Derek Thompson (with a P, as in Pterodactyl), via Mark Thoma, gives us an update on where the large campaign contributions have been coming from over the last 20 years. As you can see, finance and real estate have lead the way:
Banks “frankly own the place,” Sen. Dick Durbin famously said of Washington during the debate over financial regulation in 2010. And when it comes to total contributions for big donors, you can see what he’s talking about (FIRE = the Finance, Insurance and Real Estate sector):
So, in a 20-year period when the financial sector’s share of the economy expanded by a third, from 6% to 8.4% of GDP, donations from this particular group increased by 700%.
Before you go away thinking this graph explains everything you need to know about the way Congress works (and, by the way, that graph probably doesn’t exist), keep in mind that elite donations are just a small part of how the richest Americans are more politically active than the rest of us.
One argument that people sometimes make is that these contributions do not make any real difference in the type of legislation that is passed. But finance is generally assumed to represent the “smart money.” If there’s anybody who knows how to compare the marginal benefit of something with its marginal cost, these should be the people. From the graph, it looks like they think the marginal benefit of these campaign contributions is fairly high.