Thursday, November 5, 2009

Was Bloomberg’s Campaign Spending “Worth It?”

Summary: After spending nearly $100 million we can now ask how much is too much to spend on a campaign.

It was well noted in last year’s presidential election that the Obama campaign spent about $730 million to put the junior Illinois senator in the White House while earning about 69.5 million votes - in other words, they spent about $10.50 per vote.

It may not have come from Obama himself, but it was certainly seen as a lot of money per vote.

This year, New York City Mayor Michael Bloomberg put nearly $100 million of his own money into his re-election efforts - it came out to about $35,000 an hour for his campaign. On Tuesday he garnered 557,059 votes - enough to win with about 50.6% of the electorate.

In other words, Bloomberg personally spent about $175 per vote.

There’s a term economists use to explain the financial choices individuals make: “utility.” The idea is that every individual tries to maximize their utility given the limits of their income.

Obviously, the billionaire Mayor has virtually unlimited income compared to the rest of us - but many are still asking whether all that spending was worth it.

The great thing about “utility” is that it can mean anything. If an individual gets happiness out of buying a big-screen TV, they’ll buy one to increase their utility. If they feel better about themselves by giving some of their money to charity, they’ll do so to increase their utility. Or - in Bloomberg’s case - if they like running a city enough, they’ll put enough money into a campaign to keep doing so and increase their utility.

And because economists will look at what individuals do rather than what some figure they ought to do, the other great thing about “utility” is there’s no way of disproving that a person is not getting their money’s worth!

Bloomberg outspent his main opponent - Bill Thompson - at least 14 to 1, simply because he had the resources to do so.

No matter how you feel about Bloomberg’s ability to govern, it is concerning that one of the nation’s richest men - and perhaps the richest man in New York City - can hold on to the top office by putting so much money into a race. It’s especially troubling when you consider the fact that you’d probably vote for someone regardless of their policies if they actually just gave you the $175 they were already spending for your vote.

This race shattered records in American campaign finance history. And can you not imagine some more calls for campaign finance reform in New York City when there’s such a hint of plutocracy in their local government?

I can.

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