Friday, November 09, 2012

The Fleecing of the Billionaires

One of the terms that should strike fear into your heart when uttered by a government agency is that they've entered into a "cost-plus" contract - the winner is compensated for his expenses and is guaranteed a contractually specified rate of return on top of those expenses, sometimes a percentage. Fortunately there are few circumstances in which cost-plus contracts are offered, and they usually involve issues involving a high up-front investment and high risk of loss (e.g., setting up a distribution network for food and supplies in a war zone).

When I think of the past election, I can't help but think of the sweet deals that campaign consultants can often obtain, through which they "earn" a percentage of certain campaign expenditures, such as ad buys. With Citizens United, they can cut out the middle man - set up an organization and solicit funds from contributors, with nobody from the campaign breathing down their necks about whether their ads are working or if there might be better ways to spend the money. If rich people want to give you hundreds of millions of dollars to spend on an ad campaign, win or lose, you pocket an enormous fee.

One positive aspect Romney's loss is that it will make billionaires think twice before again trying to buy an election. But I would not be surprised if, over the next four to twelve years, we see them again attempt to do so, all the while getting smarter and smarter about how they allocate their money. But for now, it seems reasonable to say, some very rich individuals who believe themselves to be the brightest, most capable people on the planet, got fleeced.

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