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Quantitative electioneering

Dan Gross wants to see us holding elections every year, or maybe every two years. But it's not because of the salutary effect they have on democracy. It's because of the stimulative effect they have on the economy:

Every four years, when Michael Bloomberg runs for Mayor, the Big Apple is transformed into a winter wonderland where it's Christmas all year round — at least for the consultants, ad salespeople, canvassers, caterers, and hangers-on whom the mayor employs. In 2009, Bloomberg injected $102 million into the city's economy in order to win a third four-year term for a job that pays him only $1 per year.

No wonder the city's leaders decided to overturn the law limiting a mayor to two terms. Having Bloomberg run for re-election is like staging a Super Bowl, NBA All-Star game, and World Series.

Meg Whitman is doing Bloomberg one better. In her bid to replace Arnold Schwarzenegger as California's governor, the former EBay CEO has already plowed $140 million into the Golden State's stricken economy. One can only hazard a guess as to how much higher California's unemployment rate (12.4 percent in September) would be without Whitman.

In Connecticut, where I live, another CEO is having an even greater proportional impact. Former WWE CEO Linda McMahon through mid-October had spent more than $41 million of her own money on a Senate campaign -- about $25 for every voting age adult in the state. McMahon is single-handedly boosting Connecticut's office and retail vacancy rates by renting out storefronts, and has saturated the airwaves with ads the way Starbucks has saturated Seattle.

Self-funders are only part of the equation. With political passions running high in recent years, millions of citizens have made small donations. Sharron Angle, who is challenging Senate Majority Leader Harry Reid, raised a stunning $14 million in the third quarter, mostly from small donors.

Then there's corporate money. In the past two years, America's CEOs have become a bunch of Scrooge McDucks. Unwilling to hire and slow to boost dividends, they hoard cash and loosen purse strings only for overseas expansion (or CEO compensation). But now that it's easier to make big donations without having to disclose them, corporations are getting involved in politics in a big way. The U.S. Chamber of Commerce has hit up members to fund tens of millions of dollars in campaign spending. Bush adviser Karl Rove, eager to get back into the game, set up American Crossroads, which has raised tens of millions of dollars from corporations and other donors.

Surely some economist somewhere has done a study investigating whether high-cost elections stimulate local economies, right? It seems like a perfect natural experiment.

By Ezra Klein  | October 26, 2010; 3:30 PM ET
Categories:  2010 Midterms  
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Comments

Let us institutionalize this arrangement - have Billionaire Party and let them field candidates in different constituencies for different offices. Our recession will be over.

Supreme Court took the role of Fed and laid the path by Citizens United. So what if Transparency International calls USA at 22 in least corrupt countries?

When Obama is visiting as the head of oldest democracy to the largest democracy in few days, in India he is going to learn further more tricks of corruption in election. Bags of notes from Iran to Karzai, that is too gross for Obama.

Hey, who says America is not shining. If we are no longer Super Power to admire, we are at least on the way to become more 'corrupt degenerated power'.

Posted by: umesh409 | October 26, 2010 3:46 PM | Report abuse

Why not hold an election each month, just to make sure the economy is stimulated just so?

What a silly proposal this is.

Posted by: justin84 | October 26, 2010 4:01 PM | Report abuse

Let's not.

I don't think the bulk of that money gets spread around very widely in the local economy. TV and radio stations get the bulk, political consultants and a couple of caterers the rest. It's not worth the humiliation and headaches. I'd rather one of these pols gave me the $25 directly, like in those so-called democracies we've been promoting around the world.

Posted by: JJenkins2 | October 26, 2010 4:03 PM | Report abuse

"In 2009, Bloomberg injected $102 million into the city's economy in order to win a third four-year term for a job that pays him only $1 per year."

Does Bloomberg have a printing press? Or did he sell assets to other individuals, who transferred $102 million from their bank accounts to his?

"With political passions running high in recent years, millions of citizens have made small donations. Sharron Angle, who is challenging Senate Majority Leader Harry Reid, raised a stunning $14 million in the third quarter, mostly from small donors."

Rather than more frequent elections, why not task a random person in each district to go around breaking windows once a week? I'll bet you can get quite a bit of spending going on window replacement.

"Meg Whitman is doing Bloomberg one better. In her bid to replace Arnold Schwarzenegger as California's governor, the former EBay CEO has already plowed $140 million into the Golden State's stricken economy. One can only hazard a guess as to how much higher California's unemployment rate (12.4 percent in September) would be without Whitman."

Without Whitman's candidacy? It's not a guess. The answer is 12.4 percent either way.

Even assuming Keynesian assumptions, it's $140 million in a $1.8 trillion economy. The equivalent would be $1.1 billion in the U.S. economy. Anyone want to email Paul "the stimulus was too small" Krugman and ask him how much a $1.1 billion stimulus package would move the dial on national unemployment?

To the extent Whitman made a noticiable impact on the California economy, it was via Ebay, not her political campaign.

Posted by: justin84 | October 26, 2010 4:18 PM | Report abuse

Dan Gross is an embarrassment as an economics commentator. The concept of partial equilibrium analysis has never crossed his mind. Bastiat "Broken Window", bueller?

Posted by: cdosquared5 | October 26, 2010 4:36 PM | Report abuse

The baseline is not zero. If Meg Whitman wasn't the Republican nominee, somebody else would be. And he would be spending money.

Maybe the more interesting nugget is whether self-funded candidates spend more, but Dan Gross never asks or answers that question.

Posted by: Porchland | October 26, 2010 5:01 PM | Report abuse

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