Wednesday, October 27, 2010

Elections as stimulus

I don't know how to say this nicely so I'm just going to say it: Daniel Gross is perhaps the worst, most misinformed economics commentator in the country. While his awfulness has been long documented on this blog, Gross still managed to bowl me over with his latest column, the thesis of which is that election spending is such a great economic stimulant that we should have them more often. I kid you not.
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.

...And so as Congress dithers over the prospect of further fiscal stimulus, the political industry is doing its part. Opensecrets, an invaluable resource for campaign spending data, has a widget on its site that tallies the total spending on campaigns by candidates, parties, and issue groups. As of Monday morning, the total was $3.6 billion for all midterm-related expenditures.

Sure, all that campaign spending can be annoying. Thanks to Linda McMahon and her competitors, the streets of my town have been planted with thickets of unsightly yard signs, the radio stations seem to have gone to an all-political-ad format, and my mail is clogged with glossy junk mail. But this spending has a few things to recommend to it. I work in the beleaguered media industry, and elections are great for media companies — they boost advertising, readership, and viewership. But this isn't just about me. There are sound macroeconomic reasons to get behind quantitative electioneering.

Campaign cash is spent quickly, and with a sense of urgency. And it pretty much all has to be spent domestically. The goods and services you buy when you're running for offices — real estate, yard signs, mailers, consultants, advertisements — are all produced locally.

I hesitate to do so, but the data lead me to think we should have elections ever year, or maybe twice a year — at least until the economy is growing at a pace where it creates enough jobs to bring down the unemployment rate.
It's hard to know where to begin. Quite simply, political spending is not a wealth-generating activity. As Gross himself notes, the actual output of elections are literally junk -- yard signs, mailers and related paraphernalia which quickly end up populating the country's landfills. In fact, it actually impoverishes us, as it is an activity which we undertake only as a necessary evil to improve the quality of government.

If elections took place less often, or not at all, it would free up money to be directed towards other purposes. Money used to fund campaigns could be instead used to purchase goods or invested. That money has alternative uses is completely elementary, and it is shocking that Gross fails to grasp such an essential concept.

Here's an actual example of this dynamic: earlier this year I considered purchasing flowers for a certain right-winger who is near and dear to my heart. Instead of buying an arrangement, however, I donated the money to the Club for Growth. The Club for Growth no doubt used it to purchase TV advertising, direct mail and the like. Instead of the world having a few more flowers, it had more political advertising.

Yet in the world Gross inhabits we would be faced with such trade-offs twice as often -- and this is an improvement? It is a failure of the common sense test.

I'll further note that Gross engages in some gratuitous economic idiocy by his noting that political products are produced locally. This is a de facto endorsement of retrograde economic protectionism and another policy which promotes inefficiency and thus impoverishment.

It's maddening and baffling that anyone listens to this man, or gives him a high-profile platform from which to promote his views.


Scott said...

There's also the scale problem. Bloomberg's $102 million sounds like a lot, but it's chump change in NYC, where gross product is estimated to be greater than $1.1 trillion. Bloomberg's spending amounts to some 0.01% of all spending in NYC, and as you mention, that assumes he wouldn't have spent it somewhere else instead.

Colin said...

Excellent point. I am reminded that the total amount Americans spend on elections in a two year cycle is about the same as what is spent on yogurt in one year.