neither have Newsom, Prizker, Whitmer, or Shapiro. The Twitterverse shows all have made approving noises about Biden withdrawing but have not backed Harris.
On the one hand, donations on Act Blue shot up after the Biden resignation. Readers can correct me, but I assume this represents primarily small donors. I assume we will hear soon about what the big moneybags are doing.
*Updated*
Here is the exact timing & impact of Biden’s announcement on ActBlue donations today: pic.twitter.com/6qijoq1A8k— Michael McDonough (@M_McDonough) July 22, 2024
On the other hand, Rajiv Sethi explains below how a fight over the candidacy (assuming Harris is not able to demonstrate quickly that she is by far the leading contender) will burn a lot of donor money.
By Rajiv Sethi, professor of economics at Barnard College. Originally published at his website
There’s an all-pay auction unfolding before our eyes, and the bidders are factions within the Democratic party.
All-pay auctions are like conventional auctions in that the highest bidder gets the prize and pays the winning bid, but with one important difference—even the losing bidders, who get no prize, must pay their respective bids.
You won’t see such auctions at Christie’s or Sotheby’s but they are arguably more important in economic and political life than conventional auctions. When parties with opposing interests lobby for or against a piece of legislation, the losing party cannot recover the money paid to lobbyists. When multiple pharmaceutical companies race to develop a lucrative drug, the one to get there first captures the market but the others don’t get their investments back. When two countries go to war, it is not just the winner who pays in lives and treasure. And so on.
To get a sense of how the structure of all-pay auctions can lead to some terribly self-defeating behavior, consider the following simple experiment. Standing before a fairly large audience, you take out a crisp twenty dollar bill and announce that it will be sold to the highest bidder, but that all bidders will have to pay what they bid. Initial bids are typically small, just a few pennies. But as the bidding proceeds, you get to a point where the sum of all bids exceeds the value of the prize. For example, if the top two bids are $11 and $10 respectively, one bidder stands to gain nine and the other to lose ten. The lower bidder thus has an incentive to keep going, bidding $12 for example, switching from a loss of ten to a gain of eight. But the one now pushed into second place (losing eleven) can counter by bidding $13, switching to a gain of seven. And so the contest continues, until all but one person has accepted their losses and given up.
It is not unusual in such experiments for the highest bid (and even some that are not the highest) to vastly exceed the value of the prize.
The struggle to replace or retain Joe Biden as the official nominee of the Democratic party has a similar flavor. As long as each faction believes that a bit more effort will cause the others to give up, the expenditure seems worthwhile. But unlike the textbook all-pay auction in which only the contestants make payments, the costs of this competition are being paid by the party membership as a whole, and others who would like to see it prevail in November. If the president succeeds in remaining at the top of the ticket, he will do so bloodied and bruised, with little prospect of success. And if he succumbs to the pressure to step aside, whoever replaces him will have to contend with his anger and resentment, and that of his most loyal supporters.
The tug-of-war is taking place in full view of the public, with every lurch documented on social media and reflected in prediction market prices. The chart below shows prices for contracts that pay a dollar if Biden is the eventual nominee, and nothing otherwise. You can see that well over a million contracts were traded a couple of days ago, and more than half a million on days with significant movements, including the day of the debate. Every confident assertion that the matter is closed has led to a discernible rise in the implied probability of the event, only to be reversed in short order:
I am not an expert on such matters by any means, but it seems to me that if the party is to have any hope of success, the president has to take the initiative, throw his weight behind his vice-president (or some other process for selecting a nominee), lead the transition, play a starring role at the convention, and be given the dignity and respect that he feels is his due. Someone in whom he retains trust and confidence has to guide and assist him in this; Senator Coons comes to mind. And the negotiations with other party leaders have to be conducted outside the glare of media scrutiny.
Responding to reports of Biden’s anger and frustration, Josh Marshall had this to say:
I think it’s the best thing now for his party, his country and his legacy to step aside. But many who he stood by and was loyal to have acted like hyenas toward him in return. And others who never liked him mauled him when he was down. No point denying that.
Marshall’s comment explains Biden’s psychological state, and his refusal to comply with the avalanche of demands to step aside. But at some point one side or the other has to accept an outcome they would prefer to avoid, and the longer it takes for the process to end, the more damage will be left in its wake.
“ was a lead Biden defenestrater,”
I momentarily misread this as “has a lead Biden defenestrator” , and visualized Obama knocking Biden out the window with a gray metal pipe. My subconscious is more imaginative than the rest of me.
Years ago I had that done surgically to several large cysts in my liver…….. it is more than draining the cyst, it removed a part of the cyst material so the cyst would not fill again.
Many thanks for this illuminating article. Rajiv Sethi is pointing out that all pay means the populace loses. This theme calls for further development.
Obama’s desperate attempt at being oracular is the usual bloviating. As we see in his appointment of Hillary Clinton and John Kerry, Obama is the stereotipical bad manager who won’t appoint a competent successor so as not to be shown up as a gasbag.
Exhibit: Joe Biden.
And Sethi makes an insightful observation. Just what will Biden do at the Convention? Make sno-cones for Pelosi?
Let’s keep an eye on the Eve Harrington of the Democratic Party, Peter Buttigieg.
All of these whizbang charts about donations and bets going up and down ignore a couple of things: correlation isn’t causation. Coincidence isn’t proof.
We are seeing all kinds of datapoints: and we don’t know what we are witnessing.
O’Rourke was his guy early in the primary season.
Clinton came in as the Kennedy generation was retiring/dying and oversaw a wipe out instead of a new cycle. His people flooded DC, but Obama came in and really just gave out promotions to the same old trash, not new people. He didn’t bring in new people given the wipeout in 2010 and the thousand lost seats. Then there is a reason no one is listing his accomplishments.
If he doesn’t have a hand now, I think he will become a non-entity very quickly.
For those interested, origin of the Dollar Auction is the same as the Prisoners’ Dilemma: the game theorists at RAND in the 1950s, and specifically this guy —
https://en.wikipedia.org/wiki/Martin_Shubik
https://en.wikipedia.org/wiki/Dollar_auction
The reason the experts in mathematical psychology laugh at these economists is because there is a key, but unstated assumption: that the humans are deterministic.
60+ years of experiments by math psych people, then (in)famously proven true by McFadden in getting the not-really-Nobel prize in Economics for predicting demand for the not-yet-built-BART system in California, shows that in a huge proportion of decisions, humans are probabilistic. It is how the “error” term in the logit/probit model arises. FYI economists who are hard-core neoclassicals will state that the error term represents “outside factors the analyst can’t observe” in a vain attempt to preserve their precious “laws” like transitivity.
I’m not criticising you for bringing up that example – it definitely illustrates some quirks of human incentives. However, there are 60 years of studies showing that probabalistic behaviour by humans (just being random, being “psyched out” or whatever) mean these cosy proofs are merely interesting thought experiments. The cleverer economists like McFadden internalised what the math psych people had shown and used it to make $$$. What makes things very difficult is that the “math psych” model of decision making and the “economics” model of decision making cannot be distinguished empirically in loads of cases. Thus the nonsense model of human decision-making that neoclassicals keep teaching in econ 101 is allowed to continue.
TL;DR If you are open to the fact that humans are inconsistent (via mistakes/boredom/whatever) then all the problems economists spent years and loads of public money to try to explain, just go away via eminently unobjectionable explanations.
Thanks for this comment. I would love to hear more, and if you have any suggested articles on this, please feel free to throw out titles.
Maybe I’m drawing too broad an analogy, but your description of these economists rather reminds me of the “cognitive turn” in philosophy (and I have read of “cognitive economics” as well), which seems to strongly presuppose “the rational agent” as the prime mover in human decision-making, blithely sweeping away all the evidence that humans very often do not act “rationally”.
Many thanks. Perhaps a starting point is (surprise surprise) the wiki on choice modelling. Declaration of interest: this has been edited a lot but some of the stuff came from me in bygone years. I’m wary of self-promoting and breaking NC rules and Lambert was kind yesterday in asking for my blog piece describing something on voting theory. Substack stats show quite a few NC people clicked through to it.
But I stand on the shoulders of giants: my dear friend/former colleague/mentor was part of the UK group of geniuses who got head-hunted by UPenn etc to work directly under people who did the serious math for the Manhatten Project.
I don’t pay much attention to my citations these days but I recently discovered (after Google scholar kept pestering me) that an open access article by me explaining why corporate interests muddied the waters regarding this field has rapidly gone up the rankings and is about to become my most cited publication, surpassing even my “definitive” textbook (Which CUP charges approx EUR50 for). I get £80 royalties per annum which just about covers what my accountant charges p.a. for doing my tax return – Ha!
What does the Democratic Party even run on at this point? Transgender rights, inflation, pro-illegal immigrantion, and gaslighting the American public about Biden’s brain, saving democracy, and Russia-gate with a background of a big “whoopsie, who could have known” presidential candidate attempted assassination. Vote Democrat for Chaos.
Heh. Don’t forget also that they’re the party of censorship, COVID crisis mismanagement, brain-damaged energy policy, and “unequal protection under the law”.
More seriously, though, I suspect their main focus will be to say yet again, “We’re not Donald Trump!” And this carries some weight, as Trump is an egotistical blowhard who would do very few truly useful things while in the Oval Office. But if people are asked that classic question: “Are you better off today than you were four years ago?”, I don’t think Democrats will like the answers they hear. It’s going to be tougher sell this time unless they can offer a serious change of direction.
They have been unalterably good for the MIC, and war, and NATO….. foreign entanglements and massive wart spending are democratic party traits. While they revive and support Qaeda lite and its control of parts of Mesopatamia…..
Trump would say the “Swamp’s” choisen.
The top comment on Sethi’s article (at Substack) raises the question of legal challenges, which Lambert was also discussing yesterday. Where there’s a will there’s a way…?
P.S. Am I bad for smirking at the incoming anger and resentment of all those small Act Blue donors who have been hoodwinked by the Party?
Hyenas? Josh Marshall is shocked shocked that Obama is a person dedicated to ruthless practicality when it comes to the interests of his class and the money bags who really control it. Biden was always a stooge and psychologically speaking that’s probably why he was always trying to assert his authority with his vaccine mandates and Constitutional run arounds and now the attempt to himself pick the nominee in Kamala. Given how cynical our politics have become why wouldn’t the party poohbahs want to pick their own Trump slayer?
Personally I hope that Kamala stays around and then inevitably loses because the Dems are truly due the comeuppance they are unwilling to accept. And Biden is due a comeuppance too given all the bad things he has done and that Josh Marshall probably doesn’t think are bad. A plague on all of them.
Given the subject, it must be pointed out again that the American campaign finance system can be said to be the fundamental cause of this mess, including the Supreme Court’s Citizen’s United decision. In the 21st century, our political system cannot be fixed without some form of real and controlling public campaign financing.
Campaign financing is overrated as an evil. At this point, how many people can really be moved by a political ad or even someone coming to your door?
RE: increase in contributions coming in from Act Blue.
I have pretty much purged any money-seeking Dems from my email, but yesterday received a looong text from Act Blue asking for a donation …. NOW! Fast work, Kammie!
Swivel-necks gonna swivel. Pee pads to knee pads, etc.
Hilarious. Pass the popcorn! I had decided not to fritter away any time watching these machinations inside the Dem party, but they may just prove irresistible…..such crashing together of intersecting identity and interest silos oh my! Newsome endorsed Harris, it appears. Maybe angling for VP?