First you get the power. Then you get the money.

by Ted on January 19, 2004

Via The Big Picture’s Barry Ritholtz, CNN has an interesting article about which Democratic presidential candidate Wall Street might prefer. You’ve got to love the lead:

A recent study from the University of California at Berkeley, published in the October issue of the Journal of Finance shows that between 1927 and 1998, the stock market returned approximately 11 percent more a year under a Democratic president versus safer, three-month Treasurys. By comparison, the stock market only returned 2 percent more a year versus the T-bills under Republicans.

(Dwight Merideth had a marvelous series of posts on this subject called “Just For the Record”, by the way.)

I shouldn’t have been surprised, but Bush’s support from the “investor class” is far from monolithic. A Money magazine poll of “investor class” voters, however defined, revealed that only half planned to vote for Bush. And while Republicans got more in donations, they didn’t get that much more.

The piece goes on to detail:

* the Republican vs. Democratic donations of some of the largest major financial institutions.
* the positions re: corporate governance, taxes, international outsourcing, of the major Democratic candidates that would affect the investor class. (There’s a lot there I didn’t know- Dean used to be a stockbroker? Edwards is the only guy who would require expensing of stock options? Wow.)
* non-crazy quotes from Don Luskin about prominent Democrats.

It’s short and well worth a look; go to it.



zizka / john emerson 01.19.04 at 7:10 pm

It would be interesting to see what proportion of political contributions to both parties comes not from people with a general political interest, but from people with a very specific interest in a specific governmental favor — reductions in specific taxes, corporate welfare, eased regulation, tariffs or free trade on an item, etc. My guess is that it’s 3-1 up to 5-1 specific favors over general interest.

Of course, general class interests (e.g. low taxes for the wealthy, laws protecting unions) can also be seen as narrow interests, but I’m thinking of industries that have a very specific, well-defined favor that they want — weakened inspections on beef production, sugar tariffs, oil depreciation allowance, etc.

One of the big stories of American politics and media malpractice is the way that the term “special interests” by now almost always refers to large groups of people (labor, blacks, environmentalists, women) and almost never, e.g., to the oil industry or the meat-packing industry.


Matt Weiner 01.19.04 at 11:29 pm

Ted, you turned UCLA into Berkeley in that quotation [unless the page changed]. Mark Kleiman and Brad DeLong will not be pleased. Also, you skipped the first sentence: “History shows the stock market does better under Democrats.”
Nitpicking aside, though, those quotes from Luskin really do seem to be non-crazy. Are we sure it’s the same guy?


Thomas 01.19.04 at 11:53 pm

Why stop with 1998?


The Mighty Reason Man 01.20.04 at 11:49 pm

Non-crazy quotes by Luskin?

I call bullshit.

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