Money, Economy, and Election
The Idealist Investor
By Sojourner on 02-14-2008
There are close ties between money, economy, and presidential election. The economy is one of the main concerns and the most important issue in this year’s election. Both economists and political scientists have shown that historically a suffering economy usually means bad news for the candidate representing the incumbent party. In fact, the model built by Yale Professor Ray Fair predicts that even with an economic growth of 1.8% for the first three quarters of 2008, the Democratic nominee will hold the winning share of the votes (52%) over that of the Republican nominee (48%). With a recession, the Democratic nominee could even win by a larger margin (see Special Report—“The Economy: Good News for Dems, Right?” February 5, 2008 BusinessWeek). As pointed out by the Business Week article, even though Fair’s forecasts remain controversial, it is clear that the fate of the candidates is closely tied to the economic outlook in the fall.
The links between economy, money issues and elections also play out in another way. Candidates are typically backed by funding from industries, unions, and lobbyists. Investors have been interested in who have been financial supporters of different candidates to find indications of which industries the candidates will favor (see “Who’s buying the next president?” July 13, 2007 by Jim Jubak on Jubak’s Journal of MSN Money). For example, Jubak asserted that 82% of oil-and-gas companies’ political contributions went to Republican candidates in the 2006 elections. This year political contributions by oil and pharmaceutical industries have been dwarfed by support and donations from the investment industry. Specifically, Jubak pointed out that Romney raised $1.9 million from the investment industry, followed by Guiliani who received $1.8 million which was nine times the amount that he was receiving from oil industry. In the same vein, money fuels the races. On the Democratic race, both Clinton and Obama have been making headlines with their fund-raising success and rivalry for dominance in donors’ support.
As an Idealist Investor, civic issues and social responsibility are at the forefront of my mind. Money and the economy clearly play an important role in politics and the election. These are facts of life but manipulation, greed, and financial motives in elections still trouble me. Maybe naively I still hope to see proof that high ideals such as altruism, beneficence, and public interest exist in politics and presidential elections. But the reality is that U.S. politics runs on a machinery that is very much fueled by money and special interests. Putting ideals aside, as a voter and investor, we should be savvy and intentional in tracing the sources of campaign contributions in cutting through the rhetoric of running candidates to know who is tugging their “heart-“ and “purse-strings”.
