At the end of another unpredictable year, Paul Krishnamurty looks to explain the dynamics behind the drama on Betfair's political markets...
"For all the panic amongst the so-called liberal establishment, and soul-searching about the motives of voters the elite no-longer understood, the revolution on the Right stalled in 2017."
For the third straight year, Betfair markets illustrated the new politics. Highly unpredictable, with conventional wisdom in crisis and unprecedented volatility. We have seen an outsider, with no party infrastructure, gatecrash the French presidency. The Democrats won Alabama. And Jeremy Corbyn came within a few constituencies of pulling off the greatest upset in the history of political betting. Yes, considering where Labour started that campaign, Corbyn becoming PM would have represented a much bigger shock than Donald Trump becoming US president.
Yet the landscape has changed quite markedly over the past 12 months. For liberals or basically anyone on the Left, last Christmas was the most miserable time. The Brexit vote destroyed their assumption that the dominance of their values, that had once rebuilt the continent, was part of an inevitable historic trajectory. Then the greatest democracy on earth voted for a populist who shamelessly and frequently played the race card, boasted of grabbing women by the pussy, pined for the days when police beat up protesters and threatened to shut the press down.
Yet for all the panic amongst the so-called liberal establishment, and soul-searching about the motives of voters the elite no-longer understood, the revolution on the Right stalled in 2017. One by one, their poster children took an electoral beating.
Overhyped alt-right, anti-EU candidates flopped
The backlash started with the Netherlands. We were told by Brexiters that Nexit was next. That the long-running poll lead of Geert Wilders and his PVV party showed the Dutch were sick of liberalism, immigration and the EU bureaucracy. They traded odds-on to win the most seats, and he as favourite for PM, prior to their election in February. Yet this time the gamble fell spectacularly flat and, even as culture wars raged during the campaign, the 'Dutch Trump' was resoundingly rejected.
Not a problem, said the alt-right army on social media. Wilders was stitched up by the other parties but that would not be possible in France, where Marine Le Pen would at the very least win the first round, en route to the presidency and then delivering Frexit. Just like Trump, her rural voters were loyal and better motivated. As it turned out, Le Pen and Le Front Nationale only finished second in the first round, before being obliterated by a two-to-one margin by Emmanuel Macron. So much for the 'silent majority'.
Having already voted for Brexit, the UK was in a different position but liberals held similar fears. Our version of the alt-right - UKIP - were going to sweep Labour's core vote across the North and Midlands, taking a plethora of Brexit-voting constituencies. Instead, new leader Paul Nuttall imploded almost immediately under scrutiny and they only sneaked into a distant second. One effect of Trump, it seemed, was greater awareness of 'fake news'.
UK and US liberals have rarely been better motivated
Nevertheless, Labour holding a safe seat was hardly enough to transform the left-wing mood. Theresa May's pro-Brexit, centre-right government were wholly dominant over a hopelessly divided Labour, led by the toxic and unelectable Corbyn.
When the PM called a snap election, barely a neutral voice in the land predicted anything less than a big Tory majority. More excitable commentators talked of a Labour meltdown akin to their collapse in Scotland and they were backed around even money to win less than 150 seats. Seven weeks later, Labour and Corbyn had surged to their biggest vote share since 2001, won 262 seats and May had lost her majority.
But what of America - still very much centre-stage of the never-ending and intensifying culture wars? 2017 saw the Charlottesville riots, a president that energises and retweets the alt-right, and a deepening Russia investigation which is further dividing the country.
Depressing stuff for the left, then, but Democrats end the year buoyant. They've repeatedly outperformed polls in special elections, just took the unimaginable target of Alabama and are odds-on to win back the House of Representatives in 2018. Trump's approval rating is the worst in history and mainstream Republicans are, often reluctantly, tied to his negative brand. The latest generic poll puts the Democrats a remarkable 18% up.
Differential turnout has been the key to recent upsets
So, what next and what can we learn? The fissures that are currently dividing societies remain as relevant as ever. Neither the Left nor the Right is going to disappear and both seem to be ever more radicalised due to social media. When one side is better motivated to vote, probably by being in opposition, they have the potential to blindside the polls. All these recent electoral shocks were driven by differential turnout, skewing the polls by up to around 5%. In a close race like Trump/Clinton, Brexit or Alabama, a 5% swing is the difference between winning and losing.
Anticipating those dynamics is therefore probably the key to playing these unpredictable markets. Everything in politics is a reaction to something and will produce a counter-reaction. Brexit was a reaction to a period of mass, somewhat anarchic, immigration. Trump to US industrial decline, Islamic terrorism and a black, left-wing president.
2017 was a reaction to 2016. Every one of those defeats for liberals - and we can also include David Cameron's surprise majority at the 2015 UK General Election - came about due to failings on their own side. Low registration amongst young people or minorities or lack of tactical voting. Labour were battling four other parties for the anti-Tory vote. Clinton was arguably undone by Jill Stein's Green Party.
For now at least, all that has changed. Turnout is up pretty much everywhere, significantly. In recommending a bet on that outcome at the UK election, I argued that Brexit was the cause. It had re-engaged voters and changed the nature of everyday political conversations. That climate, in my view, led to higher registration and an unprecedented level of tactical voting across the land.
Ditto Trump and a divisive 24/7 social media circus that we've never seen the like of before. Cliches like "Politicians are all the same" or "It doesn't matter who you vote for. The government always gets in" sound ridiculous in the current climate. Regardless of our political preferences, we have all seen how voting can change the world now.
If the trend persists, this is unarguably good news for the Left. Inevitably they draw upon lower turnout groups - less likely to be registered or have a long-term residence, more likely to be alienated from politics. That means the Left's growth potential is much bigger than the Right, adding to their long-term demographic advantage. At least while in opposition, especially to Trump, this new-found enthusiasm is unlikely to abate. Expect more of the same in 2018.