The Case of the Missing Voters

At the beginning of World War I, the Ottoman Empire, which contained today’s Middle East, had not allied itself with either side of the conflict. It was wooed by both the Germans and the British. When the British seized two Turkish battleships that were being built in British shipyards at the outbreak of the war to prevent military escalation, the Germans made a gift to the Ottoman navy of the German battleship Goeben and the cruiser Breslau. The trick was how to get them past the British Fleet guarding the Dardanelles and into the Black Sea for the awaiting Turks.

Winston Churchill was the First Lord of the Admiralty and therefore charged with responsibility for the fighting effectiveness of the British Fleet. As a consequence of a breakdown in British command and communication, the Goeben and Breslau were able to make it into Turkish hands which caused Turkey to join Germany and the Central Powers. Churchill sought to exonerate himself with an explanation for the British Fleet’s failure in his book The World Crisis:1911-1918;

In all this story of the escape of the Goeben one seems to see the influence of that sinister fatality which at a later stage and on a far larger scale was to dog the enterprise against the Dardanelles. The terrible ‘If’s’ accumulate.

He proceeds from there to catalog a list of “if onlys” – if only this or that had happened, the outcome would have been different.

But that’s true of almost every human activity. The terrible “ifs” accumulate to doom many an enterprise. If only the Persians had gotten to the Thermopylae pass before the Greeks in 480 BC and if only the King Xerxes’ Persian navy hadn’t been lured into the Straits of Salamis where big ships couldn’t maneuver, the West would be speaking Farsi today and Greek democracy would never have taken root elsewhere.

If only General Stonewall Jackson hadn’t been killed by friendly fire at Chancellorsville and if only General Lee had taken General Longstreet’s advice to put his army at Gettysburg between the Union Army and Washington, it’s likely that the outcome of the American Civil War would have been quite different.

As I predicted in last week’s blog, the punditocracy has now sifted through the post-election demographic data, and like the ghostly hand that wrote upon Belshazzar’s banquet wall in Daniel 5,  concluded that the Republican Party has been weighed in the balance by this election and found wanting. The pundits believe Obama’s win can be attributed to a modern list of terrible “ifs” which, they conclude, accumulated to defeat Romney and will continue to defeat every future Republican unless the party turns away from its social, fiscal, and small government conservatism.

I don’t agree. The pundits are looking at granular data and trying to augur meaning from the arrangement of bones as ancient seers did. Their problem isn’t an inability to see the forest for the trees; it’s an inability to see the forest for the bark. I think the answer can only be seen by getting far enough back that a picture and pattern can be seen.

In the 2012 election, after four years of Obama in office, his supporters turned out in fewer numbers – 9.5 million fewer, in fact, which represented an almost 12% decline in votes. Romney also saw fewer people turn out to vote for him compared to the 2008 turnout for McCain – 1.5 million fewer voters, representing a decline of almost 3%. Obama’s 2008 popular vote win over McCain was 9.5 million – a 7.4% spread. But Obama’s 2012 popular vote win over Romney was 3.1 million for a 2.6% spread.

Obama, therefore, cannot be said to have won a mandate in the 2012 election after having suffered a 12% decrease in turnout and a 5% smaller victory margin over his challenger. And the voter turnout and margin of winning in 2012 versus 2008 hardly make a compelling argument that the Republican Party should embrace different values as the punditocracy says it must.

The spreadsheet embedded in last week’s blog showed the election would come down to seven historically red states that, in my judgment, had fallen under the sway of Obama’s 2008 Hope and Change bandwagon. In that blog I said Romney could afford to lose Nevada or Colorado – but not both – and he would still win in 2012.. If he held on to Colorado and lost Nevada, he would win 275 electoral votes, and he needed 270 to win. If he lost Colorado and won Nevada, he would win 272 votes. I thought it was more likely that Romney would win Colorado than Nevada, which looks like it’s turning blue, especially after reelecting the political dinosaur Harry Reid in 2010.

As it turned out, Romney won two of the seven states – Indiana and North Carolina – but he lost the other five. I was stunned. But excluding Nevada, Obama won the combined 69 electoral votes of Colorado, Virginia, Florida, and Ohio by only 245,000 out of the 19.5 million votes collectively cast in those states. Romney therefore needed 245,000 plus one more vote in each of four states to have won. Alternately excluding Colorado, Obama won Nevada, Virginia, Florida, and Ohio by only 212,000 votes out of the 12.1 million votes cast in those states. One more vote in each of them and the election would have gone the other way.

Numbers this close make a poor argument for retooling the Republican Party in order to make it more competitive in future elections – especially since making it more attractive to the Democrat base would require forsaking core conservative values regarding abortion, gay marriage, small government, and fiscal restraint. If my product has a manual thingamajig and the competitor’s product has an automated thingamajig, automating mine will only achieve parity. The objective is to become the superior choice, not a look-alike choice.

The punditocracy reached its “change or die” assessment of the Republican 2012 election loss based on exit polls. Those aren’t the right people to talk to. The right people to talk to are the voters who stayed home. They could have made Obama’s reelection a rerun of 2008 or they could have elected Romney. They did neither. The question to ask is why. The question isn’t how Romney could have persuaded Obama voters to vote for him. That assumes this and all other elections are zero-sum encounters in which a fixed number of people are drawn one way or the other. It ignores those who aren’t voting for any number of reasons … reasons that remain unknown.

That is essentially what we do in business. Asking what can be done to products or business models to woo customers away from competitors focuses on expanding market share. Asking what can be done to woo non-consumers – the often much larger potential market that is sitting on the sidelines because none of the existing product offering or business models are currently attractive – focuses on expanding the market. The latter requires a different strategy than the former and is often a more productive use of resources.

From whom did 3M take customers with the introduction of Post-It Notes? Nobody. Post-It Note users were previously non-consumers. From whom did George de Mestral’s invention of Velcro take customers? Nobody. They weren’t customers of a competitive product. How about zippers and buttons, you ask? If you look at most uses of Velcro, it took very little market share from buttons and zippers; what it replaced was doing nothing. The customers for iPod, iTunes, iPhone, and iPad were not in the market before those products existed.

The Republican Party should not concern itself with attracting Democrat voters to its agenda. That’s a market share struggle. It should concern itself with attracting the non-voter – and there’s a bunch of them. Since the 1972 election of Richard Nixon, the voter turnout has averaged 55% of the age-eligible population. Almost half of the potential market is non-consumers! And until recently it had been getting worse.

Voter participation fell from 56% of age-eligible voters in the 1972 Nixon second term election to 52% in the 1996 Clinton second term election. These were huge voter dropouts over the 24-year, 7-election period because the voter-eligible population rose from 140 million in 1972 to 195 million in 1996. In these seven elections the only one to spark interest occurred in the first Clinton election for which voter participation rose to 58% – the year in which Bush 41 was fighting for a second term. But after one term in office, Clinton won his second term with a drop in voter participation of 6.5% relative to his first term – a turnout of only 51.7%.

Voter participation rose 2.5% for the infamous 2000 election when it was assumed Gore would inherit the Clinton mantle and ended up instead tied and in a court fight with Bush 43. But the second Bush 43 election in 2004 pitted the incumbent against John Kerry and was expected to be a referendum on the Iraq War. Participation rose almost 6% to 60% – i.e. the “market” expanded by 19.5 million voters. Bush 43 got 11.5 million of these voters and Kerry got 8 million, giving Bush the election by 3.5 million votes.

The “red hot” 2008 election saw only a slight increase in voter-eligible participation – from 60% to 61.5% – an increase of 8 million voters. Note: that’s less than half the election/election voter increase that had occurred for the 2004 second Bush election. Less enthusiasm or more enthusiasm? Obama won by 9.5 million votes. Now here’s what is interesting. Eight million of Obama’s votes came from expanding the “market” of voters and two million came from McCain, causing his vote total to fall two million less than Bush got in 2004. In other words 80% of Obama’s winning margin came from expanding the market and 20% came from switching voters from the Republican tally to the Democrat. All together class: where do most of the votes come from? From expanding the market, not from market share raids.

The 2012 election shows this lesson working in reverse. The voter-eligible participation fell and 9.5 million fewer voters showed up in 2012 than had shown up in 2008. A lot less enthusiasm because the voter market shrank. Who paid for that 9.5 million voter shrinkage? Mostly Obama II. He paid for 8 million of them by getting that many fewer votes than his Democrat predecessor, Obama I, had gotten in 2008. Romney paid for the rest of them – 1.5 million – by getting that many fewer votes than McCain in 2008. Obama still won, but only by a third of the margin that he had won in 2008 because most of the shrinkage was put on his tab. Once again we see the non-voter effect – except this time in reverse.

Enthusiasm almost always goes to the winner. A lack of enthusiasm is almost always paid by the incumbent. There was no market share shift in 2012 because Romney lost as well as Obama, albeit less. Had Romney increased his votes over McCain and voter participation had fallen, then Romney would have taken votes from Obama even if he didn’t take enough to swing the election to him.

So what’s the lesson here? It’s this. Elections are largely won by expanding the voter market and getting most of the increase, not by taking market share from the opponent. Of course elections can also be won when the voter market shrinks, as Obama showed, depending upon who pays for the shrinkage and how much they pay. Romney paid comparatively little for the 2012 shrinkage, but he would have had to overcome McCain’s 2008 deficit less Obama’s 2012 shrinkage to have won. Trying to win in shrinking voter markets is a lot riskier than winning in an expanding market.

The 2012 presidential contest took place in the context of a crummy economy, a healthcare law that has been consistently hated since its passage by at least 55% of the people, and a country in which two-thirds of its citizens believe their political leaders are headed in the wrong direction.  Voters were told that this was the most important election in modern times, if not the history of the Republic, given the radicalism of the incumbent President. Yet, notwithstanding the stakes, 45% of the voter-eligible population stayed home. Why?

Well, the answer won’t be found from exit polls. Those are the wrong people to talk to. It won’t be found by explicating the terrible “ifs” … election tactics only influence the voters in play, not the ones at home. If identity politics were the answer, the dropouts would have shown up to vote their convictions. They didn’t – a subtlety that Sarah Westwood, a sophomore at my alma mater, failed to grasp in her Wall Street Journal opinion this week. I thought Susan Lapin’s response to Sarah was thoughtfully well-argued in refuting Westwood’s poorly-reasoned opinion.

The pundits are looking in all the wrong places to understand the 2012 election. The Case of the Missing Voters is like Sherlock Holmes’ dog that didn’t bark – the clues are lost in plain sight.

The case that voters should show up was badly made.

How sad.

The issues were there. The voters weren’t. Apathy reelected Barack Obama.