And the winner is...no one

US election

Could we wake up on Wednesday and still not know who will be moving into the White House come January? It may seem like the nightmare before Christmas, but it’s far more likely than in any recent US election.

Some readers may remember the 2000 election which ended in numerous Florida recounts and discussions about 'hanging chad's. Recounts are a possibility in any very close election. But given Donald Trump’s repeated comments about the election being rigged and his refusal to say whether he would concede the election if he lost, we should assume the probability of a contested result is higher than normal. Of course it’s impossible to say how things would play out in such a scenario, but the political environment seems much more polarised today and Donald Trump seems a lot less likely than Al Gore to quietly accept a contentious Supreme Court ruling.

 

But this is not the only ‘messy’ scenario where we would be kept guessing. It’s also more likely than in previous elections that neither candidate wins the necessary 270 electoral votes to become president.

We could be entering into uncharted territory

No third party candidate has won a US state since George Wallace in 1968, but this year we could see the unheralded Evan McMullin win Utah’s 6 votes in the electoral college that will choose the next president. In this scenario (and if the rest of the country is sufficiently close), then neither candidate could make it across the finish line.

 

We would then be entering into unchartered territory. The House of Representatives would choose the President from the three candidates with the most electoral college votes, including Evan McMullin. The Senate would choose the Vice President. The US has seen this before, but not in the lifetime of any of today’s protagonists. Congress was last forced to decide the presidential elections in 1824, handing the White House to John Quincy Adams; a system last tested 192 years ago could yet decide who serves as the 45th President of the United States.

It would be a messy situation, which markets may not appreciate

This system would likely throw up some odd questions. The House (each state delegation gets one vote regardless of the number of congressional districts it has) would most likely be controlled by Republicans, while the Senate would likely be controlled by Democrats. So would you have a President and a Vice President from different parties? Also, imagine a Republican-controlled house heaving Donald Trump into power despite Hillary Clinton having more electoral college and popular votes. How would this sit with a very divided society? Lengthy lawsuits would seem inevitable; in short, it would be a mess, which asset markets may not appreciate.

 

These scenarios are clearly low probability events. It requires Evan McMulling to win Utah, on which FiveThirtyEight puts a one in five probability, and the rest of the race to be extremely close.

 

But interesting intellectual exercises aside, this election has simply had too many unpredictable twists and turns to write off any scenario as ridiculous.

 
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