When I read of all the millions involved in political campaigns I wonder what effect it is having on the economy. I almost see it as wasted resource, but know there’s more to it than that.
Whether from private individuals or organizations, this has got to have an impact somewhere. Where does it come from? Where does it go? Does it prop up advertising, venues, local businesses in a large way? Has it become a key part of our national economy?
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Millions of dollars is tiny on the scale of the national economy. It doesn’t have a meaningful impact.
Most of the money spent in politics goes towards advertising. So it’s a small subsidy to advertising venues – but that’s also spread between TV, print, Internet ads, billboards, etc. So it’s still not moving the needle much in any single area.
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It’s just not that much money in the context of a $27 trillion dollar economy. There are a handful of companies that see some benefits, and advertising gets more expensive during campaign season, but that’s about it. It doesn’t amount to much.
As for waste, money can never be wasted since it’s not real. Resources, labor, and productive capacity can be wasted, and they are in this case. But not much.
Millions on the scale of our multi Trillion dollar economy. This is. So microscopically small. It is about a Penny for every $10,000.00 produced.
1) The US economy is measured in the tens of trillions of dollars. A few million is comparatively nothing.
2) The money doesn’t just cease to exist when spent on political campaigns; it continually gets recirculated through the economy, like spending on anything else does.
A lot of money is spent on political campaigns, and when it is spent it moves through the economy and supports other people and businesses.
Where does it come from?
Ultimately it all comes from people. Some of those are “normal” people making small contributions (from a few dollars to a few hundred). Others are wealthy people giving very large donations (thousands or tens of thousands).
Sometimes people give money to another group (a PAC) that collects money and sends it to candidates or spends it in support of a candidate. And sometimes, very rich people write ginormous checks to groups called Super PACs (which have no limits on how much they can take from an individual), and those Super PACs run their own campaigns.
Where does it go? A lot of places.
A ton of money is spent on advertising – TV, radio, social media, direct mail pieces. The money ultimately ends up with the company offering the advertising (i.e. the TV station or the social media company), but there’s usually a company (consultant) that gets paid some money to coordinate all this.
It’s also spent to hire people – from top campaign staff who make a lot of money to low level staff who make a little (field organizers, door knockers, phone callers).
Some of it goes to restaurants and catering halls. Fundraising often means hosting events, and there’s a cost associated with that food and drink.
Some of it goes to other small businesses (or large businesses) that make things like lawn signs, postcards, tshirts, etc.
Some businesses rely on this money a lot – others don’t.
Is it a key part of the national economy?
It’s a drop in the bucket in the big picture. We spend billions on political campaigns, and the national economy is worth trillions. So you’re talking about a tenth of a percent.
To the people involved in the campaigns (the staff, the consultants, the businesses that support them), it can matter a lot. If we stopped spending money on elections overnight, there would be people out of work and businesses that had to close. But it probably wouldn’t trigger some kind of massive economic crisis.
Adding my take since an important detail is being missed:
The money being poured into politics is beneficial for the economy. The economy does better when more money is flowing from one person to another, and it does worse if money stays in one spot (or one bank account) not being used.
When people give money to politicians, it is almost always used to buy something. We can assume this will usually be used for advertising, then the advertising industry will spend that money all throughout the economy. The final result is that the single dollar spent can create way more than one dollars worth of benefit for the economy (the number of times that the single dollar is spent in a year is called the “Velocity”)
Some people may say that spending money on politics doesn’t do anything since that money could be spent elsewhere to get the same result. But this overlooks one major detail: only very rich people are giving money to politicians, and very rich people are more likely to keep money in their bank accounts. This means that money being poured into politics wouldnt have been spent otherwise.
Money in politics prevents money sitting in savings accounts, which is bad for the economy.
(To clarify – this is from a very short term perspective. When i wrote this I assumed that none of the politicians will change how they manage the government because of money given to them)
American spend more on Valentine’s Day candy than is spent on Federal election campaigns.
It seems like a lot of money but when compared to other things, not so much.
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