The Exchanges

Q Um, it was- You had to show up, what, two hours early to get in? Three hours?

A I am, I am not a particularly prompt person. No, I got, I'm not, wasn't going to miss, so I got there at like six, six oh five for an eight 30 game. Yeah. Lined up. You're supposed to get in on sixth avenue and 33rd, and I was like on sixth and 30th or 29th. It wasn't the worst. It wasn't the least efficient process I've ever seen. New York has a way of getting things done, and you just kind of like follow people. And, and once you get in, I mean, it was like literally TSA security. They like literally like look at your wallet by hand and they take your lighters and, and, and your pens and your vapes and everything like that. And, uh, Once you get in, it was pretty normal. I did feel like the crowd was a little bit fatigued by the second half, which was a choppy second half where there were some questionable officiating decisions. I actually.

AI assessment note: “I got there at like six, six oh five for an eight 30 game.”

Q All right. Gavin Newsom in 20, 28. He's an enigma of a politician, worst run state in the union as far as I'm concerned, but he's so polished and he speaks so well and people seem to like him. With that great hair, what should we take from Gavin Newsom's, you know, continued ascension? Am I correct that he's still, you know, on the up?

A He's not. So we have an article up on Silver Bulletin, which we'll publish shortly after we finish this podcast. Newsom has fallen in Democratic primary polls from around 25% to 15%. He's fallen on polling market from like 33% to 22% or something. I think he was benefiting from some degree of name recognition, whereas now Democrats see a candidate like John Ossoff in Georgia, um, another good looking young guy, but like actually has credential Which Newsom will never have, of having won an election in a purple state, um, and being a younger, fresher face. Like, whatever you say about Graham Plattner and Janet Mills in Maine, I think Mills in the abstract might have been the face of a safer choice. I think it's good that Democrats are showing a bias toward younger candidates, right? Like, that's a lot of what happened with Zoran, too. You know, I wouldn't discount, by the way, someone like an AOC I'm not sure if she'll run. Someone like Chuck Schumer might be very vulnerable in the twenty-twenty-eight primary, for example, she has a lot of time to wait, but like, I could see, like, I, again, in New York, it's New York, so therefore you can't extrapolate too much from New York. However, people saying, we are sick and tired of the democratic establishment. I'll take a more centrist version or a more left-wing version, but not the same. I think ultimately Newsom has like a, a hard …

AI assessment note: “He's not. So we have an article up on Silver Bulletin”

Q Did you bet any of the games? And like, did you find the odds were off anywhere?

A I had the Knicks to win the Eastern Conference finals. And then after they wrapped up their series, I bet them, uh, to win the finals against either OKC or San Antonio. So I actually, I, the ticket was not cheap. I paid, it would not cover Jason's tickets. But I was able to cover, uh, cover my 200 level bowl seat with the profits from, from those non-homer bets. I thought the Knicks were legitimately overlooked in the East, and when you see a team that wins, like, that game against Atlanta, where we were up, like, literally, like, 77 to 22 at some point or something, like, I'm like, as somebody who, like, studies this stuff and builds models, to see that kind of signature significance for that level of dominance over whatever it was, four rounds of the playoffs, like, that's That's real. That's like not noise.

AI assessment note: “I had the Knicks to win the Eastern Conference finals.”

Q it out and they're like, let's hold this play. Mike Brunson, let's hold cat at the point from, you know, until the playoffs, because we know it works so good. But what makes this team so special? Is it the, the wings? Is it just Brunson's grit? Is it the three point shooting across the team? Selflessness, ball movement. There's so many things people talk about here with this team.

A I think it's Mike Brown and Kat. I'm not saying the most important components of the Knicks. I'm saying those are the deltas where things changed the most. Um, on defense, a couple of things. Number one, you have, I love Jalen Brunson, might be my favorite player. Um, he's not a terrific one-on-one defender. He gets a few steals, but like he's undersized. The low center of gravity somehow doesn't work on defense as well, but like every other defender of the Knicks, Including towns, which is a dissent, dissented point of view, are, are at least average, if not better, and so, like, kind of figuring out that system, by the way, when you rely on a defensive system that requires high effort and transition play, not playing your guys 37 minutes per game against, like, the Charlotte Hornets in the regular season, probably a smart move.

AI assessment note: “I'm saying those are the deltas where things changed the most.”

Q Yeah, House and Senate predictions. What does the data tell us right now?

A So we'll have a model out within a few weeks. Been a little bit delayed by the World Cup and the redistricting stuff. Prediction markets say Democrats are around, I think, 80 or 85% to take the House and 40 or 45% to take the Senate. Those both seem pretty reasonable to me. I think, if anything, it's a little bit low on the House. Um, I think it might be more like 85 or 90. My models surprise me sometimes, but like, look, we've been through a lot of elections that are inherently hard to forecast. The House is the one where everything kind of points in the same direction. Democrats, um, are facing a very unpopular president, an economy that voters have a lot of anxiety about, Trump, no new Middle Eastern wars. On top of that, the very, very long history of the president's party Drawing a backlash and performing poorly at the midterms, the more recent history of incumbent backlash in the U.S. and all around the world, the good results Democrats in like New Jersey and Virginia last year, and special elections, you know, look, the redistricting thing helps the GOP a little bit in the end, but you're fighting against a lot of gravity, whereas the Senate is more of a, more of a numbers game. Even in a pretty blue environment, Democrats have to win some seats in red states. It seems to me that taking a big risk in Maine, which is a state that by all rights, they ought to win in a D pl…

AI assessment note: “Prediction markets say Democrats are around, I think, 80 or 85% to take the House”

Q So what, so where do you, where is it right now? Are you looking at that?

A Right now it's two or three. However, that's among registered voters and doesn't reflect voter enthusiasm. Um, so typically the challenger party is more motivated to turn out. You saw that in states like Virginia last year. Um, that gap seems to be closing a little bit. Um, I do think some of the, uh, anti-abortion legislation, right, some of the fact that the GOP kind of is now Back on offense, on culture wars against LGBT people, right? Um, I think potentially is, is going to help motivate Democrats to turn out, right? Um, it wasn't the stuff in Virginia where they were talking about, oh, schools and kind of, I mean, you always want to, like, play counterattack in politics, right? Um, and Republicans found some effective counterattacks with respect to educational policy, Certain attitudes where, kind of, very left-wing ideas have crept into discussions of education and race and other things, right? Um, but now they're, like, kind of calling, like, um, gay and lesbian people and trans people pedophiles and stuff like that, right? And it's, like, surprisingly mainstream discourse, and, like, it's not, I don't think, Politically wise, it's also a little bit dangerous in terms of potentially, you know, triggering violence and things like that. Um, so, I don't know. I mean, neither party can really, like, help itself, I don't think, in kind of being, like, the worst version of its…

AI assessment note: “Right now it's two or three. However, that's among registered voters”

Q we were From empirical kind of history shown doesn't work as a governing system, as a economic system, but suddenly everyone's kind of been swept away by it and seems to think it's, it's the, the only way forward. Does that kind of the, the output of the conditions that you're describing that the left, the Democrats basically become a socialist party and they embrace socialism fully and full throated?

A I think there are huge generational divides where, you know, so I grew up, I'm 48. Um, so I still remember the kind of, not last question, but like, I still remember the Cold War. I still remember the Berlin Wall falling, right? So for me, the connotations are, of socialism are close, adjacent to communism, are a long history of failure of economic development in countries that adopted that system. I think people who are a little bit older don't realize that like the socialism brand, um, Is much more popular among younger Democrats. By the same token, America is still a supremely capitalist country, you know, if not for, and again, I, in my book, I have lots of critiques of the tech sector. We still are attracting the best and brightest young talent from all around the world. You know, I personally think the AI capital boom, whatever becomes of it is responsible for keeping our economy, at least the stock market in relatively good shape. Um, and you know, also things like where have Democrats lost support? Well, actually the biggest differences are concentrated among Hispanic and to some extent Asian American voters. You know, who do you think are the most likely people to own small businesses in the US? It's a cliche, but a hundred percent true that like recent immigrant groups are very entrepreneurial. It's one thing that I believe makes the United States great. And one thing…

AI assessment note: “the socialism brand, um, Is much more popular among younger Democrats.”

Q would you tell them is the right platform for this moment in time, a post-Trump era, and with socialism, wealth disparity, healthcare, there's, there's a group of issues here that keep coming up, the support of Israel, foreign wars. What's the perfect platform for either party, an independent or left-leaning or right-leaning? What are going to be on the top of Americans' minds? If you can look that far out.

A Yeah, look, I, by most definitions, am an elite, as are you guys who can afford tickets to game three of the first NBA finals game in New York and whatever, 25 years, and you're probably an elite. And most elites like me say they're, you know, socially liberal, economically moderate. I can, I know I use the term liberal, meaning the way liberals use in Europe, meaning some role for the state, but pro market in general. And that's probably my view. Um, I'm not sure that view is actually an electoral winner as much, right? Um, the most neglected voters in the U S who are culturally a little bit more conservative, but like economically more progressive potentially, but not quite in the same way that you get from like a, an AOC. They support small business. They are wary of conglomerations of power. Maybe I'm putting that with, with too generous a brush, but like, I do think that like, When you have the worst world's first trillionaire, when people have a lot of anxiety, maybe the anxiety is not the right shape of anxiety, but understandable anxiety about AI. When you have AI leaders saying things like it's going to displace all these white collar jobs. I look, I think a electorally, I'm not saying morally or righteously, whatever else. Right. I think combining a little bit of the right kind of anti oligarch rhetoric, Um, with moderation on some of the issues, um, you know, on the …

AI assessment note: “combining a little bit of the right kind of anti oligarch rhetoric, Um, with moderation”

Q because one year after Biden won that state by 10, Youngkin wins that race by two or three, so it was a 12 point swing in one year. Um, How emblematic is that of how quickly the mood of the country has changed? Is it like a one-off because Youngkin was a strong candidate against a weak candidate? Or does it represent, you know, a much stronger generic Republican ballot?

A I think it's, it's, I mean, that's what you might get if you had 50 Glenn Youngkins running for, for Senate, right? Um, he clearly, I mean, there's usually a pretty big midterm shift, but that was a little bigger than normal in Virginia. Um, and that reflects the fact that, I mean, you can, like, model it out mathematically. We have lots of data points. We have 35 Senate races every two years, right? And you can actually see the effect of being more moderate will gain you an extra two or three or four points, right? Being less More moderate, more radical in some cases, will lose you two or three or four points. And so, and so the fact that the GOP didn't kind of take that lesson and say, we can actually kind of occupy, ah, the mainstream and have potentially really large majorities, at least in twenty-twenty-two, I mean, I think that's kind of, kind of disheartening in, in some ways. And of course, Trump is still a big figure in the GOP.

AI assessment note: “being more moderate will gain you an extra two or three or four points”

Q an assumption about rate hikes. The market then reacts to the assumption about rate hikes, then the market tanks, And then the Fed is like, let's change the rate hike system because the market's tanking. How do you think about building probabilistic models that account for social feedback loops where the social decision that's made is driven by the forecast you make or by the, the market making a forecast?

A I think the evidence is that in two way elections, so Democrat versus Republican, that there's no clear effect from, and by the way, like what we do is, is a tradition. There's always been horse race media coverage has always been polling going back for many years, right? Um, You know, we think our version of it is a little bit more grounded and objective. Um, in two-way races, it's not clear if there's any impact either way, where canon effect is when you're having a multiple candidate race, right? Um, in twenty-twenty, when Elizabeth Warren started to fall behind Bernie Sanders in the polls, right, if you're a left-wing voter who prefers Warren to Sanders, but Sanders to Biden, right, you may kind of switch your vote as a result of the poll that can create momentum. Mathematically trying to not, uh, to model like a multi-way election, we do it. It's very hard. It's way more complex in part because of the feedback loops that it introduces for sure.

AI assessment note: “It's way more complex in part because of the feedback loops that it introduces”

Q think, from the data you've seen for a Republican governor to be elected again in California or for Republicans to win more seats in the House or have a shot at winning a Senate seat in California? I mean, fundamentally, does this system not get set up in such a way that it creates a irreversible model for Democrat establishment to maintain its control over elected seats in the state?

A I mean, Democrats have lost plenty of elections recently, but not in California. Partisanship is the gravity that dictates every election in the U.S., right? Like, my job, don't worry, I will get criticized if, if we say, oh, whatever, Gavin Newsom or AOC is a 55% favorite and they lose, but like, but 43 of the 50 states, David, we could probably predict right now with 97% confidence who they'll vote for in 2028, And it's not because of rigging, it's because polarization and partisanship are very powerful forces that we can't seem to, to escape from. You know, again, I would love, um, you see a little bit of this in New England, actually, right? You see like a Charlie Baker or as Phil Scott in Vermont, right? You see a little bit of like cross-partisanship in New England. You see even in the South, like Bashir in Kentucky is a moderate but Democratic governor. Um, for some reason you don't see it as much In California. I don't know why. California's, like, always been, like, the laboratory of weird and eccentric political ideas, but it's come, it's become a machine state. Maybe because it's so large that voters can't kind of touch the candidates up close and don't have a lot of, like, directly relatable experience. Um, maybe California's just kind of, like, too large in general, but I, like, I am very concerned about Polarization and partisanship. I think it leads to lower qual…

AI assessment note: “it's not because of rigging, it's because polarization and partisanship are very powerful forces”

Q So it's kind of like ride or die. We're going to just our team, our team, our team's going to win. It doesn't matter. We never apologize. Kind of the Trump playbook. Never apologize. Go on the attack. Seems to be what Gavin's doing, right?

A Absolutely. And he had some, some proof of concept. I mean, the redistricting thing was a genuinely smart tactical move. Democrats are going to wind up losing seats, but like without California, they probably lose even more. And so he did skate where the puck was going there instead of the party's like usual risk version that I've critiqued before. Um, but at the same time, the triangulating spirit of like, let's pick Kamala Harris because she's like the least unacceptable candidate. Or Hillary, or John Kerry, if you want to go back to 2004. Um, the establishment doesn't seem to have an understanding of the fact that, like, almost every election now, Obama in 2012 was, I guess, the exception. Almost every election now is a change election. We might ping pong back and forth for many cycles. Like, I think Democrats are slight favorites to win in 2028. It wouldn't shock me if AOC or Newsom or Shapiro or Ossoff or whomever wins. If they're underdogs again in 2032, look what's happening in the UK where, I mean, it's kind of become like a running joke, but we're going to be through like what, like six prime ministers in nine years or something, and they're probably the US's like closest comp. Um, it's not a good time to be a defender of the status quo, and I do think candidates like Kamala Harris, who was unable to distance herself, kind of literally unable or unwilling to distance h…

AI assessment note: “Absolutely. And he had some, some proof of concept. I mean, the redistricting thing”

Q even if you extrapolated them, 10 X or 20 X, pick your multiple, it would never swing a major election. In fact, the number of elections that have been swung based on what they told me is like the most local smallest election where there's tens of thousands of votes or thousands of votes. So Is that the issue that we're seeing here? This collection of appearances of impropriety? Yes.

A Look, the, the American election system is very decentralized, um, which, you know, as kind of like, uh, uh, old school liberal in some ways, who I'm kind of against centralized power, I think is quite brilliant in some respects, but yeah, the scale, there is certainly, there are certainly cases of fraud. When Al Franken won, what was it? 2006, right? That came down to like a recount of like 200 votes. We're never going to know that with any degree of certainty. There is like a margin of error. But in practice, and we know this too, when you do have recounts, again, I've studied this a lot, you have an oh .5% recount threshold in most states. Almost never have you had a margin larger than oh point oh five percent or so overturned. The errors can also cancel out. Again, you know, the notion that someone can Vote without physically being like the ward of their ballot. Understand why that bothers people, and I think California has been Complacent about this, and I think perception does matter, and I think you can, there's a kind of certain arrogance, I guess, is the term that comes to mind, um, about saying, well, we want everyone to vote, and so we're just gonna do things our way, and it takes a long time because we're, like, taking time to verify things. Again, you know, having studied elections all around the world, it's very unusual. Most countries we count much, much faster t…

AI assessment note: “perception does matter, and I think California has been Complacent about this”

Q and those kind of like blocking and tackling in the high level of engagement, um, which Trump You mentioned kind of burns people out with that high level of engagement. Seems like Mondami comes just under that. He's a little more positive. He doesn't use like the toxicity that much, but he's, he's engaging, right? And that seems to be working in New York and with the voter base, no?

A He's pretty popular here so far, and again, New York is a, New York is a capitalist city, I think. I think it's different than somewhere like California. It's not kind of as West Coast, uh, freshwater progressive. New York is a pragmatic place that people from all around the world migrate to. It's a place where there's a lot of wealth all around you. It's also a place that, despite seeming like a chaotic shit show at times, I mean, it's, look, it's easy to be optimistic about New York in, in mid-June when we have, like, the most beautiful weather in Of the year, and everyone's coming to visit and everything else, but like, but New York is a success story in a way that I think California has become less of one, maybe.

AI assessment note: “He's pretty popular here so far, and again, New York is a capitalist city”

Q that they feel is going to be very hard to get out of. And I would argue that that's a function of the federal student loan program and its underwriting processes, and it really condemns people to a life that is going to be very hard to grow your way out of. But what does the data tell you about capitalism and what that says about the next cycle here?

A Yeah, where the cut point is, is probably around age 40, I'd say. Obviously, it kind of ages by a year, every year, and like, you know, we saw, I saw before the New York mayoral race last year, people who were able to make incredibly accurate, almost block by block, neighborhood by neighborhood projections based on where Zoran would be good versus Cuomo, just based on knowing the city and where younger people, younger, more progressive people live, I would say. You know, I think part of it might have to do with economic, Anxiety for sure. I think it's also your experience, like, Growing up and exactly when you kind of came of age, right? Again, I grew up in like, um, I guess the first election I was old enough to vote in was Clinton in 96. This is like the triumph of the West and capitalism. You had a very robust economy in the 19 nineties. You had a lot of growth. Um, and by the time you get to your, you know, when the great recession hit, you know, I already had by a year, right? I already had a job. I already had a foothold. I think that people kind of like born, um, If you were in college when September 11th happened, like that might be kind of the, the cut point, roughly speaking. It doesn't cut quite cleanly from Gen X through millennials. It goes a few years into the millennials. Um, but like sometimes I kind of joke, it seems to me like people like in their Forties thro…

AI assessment note: “I think part of it might have to do with economic, Anxiety for sure.”

Q That makes sense, but I want to ask, I just want to ask you the empirical question. What is the difference in states or districts or cities that don't have voter ID and those that do? Politically. Like, is that basically create a huge overweighting for Democrats? Can you just help us understand the politics behind this from an empirical perspective, not putting on a spin hat or anything?

A So the theory used to be that Democrats benefit from higher turnout by kind of any means at all, and that was an era when Democrats tended to dominate among non-college-educated voters, whereas Republicans were like the, the, you know, country club, Kiwanis club, people who, like, show up in the first day of voting. That has shifted. Look where Democrats have really, really overperformed. It's in special elections, it's in midterms, as opposed to high turnout races, like Like when Trump's been on the ballot. Um, and so like, I think if Trump Like, look, I think voter ID would be pretty reasonable. I'm not against voter ID. You show your ID to do, you know, if you show ID even at mid forties to get into a bar, you can probably show it to vote. Um, but like at the same time, um, I don't think that explains what we saw in California. I think it's a system that is much too slow. We have different tranches of ballots that are kind of differently and where younger people that might be more progressive tend to vote later and or by mail. And again, It's not like this happened in Alabama or something. The prior on Pratt advancing probably would be pretty low, potentially, and I wish that people were We're less partisan. I, you know, I have been, um, critical on, on the newsletter, Silver Bulletin, about Graham Plattner, for example, um, because I think he's somebody who has not proven a…

AI assessment note: “So the theory used to be that Democrats benefit from higher turnout by kind of any”