Wednesday, October 12, 2016

The GOP civil war - some observations

It appears a civil war has broken out in the GOP. It is easy to understand why this is happening, the GOP congressional leadership made a deal with Donald Trump when they made him the party nominee. The some terms of the deal are now active but the GOP does not seem to be in a position to fully divest itself of Donald Trump.

Based on news reports at the time I think the deal went something like this - you do what you can to bring your fans over to the party's voter rolls and we will support your brand. The fine print in the deal was - if Donald Trump starts alienating the GOP existing  voters, then the GOP backs out. The flag set on this was Hillary's lead over Donald Trump in the polls. If Donald Trump fell below Hillary by 7 points - the GOP would move to secure its needs  and abandon the Trump campaign.

The basic rationale of the GOP for making the deal was that the Donald Trump supporters were not really part of its voting ranks. They were the ones making weird stances at rallies and they were clearly easy to sway with emotional reactions, but these were not people you could count on to turn up to actually vote.

Donald Trump for his part promised to make them all turn up to vote. He directed his machine to start registering voters and reaching out to people to make sure that they came to the polling both or cast early ballots.  Unfortunately for Donald Trump - there really is no Trump organization - he has never invested any money in one or raised money to build one. The result was his directives to the organization - were basically directives to nowhere. The GOP's internal surveillance people picked up on this disconnect very early on and told him to fix that - it seems like he didn't actually do it.

An added problem arose when the release of the lewd comments tapes and the ensuing mishandling of the issue by the Trump campaign created a massive 10+ point lead for Hillary over Donald. This automatically activated the "Abandon Trump" clauses of the deal and the GOP top leaders began to distance themselves from Donald Trump. The GOP's financiers began to slowly back out of pledges for campaign support [1].

The rank and file of the party and lower tier GOP leaders however were not in a position to action on these clauses. In the last decade as the GOP's voter base struggled to cope with a black man being president, a number political opportunists jumped into the party. They saw this voter disaffection as a means to launch themselves into a position of influence inside the GOP. This group of opportunists saw Trump as a great chance to topple the existing GOP leadership and seize control of the main organs of the party. It is these people that are making it hard for the GOP to detach from the Trump campaign.

The naivete of these opportunists is something to be seen to be believed  - it appears these people are operating under the assumption that the massive financial support for GOP causes which comes from personal pledges by long time leaders to special interest group will simply flow to them just because they are the new guard. The opportunists don't understand that is not how it really works.

For his part now with the "Abandon Trump" clauses in action - Donald Trump has two choices. He can either try to sound conciliatory and recover the lost support of the GOP. This would be a significant distraction from his main campaign task of attacking Hillary Clinton. Or he can abandon the GOP leadership and push ahead with the task of consolidating his base. The latter move will likely cost him the election but it might secure his brand against the catastrophic losses it would endure if he failed in the election despite GOP support.

I am not really sure what strengthening Donald Trump's brand this late in his life will do. At most he will be like Sumner Redstone - living and nominally in control but ruled by random special interest groups who basically buy airtime by engaging expensive legal teams to sue each other. I also echo Mark Cuban's question - what is the point of running a mass market engagement when you have a *premium* brand? none of these people you are drawing to your rallies are going to buy your premium products. At best they will buy mass market stuff but the royalties from those are shaky at best. Typical margins on those products are ~ 5% at most compared to the 30-50% you get from a premium brand. Why would you do this? It is one thing to broaden a brand portfolio - but it is completely another thing to shoulder ridiculous risks for no clear gains.

For the GOP - this civil war is going to cause a major split that has been some years in the making. It could be that the older established GOP people will keep their seats this time around but in the GOP's core will pull a way and try to establish its own political presence (with or without Donald Trump). Kind of like a Tea Party 2.0. It isn't clear that formation will sustain but the GOP will have to spend a lot of time restructuring itself.

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