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The dust is beginning to settle and everyone is coming out to survey the damage.  On the surface, one would think nothing happened.  House is controlled by the GOP and the Senate and the White House are in Democrat hands.  Numbers appear to be largely the same, was there even an election?  One would think by the cries and wails of Romney supporters that the end is near.

However upon closer inspection one sees some very interesting dynamics at play.  There were visible winners and losers yesterday.  Do not accept the explanations and excuses that are rapidly coming down the pipe from those with serious egg on their face, like Dick Morris and his assertions that the electorate changed or that no Republican could have won this election because Romney was so perfect.  Morris is blind, his blindness is punctuated by his closing statement:
We must stop Obama’s socialist agenda. That’s our job for the next four years. We cannot allow Obama to magnify his narrow victory into a mandate for larger government, bigger spending, and less freedom.
Indeed, Morris simply prefers his brand of Republicanism execute the business of larger government, bigger spending and less freedom.  Precisely what Romney represented.

George Will who days before the election predicted a Minnesota win for Romney offered similar and equally meaningless conclusions citing electorate shifts and the amusement that Americans chose to elect Obama again despite him being the most Leftist president since LBJ.   He, however cannot square the contradiction of the self-identified conservatives.
Self-identified conservatives outnumber self-identified liberals 2-to-1 in a nation that has reelected the most liberal president since Lyndon Johnson and his mentor Franklin Roosevelt. 
Ahh, but here lies the rub.  It was not Obama's Statism that won yesterday, it was Romney Statism and his backward philosophy that lost.   I have asserted that there is no difference between the Democrats and Republicans outside of specific personal issues and it is precisely the Statist similarity and the personal issue difference between Romney and Obama that gave Americans a very simple calculation.  Why would they choose Statism AND a slew of other unpleasant additions when they can do without them?  

To that end, lets quickly examine the winners and losers and see if we can make sense of what America has concluded.

Winner:  State Rights

Yes, you read that correctly.  Despite the gross overreach of our Federal Government over the past many years and decades, the fight continues. In THREE States the 10th Amendment flexed its muscle on the matter of health care.
  1. Montana, Referendum 132: Giving choice to Montana residents of whether to buy health insurance striking at the heart of the ACA's individual mandate. 
  2. Alabama, Amendment 6:  Prohibiting mandatory participation in any health care pool
  3. Wyoming, Amendment A: Amending the Wyoming Constitution to ensure that health care choices are the right of the individual.
In all three cases the margin of victory was massive.  To see States challenge Federal law is precisely how the Republic was designed to function.  Since the State laws do not violate the Bill of Rights and do not overtly harm anyone's natural rights the Federal Government is going to have to accept this - one way or another.  

That is not all.  Two States have gone boldly where none have gone before, a direct challenge to the Federal Government's ban on Marijuana.
  1. Colorado, Amendment 64:  Legalization and regulation of up to 1oz of Marijuana.
  2. Washington, Initiative 502:  Legalization and regulation of a small amount of Marijuana (size unknown).
  3. Massachusetts, Question 3:  Medicinal Marijuana.  While not bold per-se, as it joins 17 other States in ignoring the Federal laws.
In both cases, the victory was not even close.  Oregon tried to follow suit, but surprisingly failed.  Still, despite all the problem that California has been having with federal raids on their dispensaries two States decided for a full frontal attack.  Incidentally, the best and only way to stop federal raids is for as many States as possible to legalize the substance thus making enforcement impossible.   

A special mention is New Hampshire and CACR 13, where a majority of its residents voted to ban the income tax.  The measure passed 57-43, but it is unclear at the moment as to whether that is a big enough margin for the purpose of amending the NH Constitution.

What is fascinating is that despite Colorado, Washington, Massachusetts and New Hampshire all voting for Obama they also all voted for State rights and freedoms.   You can easily throw your hands up in despair and assume that Americans are stupid in voting for Obama and more taxes, yet how do you reconcile that with 57% of NH residents voting to ban all possibilities of new taxes on one hand and Obama on the other?  

Loser:  Social issues

Social issues were on display.  

Maine, Maryland and Minnesota all voted to extend and enhance same-sex marriage rights.   This is another giant step in the right direction as it takes marriage out of the federal political discourse and plants it exactly where it belongs, the States.  While marriage should not be a government issue regardless of what level,  the best way to solve the issue of differing morals, values and religious sentiments is to localize the issue and handle it among the communities.

States extending same-sex rights while breaking down barriers of the abysmal failure known as the 'war on drugs' is a sign.  It is a sign that the electorate is shifting their stance on these issues.  Yet the Republicans are failing to get the memo.

Defeat of Todd Akin:   Todd Akin was supposed to handily defeat the very vulnerable Missouri Senator Claire McCaskill.  But he decided to let the world know what he thought about abortion and specifically abortion as a result of rape.  He turned an easy victory into a decisive loss.  No one other race showed quite as clearly how out of touch "family values/social conservatives" are.  If you are a Republican and social conservatism is important to you, then simply accept the fact that your views are not being shared by the majority.  

Defeat of Richard Mourdock:  While not clearly as obvious as the Akin defeat, Indiana's tea party choice of Richard Mourdock was comfortably leading his Democratic opponent in most polls until he commented on abortion and rape.  While his wording was not as offensive as Akin, the immediate shift in polls and his ultimate defeat followed promptly after.  Whatever he meant is not important, the idea of not allowing abortions after rape is simply too offensive for a majority of the people.  

When taken in context with the movement to legalize Marijuana, promote same-sex marriage and the defeat of two Republicans who were going to win if not for their abortion comments the picture is clear.  Things, they are a-changin'

Winner:  Limited Government and Libertarians

Gary Johnson finished with 1% of the national vote yesterday.  This is a historic finish considering he was only bested by the Clark/Koch ticket in the 1980s (by .06%) which was financed heavily by the Koch fortune.  Note: Gary Johnson was only on 48 ballots. 

While 1% is pitifully low, it is twice as much as the average Libertarian haul.  

Now it is true, Gary Johnson is not a pure libertarian by any stretch of the imagination.  His economic views are more aligned with Chicago style Friedman policies and his knowledge of Austrian economics is non-existent, but for the purpose of selling the message he did a fine job.  

Over 1 million Americans cast their vote for:  a greatly reduced Government in size and funding, flat consumption tax, end to the war on drugs, end to the war on people, end to violations of civil liberties and serious reform of entitlement, education and health care spending.  

Loser:  Big Government Republicans

Republican Senate losses combined with their inability to take the majority (something believed a month ago to be certainty) should give everyone pause.  Yet despite the GOP Senators's inability to accomplish much yesterday, the House remains intact.  This suggests, quite plainly I believe, that Americans are quite tolerant of the Republicans to continue handling the budget.  In fact more and more liberty minded candidates like Justin Amash (who won by 9 points) are joining the fray.  Republicans who want to cut military spending, oppose the Patriot Act and put social issues aside.    Those Republicans who continue to propose Romney-style spending with unpopular social issue positions will continue to lose.  

Winner:  Liberty

The loss of Romney, as I wrote yesterday paves the way for a 2016 that has the potential to offer a real distinction.  The lessons of 2012 are loud and clear.  Adapt or die.  

Whichever candidate emerges in four years will need to deliver a very simple proposal to the American public.  

A proposal of social tolerance, reduced military spending and intervention, civil rights, liberal drug policies and a true endorsement of a real free market unhampered by monopolistic money, the Fed, crony capitalism and regulations written by-and-for large corporations.    If the Republicans learn this lesson then they will be embraced, otherwise 2008 and 2012 will repeat.  

Give Americans a real choice, a choice of liberty and freedom.
Then and ONLY then, if America chooses otherwise can you begin to worry.  
For the time being, the future is bright and hopeful.   
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"It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.” - M. Rothbard