The new wave of retail investing fueled by Robinhood, stimulus checks, and meme stocks has been followed closely by concerns about bubbles, unsophisticated investors gambling, and wild speculation. We are witnessing a similar revolution when it comes to democratizing political giving.
In finance, new technology has opened up the world of stock markets to more people than ever before who would have previously relied on financial advisors and fund managers to serve as gatekeepers and protect them from unreasonable risk. While the majority of investors are benefiting from lower fees, better information, and access to more asset classes, there are, of course, many who are being harmed by investment decisions they don’t understand and, in rare cases, dark patterns in user interfaces that intentionally confuse them.
In politics, fundraising was previously the prerogative of well-heeled donors at receptions and ideologues on mailing lists. The reputation needed to build a network of donors and the resources required to reach the grassroots have traditionally served as the gatekeepers to political giving.
The advent of ecommerce, social media, and email marketing have thrown the gates open for millions of donors to give to political candidates and causes of their choosing. 62% of political donors gave online during the 2020 cycle compared to just 38% who gave by mail. 33% of donors gave for the first time last year. All told, 64% of donors give multiple times.
A motivation for this rise in political giving is surrogate representation seeking. An individual is free to give to whichever candidate they choose and campaigns are taking notice, raising millions of dollars from outside their own states.
Facebook’s ad targeting tools have changed “all politics is local” to “all politics is an all-out national free-for-all.”
Similar to the concerns about “unsophisticated” retail investors, there are emerging worries about naive political donors who give to long-shot politicians, Scam PACs, and fall prey to hyperbolic marketing tactics.
Take Representative Marjorie Taylor Greene from Georgia: she is a freshman member of the House in the minority party and has no committee assignments. Despite being a questionable political investment, her campaign raised more than $3.2 million this year already.
Prepare for the rise of Dogecoin politicians.