What can we learn from the 2024 US elections?

As a consumer PM, I’ve developed a natural interest in consumer psychology, behavioral economics and social sciences over time. And becoming a business founder, has driven me to seek a deeper understanding of traditional economics and politics. All that is to say that I’ve been fascinated by this time’s US elections more than usual.

Politics in my opinion teaches you a number of business lessons.

1. Winning elections needs you to run a super sized marketing and sales operation across a massive customer base (the citizens).

2. Determining what policies to push for (both domestic and foreign ) needs you to exercise your product manager skills. Understanding the customer base, their problems, and identifying solutions that work for them.

3. Designing policies for a country is a massive exercise in system engineering at the largest scale.

4. Balancing budgets is a lesson in business sense. How do you make revenues, what do you spend it on.

5. And finally, rallying the entire government apparatus to execute on your vision is nothing short of the ultimate leadership exercise.

It also teaches you life lessons such as how to handle complexity, how to work with people you don’t agree with, and how to make peace with decisions that are in the grey.

Observations about the 2024 elections, and lessons.

It’s only been two days. Not all the data is out, and so these observations are very early. But, I believe this moment is also ripe for reflection, because the pulse of the country is the strongest in this moment. I also want to call out that these are my observations and opinions, and I’m entirely open to the possibility of being wrong. And with that, here we go..

1. Why I think the Democrats lost

Everyone has an opinion on this, and here is mine :). Before diving in, I must reveal that I am a Democrat and I voted for Harris. And with that, I believe the Democrats lost because of three key reasons.

a. The global Anti Incumbency trend: The post pandemic rough economic situation has caused all incumbents around the world to lose majority in their respective countries including UK, India, South Korea, Poland, South Africa, Argentina and many more. More here.

The business lesson here is that, attempting to build businesses that are against the larger trend is always harder. Find a niche that can ride the larger trend wave.

b. Ineffective communication by Democrats: Over the past few decades, the democrats have inadvertently gone from being a party of the working class to a party of college educated, and as a result have lost touch with how to communicate with the working class - which channels they consume information on, which celebrities influence them and what language offends them.

The reason for this switch I think is because Democrats positioned themselves as standing for ‘social justice’ and ‘economic equity’ to counter Republicans’ positioning of ‘business friendliness’. While this move was intended to target people in the margins - immigrants, women and working class, it has been having the unintentional effect of attracting the very opposite - educated and privileged - the elite, for reasons that become clearer later in the post.

The business lesson here is a marketing one. Understand and speak the language of your customer. This is also easier to do if you have a single homogeneous customer segment like the Republicans did (the working class), than a selection of different segments like the Democrats do.

c. Insurmountable personal headwinds for Harris: In addition to having just over 100 days to run her campaign (as opposed to Trump who has been running for 10 years now in some way), Harris had the additional headwind of being a woman.

Many I’ve spoken to have argued that misogyny didn’t play a part, often making the faulty argument that because they themselves would have voted for a woman president, that means that misogyny doesn’t exist. So, let me clarify - I’m not making the claim that everyone in America is sexist. I’m making the claim that not enough people in America are comfortable enough YET to place their fate in the hands of a woman, mainly for innocent reasons such as - they haven’t interacted with a woman in a leadership role yet. This is no one’s fault, and it will improve over time with more women leaders.

To drive home the point though, consider whether Trump would have been able to get away with everything he says and does, if he were a woman. The bar is simply much much higher for women.

The lesson for business here is both in understanding customer psychology and biases, as well as in leadership. Understand the unique challenges your team members face, because of their unique situation.

2. Almost everybody voted against their economic interest

My second observation is that, for an election where economy was self reported to be the #1 issue for many, it is ironic that most of us have voted against our personal economic interest. Some of us did this intentionally, some unknowingly.

I will make this case by showing two things.

a. Barring outliers, the rich voted for Democrats, and the poor voted for Republicans.

This exit poll data shows a significant broad base shift to the right among most groups. The groups that shifted left or stayed mostly where they were were older folks, college educated folks and white folks. These are some of the most economically prosperous groups in America. The folks that shifted right significantly are younger folks, non college educated, hispanic, asian and black. Apart from Asian (who are among the richest demographics, and hence an outlier), the rest make up the working class in America.

In short, the economically well off voted for Democrats, and the less well off voted for Republicans.

b. The economic plan put forth by the Democrats will perform better for the working class, while the one put forth by Republicans will ONLY perform for the wealthy.

I think the simplest and best explanation I’ve seen of this is made by Prof Richard J Murphy here.

And with that, I arrive at my observation Almost everybody voted against their personal economic interest. My claim is that different groups did it for different reasons though.

• The college educated and white(voting Democrat) seem to have prioritized issues like the threat to democracy, social justice and economic equity over personal economic interest, evidenced by this self reported exit poll results, and in line with the Democratic agenda.

• The lower income group consisting of non-college educated working class and young (voting Republican) seem to have been the largest victims, who have voted against their own interest, by voting for an economic plan that will bring them extreme economic pain.

• The wealthy( who voted Republican were outliers) seem to have intentionally prioritized their personal economic returns as evidenced by the non trivial tech community that rallied behind Donald Trump.

3. The two party system conflates economic and cultural spectrum

For the longest time in US history, America was a fairly homogeneous society (compared to today) focusing mainly on industrialization and economic growth. Accordingly, the two party system neatly split along the line of economic right and economic left.

The right was business friendly, believed in reducing the role of government and focused on offering all citizens economic opportunity. The left focused on economic equity and used government to ensure a safety net for the marginalized. However, both parties worked with each other towards common goals.

Over time however, a new cultural right - left divide started forming in the populace due to different factors such as

1. Increased diversity due to American immigration opening up, creating a diverse set of social justice issues.

2. With progress, more of the population getting to higher levels of Maslow’s hierarchy of needs such as self actualization and transcendence, creating a psychological need for people to root for social justice.

3. Rampant industrialization creating negative externalities such as climate change, which needs you to step outside businesses to fix.

4. Globalization creating intricate dependencies on other nations, even as those nations start to develop and find their own voice.

The result is that now we have a two party system that juggles economic and cultural left - right values, causing many to not find a home, while others create an ideological relationship with their party, locking in and closing their mind to alternate views.

The business lesson in this is in system design and engineering. Constantly revisit your systems to make sure it is continuing to fit your evolving business priorities.

Closing thoughts - my feelings.

I wanted to keep my feelings and partisanship aside and think about this situation rationally, in this post. However, in this final segment, I want to capture how I’m feeling. Like many in the country right now, I’m experiencing a variety of emotions. From sadness and disappointment to anger and disgust. Talking about it, writing about it has helped me cope, and I hope that the Democrats regroup and figure out how to never let this happen in the future.