Five takeaways from the second presidential debate:

First, competitive pressure–the politics version of market forces–surely does improve performance. Everyone agrees that Barack Obama was terrible in his first debate with Mitt Romney, and that wasn’t really a surprise. After all, this president has spent four years being revered, not just by his staff, but by much of the world; such sustained adulation would slow down anyone’s fight-to-win instincts.

Only two other sitting presidents have won the Nobel Peace Prize, and those two, Theodore Roosevelt and Woodrow Wilson, actually ended wars–and they had to work to do it. By contrast, the Norwegian Nobel Committee announced that Obama was their choice on October 9, 2009, less than nine months after he took office, based on gauzy promises about non-proliferation; none of these promises, of course, has been realized, before or since. And then, two months after the announcement, the newly lauded peacemaker announced a “surge” of U.S. troops into the escalating war in Afghanistan–although making more war didn’t prevent him from collecting his peace prize in Oslo.

Indeed, even before he took office, Obama had a pretty healthy ego; as he said in 2008, “I think that I’m a better speechwriter than my speechwriters. I know more about policies on any particular issue than my policy directors. And I’ll tell you right now that I’m going to think I’m a better political director than my political director.” A commander-in-chief with those sorts of views will inevitably be hard to coach.

To be sure, the president has heard discouraging words from, say, Vladimir Putin and Bibi Netanyahu. Yet inside the White House, it’s safe to say that he has been well-insulated from pushback. But of course, the world has a way of dealing with hubris, and so Obama met his nemesis in Denver on October 3. Joe Biden, learning from his boss’s mistake, was better in his debate on October 11; then on Tuesday night, Obama–proving that he can still compete if he has to–was better still.

For his part, Romney has done innumerable town halls over the last five years, and so he was effective the second time around, notching up his second strong performance. The result: “It was a very good fight,” said George Will afterward, adding, “I have seen every presidential debate in American history since … Nixon and Kennedy in 1960. This was immeasurably the best.” So there you have it: Steel against steel sharpens the knife.

The second takeaway: Compounding the irony of his Peace Prize juxtaposed against war policies, Obama has kept his eye firmly on the “peace vote.” Having exited from Iraq, and having finally come to realize that Afghanistan was a quagmire, the president has become a relative dove on Syria and Iran. Asked about possible conflicts with those countries on September 23 during a “60 Minutes” interview, Obama taunted his challenger: “If Governor Romney is suggesting that we should start another war, he should say so.”

For his part, Joe Biden, in his debate with Paul Ryan, emphasized with his usual grinning fervor that the U.S. would leave Afghanistan in two years: “We’re out of there by the year — in the year 2014.” And although Afghanistan barely came up in the second debate, Obama went out of his way to assure voters that the U.S. would “transition out” of that war, adding that Americans can look forward to “savings from ending wars to rebuild America and putting people back to work.”

Of course, reality sometimes proves to be different from rhetoric: On October 16, Marc Grossman, the State Department’s special envoy for Afghanistan and Pakistan, told reporters that the Obama administration was, in fact, looking for a way to keep US troops in Afghanistan past 2014. So will Romney call Obama on this looming contradiction in the next debate?

Third, putting Afghanistan and national security aside for the moment, we might note that Romney, on domestic issues, is clearly moderating his positions. Just in February of this year, Romney told an audience that he had been “severely conservative” as governor of Massachusetts; that particular locution struck many as awkward, to the point of insincerity. As a famous conservative with undeniable right-wing cred, Barry Goldwater, once said, moderation is not always a virtue, but Romney, fully aware of Goldwater’s landslide defeat in 1964, suddenly seems eager to chart a different course–a course toward the middle.

In the first debate, Romney was at pains to emphasize his willingness–make that eagerness–to negotiate with Democrats, just as he had done as governor of Massachusetts. And in the second debate, he seemed determined to spell out his moderation on taxes, health insurance, and immigration. After all, how many times during the Republican primary contest had Romney touted the “John and Abigail Adams Scholarship,” which provides achieving students with “four years tuition-free to the college of your choice in Massachusetts”? Not so much severity there.

Even on foreign policy, Romney seems to be moving to the middle. As noted, national security didn’t come up much during the second presidential debate–except for Libya, and that controversy seemed to involve forensic investigations, more than foreign policy questions. But here’s National Journal’s Michael Hirsh analyzing Romney’s October 8  address to the Virginia Military Institute:

Romney’s speech continued a broad move to the rhetorical middle that he signaled during his first debate with President Obama last week. Yet in toning down his language–for example, by backing away from earlier suggestions that he was ready to go to war with Iran–Romney revealed that his actual policy differences with Obama are almost undetectable in many areas.

The fourth takeaway: Competition is making Obama, too, more moderate. Although the President mentioned “clean” energy several times, the words “green,” “global warming,” and “climate change” did not cross his lips. Clearly realizing that the economy is his biggest weakness–and Romney’s greatest strength–Obama sounded like a Chamber of Commerce man when he said, “I believe that the free enterprise system is the greatest engine of prosperity the world’s ever known. I believe in self-reliance and individual initiative and risk-takers being rewarded.”

Some might argue that Obama is perhaps not fully sincere, but in fact, on one key issue, the corporate income tax (an issue I am working on), the president has taken an unabashedly pro-business position. At Hofstra he said, for the second debate in a row, that he wants to see a reduction in the U.S. corporate rate of 35 percent, currently the highest in the world. Meanwhile, Romney has long been calling for a reduction in the corporate rate, and he has repeated that position in both debates as well; so for all the presidential debate fireworks, at least one issue of consensus seems to have emerged.  The Vital Center might yet re-emerge.

Fifth and finally, while most observers, and most polls, indicated that Obama had a good night on Tuesday, there’s a big question mark left unanswered by the debate–what will happen if Obama wins re-election? And this unknown haunts the MSM: As Mark Halperin of Time magazine put it on Wednesday morning, “I think the president won,” but then he immediately added, “The president did not lay out a second-term agenda.”

Indeed, the post-debate editorials in The New York Times and The Wall Street Journal–while poles apart on the candidates and their philosophies–both converged around that same question-mark point. The Journal opined bluntly, “Mr. Obama seems out of ammunition for the next four years.” Okay, that’s not too surprising, coming from the Journal. But the Times, if anything, was harsher in its extrapolation of an Obama future: “What he did not do was describe how a second term would be more successful than his first.” Ouch!

So maybe that’s why most polls still show Romney ahead. It could be the case, of course, that the full impact of the second debate has not settled in. But it could also be true that voters like what they see of Romney–and they are worried about what a second Obama term might portend.

The Obama campaign tried to bury Romney in negative advertising, and while that negativity certainly had an impact, it failed to destroy its target–in part because Obama failed to back it up with his own attacks in that fateful first debate.

And so now, for a total of three hours on national TV, voters have had a chance to see plenty of the real Romney. Thus when the Republican challenger talked on Tuesday about the last four years, and the next four years if Obama is re-elected, perhaps his words resonated with voters’ fears and hopes:

I think you know that these last four years haven’t been so good as the president just described and that you don’t feel like you’re confident that the next four years are going to be much better either. I can tell you that if you were to elect President Obama, you know what you’re going to get. You’re going to get a repeat of the last four years. We just can’t afford four more years like the last four years.

Indeed, to this veteran of Ronald Reagan’s 1980 presidential campaign, Romney’s riff was an echo–no doubt quite intentionally–of The Gipper’s famous closing statement during another debate, against Democratic incumbent Jimmy Carter, who squared off with Reagan 32 years ago:

It might be well if you ask yourself are you better off than you were four years ago? Is it easier for you to go and buy things in the stores than it was four years ago? Is there more or less unemployment in the country than there was four years ago? Is America as respected throughout the world as it was? Do you feel that our security is as safe? That we’re as strong as we were four years ago? And if you answer all of those questions yes, why then I think your choice is very obvious as to who you’ll vote for. If you don’t agree, if you don’t think that this course that we’ve been on for the last four years is what you would like to see us follow for the next four, then I could suggest another choice that you have.

Reagan, of course, was that other choice. And with those words, Reagan made his own connection to the voters in that campaign, which he won in a landslide. It’s hard to imagine Romney winning a similar victory in 2012, because Obama’s favorability rating today is considerably higher than Carter’s then. But even so, it’s clear that voters want a change. And so maybe the American electorate will ignore the pundits and the pontificators and reach their own judgment about the incumbent. Perhaps that judgment will be, “We can do better.”

James P. Pinkerton is a contributor to the Fox News Channel and a TAC contributing editor. Follow him on Twitter.