Tuesday, December 16, 2003

Economics and Political Parties: A great WaPo article tying together Ronald Coase, Howard Dean, and the cost of information. Sample:
For all Dean's talk about wanting to represent the truly "Democratic wing of the Democratic Party," the paradox is that he is essentially a third-party candidate using modern technology to achieve a takeover of the Democratic Party. Other candidates -- John Kerry, John Edwards, Wesley Clark -- are competing to take control of the party's fundraising, organizational and media operations. But Dean is not interested in taking control of those depreciating assets. He is creating his own party, his own lists, his own money, his own organization. What he wants are the Democratic brand name and legacy, the party's last remaining assets of value, as part of his marketing strategy.
So Dean can build his own "Laptop Party" (not as dirty as it sounds) by organizing on the internet. Much has been made of Dean's success in using the internet to raise money; but he's going to effectively double (or better) the value of that money by using the internet to spend less. First, likely Howard Dean voters are getting in touch with him, while most parties and candidates still spend money hunting down their demographic. Second, his e-mail lists, blogs, and general web presence allow him to quickly and cheaply spread a message that a more mainstream candidate might have to buy media time for. Third is a piggyback reason: These first two activities (identifying your target audience and sending them the message) have historically been expensive enough that the political parties effectively subsidized them. Now that soft money to parties is limited, that's not possible, so more of a candidate's own war chest will be spent on erstwhile "party" tasks. But, as Dean himself has made clear, his "Deaniacs" are a proprietary network -- one that he has implied that he would be reluctant to share with the party, should they nominate someone else.

That said, I doubt that all these advantages will help Dean much. He is revolutionizing the political process, to be sure. But Bush's $200 million war chest will be hard to beat. Old-fashioned media buys still have a place, particularly when a candidate like Howard Dean needs to find his way to the respectable, soccer-mom center.

Stipulating a Dean nomination, my guess is that, despite his great economies, Dean will struggle for money to reach beyond his base next summer.

(Link: Hit and Run)

No comments: