Election uncertainties, perishable scenarios and global implications

By Enrique Rueda-Sabater

In a year with an ample supply of surprises—of the kind that do not offer a resolution but instead heighten the uncertainty around making our decisions harder—the case for scenarios has never been stronger. Scenarios that are not designed to predict outcomes but to explore possibilities and flex the mental muscles we need to navigate change and turn challenges into opportunities.

The hardest kind of uncertainty to factor into decisions is radical uncertainty (this term is one hundred years old and coined by Frank Knight but has been popularised more recently as the "unknown unknowns") and scenarios can help even with that by exploring unlikely but plausible dynamics and how they might intersect with more widely envisaged trends.

A set of scenarios sponsored by the Rockefeller Foundation in 2010, for instance, explored the impact across countries of a deadly, swift pandemic. It might have helped countries prepare for 2020—if their leaders had paid any attention or been of such a speculative mindset. Indeed, it is intriguing to think whether this kind of "what if" scenario mindset explains some of the otherwise apparently unexplainable differences in the impact of the pandemic across countries.

Scenario analysis can be particularly valuable when we know the timing and framing of an event, but a wide range of outcomes are plausible

But the pay-off from scenario analysis can be particularly valuable with a very different kind of uncertainty—where we know the timing and framing of an event, but a wide range of outcomes are plausible. Their time horizon might be short, and it seems almost worth to just wait for the denouement, but envisaging alternative paths might offer insights that provide a basis for quick reaction and advantageous decision-making.

Within the next 2-3 months we can expect that one such major uncertainty will be resolved. The US elections (for President, the House and a third of the Senate) have a fixed date—less than about a month from now—and what, until now, we thought were known boundaries for uncertainty … although they seem to be in question this year due to both the logistical voting complications caused by Covid-19 and by Donald Trump’s attitude and threats.

White House
The White House at night during the Trump Administration (Photo: Gary Tognoni/Getty Images)

This sets the stage for a peculiar scenario exercise—both because of the time frame (which makes them very perishable) and the limited set of outcomes. But it also offers an opportunity (or excuse?) for plunging into an unprecedented situation and using the logic of scenario analysis to explore multiple possible unconventional paths out of the normally binary set of outcomes to an election event.

Of course, this all goes against the usual advice (including the one I often impart) about scenario time frames and scopes. To make it even worse, there is one possible outcome (one side of the binary set) that I propose not to consider. The normal binary set involves that one of two candidates wins the presidential election which then triggers either a continuation of the presidency of an incumbent (if there is one) or the transition to a new administration—and a change of occupant in the White House.

US electoral scenarios 2020

Let’s for this exercise rule out a Trump win on November 3rd—something well justified by the many weeks of very stable polling which reflect inter alia a pathetic performance in response to the Covid-19 onslaught—including the latest development of Trump requiring hospitalisation and many having been infected in the White House.

Democratic worries of complacency are understandable, but let’s take as a working assumption that the surprising experience of 2016 (critical numbers of potentially Democratic-leaning independent voters staying away from the polls because of an unfathomable but heartfelt dislike of Hillary Clinton) will actually play against Trump this time—primarily because of the strength of independent voter disapproval of his performance and character … which the September 29 debate has compounded.

Democratic-leaning independent voters staying away from the polls will actually play against Trump this time

That still leaves plenty of uncertainty for the weeks immediately after November 3rd and how that plays out could have significant consequences for US policy and for international relationships, partnerships and conflicts. In particular, the different positions (ranging from principled stands to pernicious interference) adopted by national governments during that period of potential turmoil might have long-lasting consequences for the relationship with the US and significant "ricochet" implications for businesses from those countries.

Two axes of uncertainty can serve to frame the scenarios.

  • On one hand: whether Joe Biden’s win is categorical (which also entails Democratic control of the Senate); or whether the margin of his win is slim (which implies a long-drawn process of result certification and Republicans retaining control of the Senate).
  • On the other hand, the uncertainty relies on the personal stance of the erratic Donald Trump (ranging from acceptance to denial of the result).

For completeness' sake it would make sense to develop a complementary set of scenarios. They could emerge from contraposing the size of a hypothetical Trump win (ranging plausibly only from razor-thin to slight) with the outcome of Congressional elections (ranging from Democratic control of both House and Senate to maintaining an unstable split with Republicans barely controlling the Senate and Democrats with slim margin in the House). I don’t propose to explore that set of scenarios. Not only because it stretches my forbearance but also because the differing implications of the scenarios would be mostly domestic—while internationally just extending the erratic nature of recent US positioning.

So, returning to our Biden-win axes … they point to four quite different scenarios that the US polity and the international community will have to face. The four situations are summarised in this chart by possible newspaper headlines sometime in the aftermath of the November 2020 election.

Scenarios USA elections 2020

Grumpy Trump resigns

A categorical win by Joe Biden (immediately clear through in-person voting as well as absentee and mail ballots) and the significant number of Senate seats gained by Democrats are widely interpreted as voter punishment for Trump misdeeds and Republican connivance (notable in that regard is Mitch McConnell’s loss of his long-held Senate seat). Many countries – led by Western European ones and China – are prompt to welcome the outcome and signal openness to revisit bilateral partnerships and global engagements.

In this scenario, Trump strikes a murky deal with VP Pence under which he resigns the presidency and gets a pardon shield

Donald Trump faces the prospect a two-month lame-duck period in which he will be ignored or derided and the potential legal jeopardy in which he, his family and the Trump Organization could find themselves in 2021. In view of those prospects he strikes a murky deal with VP Pence under which he resigns the presidency and gets a pardon shield as extensive as possible under the circumstances for "pre-existing" conditions. 

In two months as president, M. Pence gets the chance to show the kind of statesmanship that could turn out to be a sound political investment on his political future and in the process facilitates a smooth transition to the new administration.

This scenario would pave the way for the Biden administration, with Congressional leadership support, to promptly signal willingness for reactivating orderly international cooperation. Early positive gestures by China create space for the pursuit of win-win options (as opposed to the current zero-sum logic) in international economic relations. Germany’s presidency of the G20 provides also an opportunity for improved dialogue on global challenges (notably climate action) and governance—including financial stability and crisis management. In this environment, companies that move quickly to understand the new re-globalised situation will gain an advantage with lasting results.

Out kicking, screaming

A categorical win by Joe Biden and a number of Democratic candidates for currently Republican-help Senate and House seats becomes clear within days after the November 3rd election. Donald Trump explores without success all possible avenues for questioning the results and stirring the narrow sliver of his base willing to agitate unconstitutionally under the circumstances.

The chastised Republican leadership recognises the threat to their political survival implied by being seen as standing idle in the face of such attempts; they distance themselves decisively from them—leaving Trump to spend two months ranting and raving without conceding defeat until the last minute and making it difficult for any government department to facilitate an orderly transition.

Donald Trump
In this scenario, Donald Trump explores without success all possible avenues for questioning the results (Photo: Gage Skidmore/Wikimedia)

In this scenario, positions taken early on national governments and global corporate empires will have lasting implications. Some countries that have been favoured by Trump administration positions or "blind eyes" misjudge the situation and equivocate—or worse—which will be noted for future reference and could become stumbling blocks for their continued partnership or inclusion in new US-sponsored international initiatives. Some companies may see the opportunity to deal or gain exemptions amid this turmoil but could well find these gains fleeting—or even counter-productive.

Once the dust settles, a Biden/Harris administration and Democratic leadership of Congress will open the door for re-engaging in international cooperation, but the messy transition process will result in a slow uptake of initiatives except in pressing issues.

The strident atmosphere of the 10 weeks between election and inauguration and the assertive stands taken—or not—by key Democratic constituencies and stakeholders will determine what influences the new administration's early positions on issues such as trade policy (tariffs, agreements, “buy American” …) and international bodies.

No political Christmas

As the late December deadline approaches, the results have not yet been fully certified (some states are still missing), Donald Trump has refused to accept the increasingly clear, though slim, Biden victory and Republican leaders (sure to remain in control of the Senate) have not pressed for a final resolution—waiting to see what advantages can be gained by having the new Democratic administration potentially exhausted even before it takes office.

Various state-level challenges have percolated, and the issue will finally have to be resolved by the Supreme Court—barely in time for the finalisation of the process by Congress within the prescribed period.

White House protest
In this scenario, panic sweeps the White House with document destruction and attempts to cover up recent misdeeds

Executive orders of all kinds have been issued—and been challenged—creating governance chaos and not allowing even consideration of a transition process. As 2021 starts and it becomes clear that the Biden administration will be soon sworn in, panic sweeps the White House with document destruction and attempts to cover up recent misdeeds.

Stocks around the world will have slumped, bond prices and currency exchange rates swung with unprecedented volatility—including at various points huge drops in the value of the US dollar, as erratic decisions in Washington and deliberate misinformation emerging from various interfering governments have affected markets of all kinds and targeted individual companies in unpredictable ways.

The market turmoil and global financial uncertainty triggered by the US post-election will take years to settle down—as will the international animosity that interference created.

Bad loser transition

A slim Biden win that is however clear enough to be unquestionable within days of the election leaves Donald Trump without a base of support to challenge the outcome. While persuaded to respect the verdict of voters, he sets out vindictively to sabotage the incoming administration to make his time in office look as good as possible by comparison.

Government departments and agencies are precluded from making any contact with the Democratic transition teams and political appointees there are urged to block any more constructive attempts by professional civil servants.

A slim Biden win within days of the election leaves Donald Trump without a base of support to challenge the outcome

This Biden/Harris win has not produced enough coattails to change control of the Senate and the Republican leadership is trying to regroup and not inclined to spend energy reigning in the Trump administration’s transitional disruption or the venality that has crept into White House decision making in the final weeks of the administration.

Partisanship looks large again but at least it will be back to revolving around issues more than personality. One issue in which strong bi-partisan agreement will quickly emerge is the enactment of decisive steps to penalise countries or companies that sought to amplify the disarray by interfering in the election or take advantage of the murkiness of the transition.

Progress will be slow, if any, on important international issues requiring constructive bi-partisan engagement such as treaties on climate action or reactivation of the trade agreements and dispute resolution mechanisms and international treaties.

Similarly, on the domestic front, it will be difficult to advance on health coverage and care management and to decide on prompt action were the effects of Covid-19 linger well into 2021—with potential dampening implications for global markets.

Inconclusive conclusion

The lead up to almost all elections generate uncertainty—we have seen plenty of that in recent years. In addition, some elections have the potential for major impact beyond their direct political contour. Brexit can count as such an example.

The upcoming US election comes at a moment—with the pandemic still lingering, global governance in disarray (not least because of US actions) and widespread inequality and social dissatisfaction at the same time as a few corporations accumulate unprecedented technological and financial firepower.

Although scenarios are usually best employed to explore long-term dynamics, we have used them in this case to illustrate how the short-term outcomes of an election can spark global dynamics of lasting impact—for better or worse.

By design scenarios are inconclusive—they raise questions more than provide answers—but therein lies their value … to make us challenge singular views of the future and force us to explore alternatives and their implications.

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