From what I’ve heard both party’s and their respective supporters have spend quite a bit of money on their campaign (7bln?).
Where did all this money come from?
Where did it go?
Is it just the likes of Murdoch that get back their own money? Or is there a significant portion of that cash that wouldn’t have entered the economy otherwise?
The US is a $16,000 billion dollar economy. The campaigns spent $2-3 billion. The math says that the effect is invisible.
Depends on what you call “significant.”
The National Retail Federation says we spent more on Halloween.
Hurricane Sandy may cost$20 billion in inusrance claims alone.
Yes, what he said. A little over $2 billion was spent just on the presidential race by campaigns and political action committees (PACs). The total spent was about $6 billion in the 2012 US elections including the presidential race, Senate, House, and local races (judges, guv’nors, state legislators, surveyors, dogcatchers, etc). The US economy was roughly $15 trillion in GDP for 2011, but perhaps closer to $16 trillion for this year as implied above. I perceive that the presidential campaign/PAC money was a small, helpful nudge in the economies of certain swing states.
By comparison, the 2009 stimulus of $800+ billion has a much larger effect although that spending is spread out over several years.
I guess I’m a bit ignorant in economics
I don’t really see how shifting money from one group of people (political donations) to another (advertising) has any net effect on the economy. Nothing of substance was produced, so it just doesn’t seem like it would do anything.
The advertisers have more money to buy things, yes…but the donors have less so they can’t contribute to the economy.
seems like there’s a law of thermodynamics at play here. With respect to ‘industries’ that don’t really produce anything…Money can’t be created or destroyed, it just changes hands.
With intangibles, the question you have to ask is: if the donors did not give the money, would they have spent it on something that creates more wealth, or would they have just stuffed it in their mattress?
If the former, then political advertising can be said to have a negative effect on the economy, since that’s less money than would otherwise be available to build, say, fancy furniture which might be more valuable.
But if they would rather stuff it in their mattress, then the ad agencies are out of a job and the media has less advertising revenue.
So if someone offers a service that is worth more to a buyer than hoarding his money, it creates wealth because the service provider now has a job, and can himself spend his income on other services. So that can have a positive effect.
Put another way, money moving around = good, money sitting still = bad.
All that said, the money spent on American elections, while a lot in absolute terms, pales in comparison to that spent on, say, Funyuns.
Agreed, don’t discont the changing hands part - it’s pretty important.
Look at Steam. If I buy games from them it keeps people employed. The game, downloded over the internet is somewhat intangible and even if I never play the game the point is that the money changing hands keeps someone else employed.
That’s not to say it’s the only part of the equation, but it is an important part.
I think I can see it helps the economy to spend it rather than stuff it,
but it hurts the economy to spend in on intangibles rather than ‘fancy furniture’
So I think the
money moving around = good
is understandable to me and correct only if the person who donated it didn’t have it stuffed in a mattress. (which seems like a rare event)
‘money sitting still’ seems like a fairly unlikely scenerio though; most people have their money moving in the economy somehow…even if it is just numbers in a savings account.
If the winning ticket had taken its entire expenditure and used it buy food, clothing and shelter to the worst-off Americans in the swing states in the months before the election, how many additional votes would it likely have gained?
Insufficient data for meaningful answer
(memory cites, sorry, Googling for this is helplessly polluted with blogspam)
In the past couple decades there have been vote-buying scandals where local operators “purchased” the votes of people for anywhere from $5 to $200 a ballot. Cash is more useable and appreciated than goods, so, just assuming they give cash, the e.g. Republican presidential effort (almost $1B in campaigns plus superPACs) could have bought anywhere from five million to two hundred million votes.
The Democratic side could have bought about the same number. Then you start getting into hypotheticals of bidding wars and so on.
Nobody spends the money on intangibles. All money is spent by people and goes to people.
It’s true that some effects are different if the money buys hard goods instead of services. But in this case, the overall effect is the same. After all, we live in a service economy. All those tens of millions of people count. A campaign rents a bus to move the candidate around: that’s money for the bus company, and the salary of the driver, and the gas used. Hotels get the money from all the campaign staffers. So do restaurants. Television and radio stations and billboard companies and phone bank operators and printers of campaign flyers all get money for advertising, and they pay their employees and pay their rent and their utility bills and buy supplies. Every dollar spent has a multiplier effect and it’s that multiplier effect that determines how the economy gains. The size of the multiplier effect differs for every transaction, but economists spend their careers tracking these things.
Every dollar spent creates value (because something is produced that wasn’t there before), and the value is more than the single dollar because of the multiplier effect. That’s why theoretically a stimulus helps the economy during a down time. The campaigns are much too small to be significant in the overall economy but all economies are the sums of such smaller purchases.