On Meg Whitman and the Perils of Financing Your Own Campaign

Adam Nagourney writes:

But Ms. Whitman is the latest wealthy Californian to learn that it may take more than money to win an election here, particularly for a first-time candidate confronting a vast and convoluted electoral landscape.

He is right, and not just because wealthy people sometimes hire illegal immigrants.

When wealthy candidates finance their campaigns, news coverage and commentary often portray this as suggesting strength. After all, a jillion million dollars is a jillion million dollars, no matter where it comes from, right?

Not really. First, it is important to remember that many candidates spend their own money because they are forced to, not because they necessarily want to. That is, they invest their money because they are facing strong opposition and could easily be defeated, or because they are languishing in the polls and desperately need to give their campaign a jolt, or because they are uncertain about their ability to raise money. Self-financing may be as much a sign of weakness as as sign of strength.

Second, dollars raised from other donors appear to produce more votes than dollars provided by the candidate. This may reflect the additional benefits of cultivating a network of supportive donors. Private donations signal the strength of the candidate to the media and political elites. It will surprise no one that a candidate would give his campaign $3 million; after all, it is his money, and he wants to win. But if 3,000 people give the candidate $1,000 each, that may convince others that he is a serious contender. Moreover, the act of fundraising may generate local media coverage of fundraising events and may strengthen a candidate’s ties to crucial interest groups and blocs of voters.

All of the above is poached from Jennifer Steen’s excellent book, Self-Financed Candidates in Congressional Elections, although she is not responsible for my interpretation. The book really should be required reading for anyone watching or covering self-financed campaigns like Whitman’s.

4 Responses to On Meg Whitman and the Perils of Financing Your Own Campaign

  1. Jennifer Steen October 5, 2010 at 1:38 pm #

    Thank you for the plug, Dr. Sides! You did a great job paraphrasing my findings. A-plus.

    I am watching the CA race with extreme interest because Meg Whitman has vaulted into an extremely exclusive group not treated in my book, which should perhaps be deemed “mega-self-financers” and previously included only Jon Corzine and Michael Bloomberg. I’ve been reluctant to generalize from this party of two, but after the Whitman results are in I’ll probably feel more comfortable either lumping them in with the other self-financers (if Whitman loses) or keeping them in their own category (if she wins).

  2. Brian Arbour October 5, 2010 at 2:52 pm #

    One more reason why self-financed dollars may not get as much bang for their buck is vendor pricing.

    A lot of workaday political consultants feel conflicted about how much to charge a camapign–wouldn’t that money be better spent winning the election (and thus, improving your reputation). Same for other vendors, many of whom got into some form or politics to get their preferred views enacted.

    When there is a wealthy candidate willing to spend whatever it takes, consultant charge full price, if not more. For most consultants, there is not a “price card” or a transparent set fee, so they often jack up rates for rich self-funders.

  3. dick winters October 5, 2010 at 7:47 pm #

    Interesting analysis, and one that is seconded by Jennifer. It strikes me that a powerful factor at work here is that donors realize that Meg Whitman can self-finance her campaign and these possible donors choose not to spend on her campaign on the assumption that (a) she can and will be forced to; in part because (b) both she and donors know that donors’ money is more effective in other races, so don’t invrest in her campaign that she can self-finance when the returns of my campaign $s obviously go further elsewhere. Problem for Whitman and the other wealthy-self-financiers is that there is no way they can credibly withhold their own fortunes from the race — and everyone knows that

  4. Justin October 7, 2010 at 3:56 am #

    I’m pretty sure there is a paper discussing how the candidate with more money is less likely to win in close elections.