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US MIDTERMS - WHAT WE SHOULD BE WATCHING

Updated: Oct 16, 2023

In the US midterms, it is the state-level elections that matter most. Who wins key positions, such as state governors and attorneys general could shape the future of American democracy for decades.



On November 8, voters go to the polls in the US midterms. While the media focus is on which way the Senate (probably republican) and House (definitely republican) will go, these are not the really important races to which you need to be paying attention.


It is the state-level elections that matter most.


Who wins positions as state attorney generals, secretary of state, and governors could determine the future of American democracy (and consequentially, its economy and society, its soft and hard power) for the next decade or two.


A meaningful weakening of the institutions of American democracy will have reverberations in China and other authoritarian states, in other democracies such as those in Europe, Latin America and Asia, and in aspiring democracies.


Risk auditors look at two aspects of a risk – the likelihood of it taking place and the consequence if it does.


Two years ago, in the run up to the 2020 general election, many Americans were worried about the resilience of America’s democratic institutions given the pressure they were under from President Trump. I was not. I fundamentally believed that these bedrocks of the American democratic system were strong, in the judiciary, at the Supreme Court, and at national and state institutions.


While the consequences of a democratic collapse were enormous, the likelihood of it happening was extremely low.


This mid-term election will be a clear marker as to whether the likelihood will meaningfully rise.


State-level political leaders approve (or not) their state’s voting results (such as in the 2020 and 2024 national elections). They set the state’s election rules and lead the vote count. With this power they have the potential to disenfranchise voters and change outcomes.


Next week, in a number of key states including Nevada, Arizona and Michigan (three states that Biden won in 2020 by less than 3 points), there are officials running for office who deny the result of that election. They do so despite the lack of any real evidence of fraud. At the most extreme, some have stated quite explicitly that if Trump were to run and lose in 2024, they would assume (and claim) the election was fraudulent.


If key institutional leadership posts are won by officials who are willing to trample over – and even destroy – the will of the people and the legitimate electoral process in their state on behalf of their party, America’s democracy will be the casualty. This need only happen in one swing state to call into question the entire national election result.


This, to me, is a far more profound consequence with a very long tail of implications for the US and the world, over a potentially decades-long time frame. With outcomes this potentially traumatic, if the likelihood of it happening even increases from one to ten percent, that will have extraordinary results, for us as individuals and businesses.


This is why you ought to be watching the state-level races.


This is not to suggest that the Senate and House races don’t matter. They too will have implications. But I can already tell you, at least broadly, what is going to happen. If the republicans win either house they have made clear they intend to bring President Biden’s policy to a halt, gridlocked. As a result, Biden will do what Obama and Trump did before him, to move his agenda forward by executive order leading to ongoing uncertainty and unpredictability around, among other things, taxes and regulations.


The next two years will be moribund, important policy initiatives are unlikely, the regulatory context will remain uncertain and thus it will be very hard to take important business decisions. Exactly how this plays out will depend in what industry you work, where you live, your income etc.


More consequential however is what happens next. If election deniers are chosen in key state leadership positions, America will be taking a path that could lead to an earthquake and tsunami that would make the next two years political intransigence look like no more than ripples.

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