Money's surprisingly ineffective role in the 2020 election
Welcome to “Not Pretty, Not Rich,” a newsletter about money and the economy.
Hey everyone,
This is going to be a short newsletter, as I’ve found myself buried in work. I’m fortunate, for that, I suppose. But fair warning that the next few issues will probably be bare-bones as I should have some more breathing room in February. So, for now, I’ll just be sharing some news, links, and a few other money things that I think are particularly pertinent.
Also, this isn’t sending on Friday, per usual. I will probably send it on Tuesdays for the time being, as it’s more suitable for my schedule.
It’s Tuesday, January 12, 2021, and here’s this week’s rundown:
News recap
Money and politics: A look back at 2020
Fancy words: SPACs
Numbers and links
News recap
It’s a new year, but the craziness of 2020 is sticking around; 2021 is, so far, just 2020 DLC:
The Democrats will take control of the Senate. That probably means big legislative changes, but in the immediate term, more stimulus measures (like those mythical $2,000 checks).
Given what happened in D.C. the other day, it’s worth thinking about how much money we spend on defense, and how ineffective it can all be:
This year, a bunch of states are changing or enacting laws that could have an effect on you financially — legal marijuana, minimum wage increases, sports betting, etc. If you’re getting a raise, be smart about what you’re doing with the money. And if a new industry is budding in your state, think about ways to take advantage.
Elon Musk became the richest person in the world, passing Jeff Bezos, and now has a net worth of $209 billion.
Money and politics: A look back at 2020
A lot of money was spent during the 2020 election with lackluster results.
Our political system has issues with financing, as dark money groups, PACs, and gray-area bribery have taken their toll on our elections. Money is used to win campaigns by purchasing ads — be they television ads, yard signs, or an outsized presence on social media networks. Generally speaking, the bigger a candidate’s war chest, the more likely they are to win, as they can effectively buy themselves further reach.
With many people amped up this past election (and with a lot at stake), some campaigns saw massive influxes of cash. Candidates in states like Maine and South Carolina received millions upon millions of dollars in donations from people all across the country. In fact, this past election saw nine out of the ten most expensive Senate races in history, according to The Center For Responsive Politics (the data concerning the two Georgia run-offs in this chart is out-of-date as it was published in December, so you can ignore for now):
But the amazing thing here is that, by and large, all of that spending didn’t produce results. Incumbent Republicans won in every state in the chart above, with the exception of Arizona, and later, in Georgia. Tens of millions of dollars in spending didn’t make much of a dent in South Carolina or Maine or Kentucky.
What’s it mean? Perhaps money isn’t all that matters in our elections. Clearly, it plays some role, but even Trump’s campaign — which had amassed around $1 billion as of early 2020 — found itself broke as election day neared, and ended up losing by 4.5%.
Will these results change the way we think about money and politics going forward? Maybe. Candidates may opt to go for leaner, startupy-type campaigns in the future, which may allow more people (who often don’t have the resources) to consider running for office.
In a year full of surprises, the relative ineffectiveness of cash in the 2020 campaign was yet another one.
Fancy words: SPACs
You’re likely to see the word “SPAC” pop up in the news. “SPAC” is an acronym, and it stands for “special purpose acquisition company,” and it’s currently the hottest way to take a company public.
SPACs have been around for a long time, but given how long and complicated it is for a company to go public, many are eschewing the traditional IPO method and instead going public via a SPAC.
Here’s how it works: A SPAC is created by investors. It’s a business entity, but it doesn’t actually do anything — it’s an empty shell, or a husk. Like the doll from “Child’s Play” before it’s possessed. Investors can buy shares in the SPAC as they would any other company, and the SPAC raises capital. Then, it targets a private company that it wants to acquire, ultimately merging with it, and thus making that company public.
That’s the short and sweet of it, but what you need to know is that SPACs are hot right now — really hot. Some companies that have recently used them to go public include DraftKings and Virgin Galactic, and SoFi looks like it’s primed to do the same.
Numbers and links
Why the markets boomed during one of the worst years in history (New York Times)
How $15 minimum wage became a mainstream policy idea (New York Times)
Good: “A new federal health care rule will require hospitals to publicly post prices for every service they offer and break down those prices by component and procedure.” (NPR)
48%: The percentage of Americans who now want to live in a rural area, up from 39% in 2018. (Gallup)
Median rents in the country’s most expensive cities are down significantly over the past year. (Zumper)
$150 million: Investors can now buy into artists’ catalogs. Neil Young is the latest to strike a deal for his songs. (BBC)
What are we going to do about legislators’ stock trading? (New York Times)
How Billionaires See Themselves (Current Affairs)
The Army has a warehouse full of Nazi artwork. (The New Yorker)
See you next time!
“Not Pretty, Not Rich” is a newsletter about money, finance, and the economy. You can connect with me through my website, Twitter, LinkedIn, or send me an email at sammbecker@gmail.com. Also, if you enjoy this newsletter, I’d really appreciate it if you would share or forward it to others.
And remember, the contents of this newsletter are not meant to be taken as advice. It’s all for informational and entertainment purposes only.