Democracy for sale! $22 per head


While we’re on the subject of governments.

As many of you1 may know, election season is upon us, and there seems to be something of a ruckus regarding the amount of money that the government exudes.

Much of that terrain has been well-trodden.

However, I am less interested in the million dollars that the federal government spent in the 10 seconds it took me to write this sentence fragment2 and more interested in the money spent in the service of getting into and influencing government.

Although many discount the utility of government spending, others believe quite fervently that there is value in providing a regulatory function to a capitalist economy. I suspect that both sides could agree, however, that money spent in the hopes of influencing how the government money is spent is an unfortunate byproduct of a capitalist system gone awry and represents a net drag to the economy.3

Framed as a question: how much do we pay to install, to depose, to influence our government? What is the cost of a senator? What is the cost of a president? What is the cost of a vote?

We all have a sense that the cost of getting elected is rising. When power brokers and business executives spend significant fortunes for their chance at taking the tiller (and still fall short), when 24 hour news networks breathlessly audit quarterly fundraising reports, when candidates spend more time in geographies where an electoral win is already assured (but the petty cash is crisp) than in states with votes still in play, we could be forgiven for assuming that the political game requires fewer handshakes than it does shakedowns, is more dollars and cents than it is wonky common sense.

The data would support such an impression. In today’s dollars, senate candidates spent $3.50 per vote in the 1990 and 1992 election cycles and $4.50 per in 2006 and 20084, house candidates grew spending from $3.20 to $7.90 over the same time period, and the expense of winning the presidency increased from $2.80 per vote in ’92 to $10 per in ’08.5 At that rate of growth the first $10 billion presidential campaign could occur by 2028.6 All in, the cost of (or, perhaps, the perceived value of) each general election voter rose from a little under $10 to more than $22 over just 16 years.

Campaign dollars per vote have doubled over 4 election cycles

Of course, vote-cost inflation should come as no surprise.

As the country’s income distribution has grown increasingly disparate, the scarcity value of non-commoditizable items has commensurately increased. (So trinkets and baubles, Rolexes and supercars have all seen relatively robust price increases even as incomes, in aggregate, have stagnated). What could be more scarce than a stake-hold on the presidency.7

Perhaps another way to think about it: as the country’s economic resources have concentrated, the resource holders have lost relative voting power and so have increasingly relied upon economic power to protect their resource pool. In 1996 more than 300,000 earners commanded 10% of the country’s pre-tax income; in 2008 that same income share accrued to 130,000. For those earners every 1% increase in the tax rate would conservatively represent a half million dollar present value loss.8

Given that such a large economic risk is shared by a relatively concentrated minority, it’s no surprise that the price of the presidency has inflated. When measured against a potential half million dollar loss, $10 a vote seems quite the bargain.9


  1. yes, you two who wandered in here by accident []
  2. with war, health expenditures and retirement making up more than 2/3rds []
  3. Though, as I think about it, I’m sure that many would argue that money serves as the ultimate democratic measuring stick providing brute leverage to those that most deserve it (with a wide wide margin for error), and so influence on government should be exactly, directly proportional to the money that can be spent to influence it (what is a vote, after all, but an exertion of energy and effort that could otherwise be spent in more productive economic activity and so, ultimately, something that, by definition, has to be paid for in some way (blood, sweat, tears or dollars)?) []
  4. I measure the senate and house averaged across two election cycles to adjust for the distortion that a presidential cycle lends to the denominator of the per vote calculation. []
  5. All figures calculated as total spend by all candidates divided by number of votes cast for each. []
  6. $10 billion nominal, with an assumed general inflation rate of 2% between now and then -- brave, I know. []
  7. Think of this as the presidency as a Loius Vuitton handbag theory. []
  8. At a 10% discount rate over 20 years. []
  9. Election spending data compiled from []
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…80 pajaritos in the bush


So what does this have to do with anything?

The payment schedule on mexico's billion dollar bond

The Mexican government just borrowed almost $1 billion repayable in 21101 at a 6.1% rate. Yes, the world just gave the Mexican government a billion dollar bird.

In 34 years we will have collected our 2 from the bush (assuming that the Mexican government or its placeholding drug cartel keeps paying its rental rate).

Looked at another way, the present value of the cash flow coming from that Mexican bond will only justify the world’s investment if Mexico keeps current through 2037.2

Can the Mexican government pay its interest for the next 27 years?

Well its last default, by coincidence, occurred 28 years ago (though it was a near thing in ‘94), and they’ve defaulted 3 times over the past 110.3 At that rate, in 4 out of 10 futures the investment will not be justified.

Put another way, at a 3% default rate the present value of the world’s investment measured over the entire lifespan of the bond works out to 80 cents on the dollar (that’s a pretty meager bird).

Just another case of the quail-blind leading the quail-blind I suppose.


  1. not a typo []
  2. as discounted at the 30 year treasury bond []
  3. This Time is Different, Reinhart and Rogoff []
Filed under: time 2 Comments

A bird in hand…


To depart for a moment, from somewhat sobering reflections on mortality (to which I’ll return), let’s examine a different kind of cost: is a bird in the hand really worth two in the bush?

Well, it depends upon how good a shot you are.

To simplify matters imagine that you’ve got a Charleton- Heston-like deathgrip on your trusty .22 and Bruce Lee-esque reflexes. In short, the moment you see feather-one of either of those two birds in the bush it’s as good as yours.

Surely, then, they’re worth more than that dead bird you hold in your hand, and so you trade it away and wait.

And wait.

And wait.

Years later, when they find your desiccated skeleton, the rifle still poised, the NRA card still laminate and unblemished it won’t merit much mention until they discover the quail colony not ten yards distant. A source of scientific debate: for can they still be considered “quail” when they have so completely adapted to living, breeding, preening without ever leaving the confines of a single bush?

But even if you hadn’t perished in your pursuit, would trading away that bird in hand have been worth it if it had taken a year to catch those two in the bush? How about a day? An hour?

It depends.

It depends upon the value of a bird and the value of your time (and the value of the experience, sitting around and waiting for those birds, and the value of the story you get to tell, the value of the ammo you have to waste and the dollar-value of damage that ammo does to your gun in firing, not forgetting, either, the psychological damage you may yet do yourself for watching two additional living creatures perish by your direct and purposeful acts, and can that really be valued?1), but there is a third (eighth?) variable I’d like to focus on, and for the sake of clarity, I’ll reset the scene.

It is not you in that quail-blind but, rather, your indestructible auto-shooting bird-net-gun (steam-powered by renewable geothermal energy); you have already caught one bird, and another hunter has the next reservation (there’s some kind of chalkboard sign-up system – kindof like a bar’s coin-op pool table). Now he offers to take your single bird bounty off your hands in exchange for his slot on the chalkboard (where he’s signed up for the next 30 years), and though there are two birds left in the bush, they’re just chicks, so it will be five years until they peep their little beaks out. Do you make the trade?

To distill the problem into comprehensible form: is two birds five years from now worth more than one bird today?

Well it depends upon your rate of return.

If you imagine that your indestructible auto-shooting bird-net-gun also does taxidermy (powering itself with the flesh of the bird in order to do so – yes, it’s a carnivorous taxidermy cannon) and you can rent out a stuffed bird at an annual rate of 25% of its full cost, then by renting out the first bird you could earn enough to buy yourself a second in four short years.

Two birds in four years versus two birds in five? I’ll take the former, thanks.

But, if there’s not a tremendously demanding rental market for stuffed quail, and you can only command an annual rate of 10%, then it’s two birds in five years versus two birds in ten, so you’ll gladly trade away your keeper in exchange for another slot in the quail- blind.

The bird in the hand might be better, depending on the rental rate
So, in answer to the age-old question: a bird in hand is neither better (nor worse) than two in the bush, so long as the taxidermy rental fee is equal to 20% of the value of the bird (and so long as the birds in the bush are fifth-year-flying quail.)

You follow?


  1. NB: yes []
Filed under: time 5 Comments

Outspend and extend (your life at $3/hour)


Of course such lean living almost certainly has an impact on health. If we spend less do we live less?

Put another way, what is the cost of a year of life?

“Priceless”, you say?

Well, these guys,1 who are probably pretty smart, would have you believe that we (and by “we” I mean the American taxpaying public) are willing to pay $129,000 (in dialysis costs) for an additional quality-adjusted year of life.

Seems expensive (or horrifyingly cheap, depending upon your perspective).

But that’s what we’re willing to pay once somebody is already sick; what would an extra dollar in the pocket do for how long we’re likely to live?

By turning to Canada, in which the healthcare is ostensibly free, I’ll derive down to the health-effects of an extra discretionary dollar spent. So somebody in Canada has already followed this line of inquiry.2 It should come as no surprise that the more you earn the longer you live: a top-decile- earning 25 year old male can look forward to a healthy life lasting almost 40% longer than a bottom-decile-earner.

With just a bit of arithmetic (and some sourcing from the Canadian household spending survey) we can convert these earnings into post-tax spending, and see just how important our consumption dollars might be.

Lowest income earners in Canada spend roughly $30 per day3 (seems to be the North American magic number – see prior post). At this level they can expect to live until 62, but for $5 a day more, they could expect to live until 65.

Over the course of a lifetime this works out to a little less than $25,000 per additional year of life, and if you spend more, you get more (though the series suffers from predictably diminishing returns.) You can live 14 additional healthy years at a cost of $100 thousand per.

Lifespan for sale, as low as $3 an hour

Put another way, you can buy 3 additional years of life at less than $3 an hour, the 3 years after that will run at a little more than $4; you’ll pay $7.50 an hour for the next 3 and $14+ for 3 more. By this math if Bill Gates weren’t so foolishly frittering away his net worth on charitable institutions he could expect to live to be 115 years old.

Circling back, what decision are we actually making when giving a patient dialysis at a cost of $129,000 per healthy year lived? Does that make sense when more than half the population can effectively buy additional life-years at less than $65,000 a piece?

(And, of course, it does and it doesn’t. We humans have proven remarkably adept at watching dumb the smoldering flare-sparks, a glass of water at hand, when not three hours later we’ll find ourselves dumping futile bucket after futile bucket into the inferno).

Returning to Mr. Microsoft for a moment, if he were to effectively buy life-years, the final billion dollars spent would net him 25 extra days. A billion instead in the hands of low income earners should net 15.5 million.4 So unless Mr. Gates believes his remaining time on earth to be 600,000x more important than that of the common man, his charitable bent would seem to make a bit more sense.

What does this have to do with how we proles should operate? Well if you’re a 25-year old spending $10,000 per year and looking to get yourself into Guinness, just aim to increase spending by 17% a year (year after year after year). Sure it might be difficult in the twilight of your life (as you spend $70,000 per minute), but it’s certainly a small price to pay to best Jeanne Calment.5

Perhaps more practically, when you’re choosing between the organic banana and the pesticidal alternative, or the car with side-impact airbags versus the used clunker, without, pause a moment to consider that some don’t even have the choice, and remember that for 3 extra bucks you might just net an additional hour on earth.


  1. Stanford empiric estimate of the value of a life study []
  2. here []
  3. A 2001 datapoint, converting Loonies to USD and inflation-adjusting to 2010 levels []
  4. To say nothing of how far that money could go if properly allocated to strategies that effectively multiply its impact. []
  5. Who was very very old. []
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$30: the daily cost of life


What is the cost of living?

It’s a frightening concept when truly considered. “Without [x] you will die.” And [x] is not food, or water, oxygen or air but, instead, a number, an abstraction, a disembodied quantity.

Allow me to embody it.

In the US, people have trouble spending less than $30 per day, even in households that generate less than half of that in wages. 1 And what do they spend it on?

More than half goes towards a place to stay plus the requisite gas-phone-electric; a fiver for transportation; a bit more than that on food. Then between $2 in healthcare, a buck-fifty’s worth of clothes and the same on education there just isn’t that much left.

Cost of life in US

But they could spend smarter! (you may, with great indignation, claim.)

Perhaps, but even those who generate double the income don’t spend that much more: they spend 3 additional dollars on the house and a couple of extra bucks on the car; an additional dollar goes towards a retirement plan.

3,000 pennies.

And the number holds firm through recent history. In 1984, households generating $5 per person per day in income spent $30 per person to get by; households with quadruple the income spent just $32.2

300 dimes.

By this measure almost 30 million US families (1 out of every 4) don’t generate enough income to live. They accumulate debt; they scrounge and beg; they live silently desperately restlessly hungry for another nickel or penny or dime. They need a dollar and a quarter every hour; 2 cents per every person per every minute.

Yes, that ticket to live: its cost is $30 (and it expires at midnight.)

And awful how far we fall short.


  1. To be precise, households that generate between $8.50 and $17 in income per person per day spend $32.75 per person per day; sourced from the 2008 consumer expenditure survey. []
  2. All dollar figures inflation adjusted. []
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