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 []
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