Short-Term Modeling and Political Risk

Economic modeling that technically manipulates risk for short-term gain (flash trading being the most extreme example) yields increased political risk.

Democrats and Republicans are now clamoring to turn the zero-sum economics of the Great Recession into a political game of partisan gain. Playing the game conserves the risk within predictable parameters of bivariation.

Democrats blame Republicans for our woes while Republicans warn it gets worse from here if we do not stay the course. We all know, however, that the compromise will do little to change the course, but anchors the risk to its current value.

Gaming voters with rhetoric that is overwhelmingly tired if not complex would usually result in apathy and anomie, reducing the risk to the binomial, Democrat or Republican alternative.

Now, however, not enough time can pass for voters to forget the source of the zero-sum--the depreciated net worth of the average income--if the cyclical trending that supports it occurs with such a short-term frequency, increasing the political risk.

Short-term, cyclical accumulations (beta volatility with little growth) is indicated well into the future with expert technical analysts apprehending a long, jobless recovery. The detriment is being fully disclosed to minimize the risk of failed expectations, but not without increasing the fundamental risk.

A highly frequent and causally recognizable trending phenomenon that easily correlates the accumulative detriment with the benefit does not allow enough time within the cyclical space to operationalize with bivariate realignment.

The risk is not as credibly reduced and gains a gamma proportion. Its management is likely to be more tyrannical, associated with systemic risk (controlling the cost of health care with an unpopular reform, for example), and more prone to organized consolidation when less is needed (merging banks and requiring higher capital requirements to leverage the risk).

With such a short frequency, bipartisan (binomial) gaming for votes is effective with only the most strident supporters, posing a significant political risk. The risk is being buried in complex issues like financial reform and being correlated with an urgency for economic recovery.

Even the Laffer Curve has been pulled off the junkheap of disconfirmed hypotheses.

After twenty years, an eristic like the Laffer Curve has an allure for conserving the present value of the risk.

Despite its tarnished past, producing record budget deficits in the Reaganomics era, the artifice has been derelict long enough to be polished up for some current use.

Laffer's technical argument for marginal tax reduction can be the eristic for a balanced budget without reference to continuing "the Bush tax cuts." Knowing that it does not work is, nevertheless, well within recent memory, and even more disconfirmation is gained with a long-term memory trace.

More of the problem is obviously not the solution. Artifices clothed in the credibility of technical jargon will entrench resistance to binary, Democrat-versus-Republican politics. At this point, especially with an economic outlook that calls for a jobless recovery, old eristics are not only annoying, but enraging.

Short-term economic risk models present a significant political risk that tends to the fundament. If the primary parties do not merge non-partisan demand for change into their binary, risk-management model of conserved accumulated value, third-party pluralism become more probable. The beta risk will transform into alpha risk.

The binomial party system is designed to resist an alpha transformation of political risk.

With political, gamma risk being Constitutionally endowed (being of an unavoidable, "constitutional" nature) rather than economically determined, Hamiltonians rely on a republican form of government to keep gamma risk from transforming into alpha risk. Instead, it is transformed into a beta-risk variation--partisan gaming of the risk to conserve its value.

While a two-party, republican form of government presents a continuous, but spectrally fused, ideological platform that conserves the present value of the zero-sum, high-frequency accumulation presents a much trickier risk volatility beyond the normal beta bivariation.

Frankly, it is more than Ivy Leaguers can successfully handle. Volatility, for example, is being increased to avoid the political risk. Increasing complexity with quantitative abstrusity just increases the risk being avoided.

Using wisdom and intelligence to pepetrate a detriment is an ignominy that ultimately revanches. The security of the reward is as delusional as the assumption of the reduced risk.

Independents are poised for significant transformation of the risk without sacrificing the easily verifiable accountability and productive capacity of a free-market legitimacy, empirically defining what limited government really is by doing it, rather than always gaming the hypothetical.