Half a year ago, Scott Alexander made a post about the surprisingly small amount of money in American politics. Yes, surprisingly small amount. That is not a typo. I was curious about what the corresponding numbers are for Germany, so I did some digging.
For the US, Scott estimates around $12bn is spent on influencing politics per year, just shy of the annual revenue of the American almond industry. German GDP is around 5.5 times smaller than US GDP, so naively, we would expect political spending to be around $2.2bn. Let’s take a look!
- The parties in the German Bundestag have a combined annual budget of around $560m.
- The party-affiliated foundations (which also do a lot of think tank work) have a combined annual budget of around $650m.
- All other German think tanks also probably have a combined annual budget of around $650m (generously rounding up).
- Advocacy groups in Germany probably account for another $540m (much less data and the estimate is much more uncertain).
- For other interest groups like companies, trade associations, unions, and so on, I did two Fermi estimates that resulted in a very generous average estimate of around $650m.
- That gives us a grand total of around $3bn.
I couldn’t find numbers on the annual revenue of the German almond industry, but that of chocolate seems to be around $7.2bn per year. So Germans spend more than twice as much on chocolate per year than on influencing the political system.
Also, this total of $3bn is almost certainly an overestimate due to some conservative assumptions, the inclusion of entire budgets of which only a fraction is spent on political influence, and some likely double counting. I would expect it to be closer to $2bn. The fact that it’s more per GDP than in the US just seems really unlikely. It’s also become clear to me that Scott’s numbers are gross underestimates in some cases. For instance, he suggests that US think tanks have a combined annual budget of $500m. That seems way too low, given that the corresponding German number seems to be around $650m.
The German total was still surprising to me. I had expected it to be significantly less per GDP than in the US. After looking at the numbers a bit closer it became clear that the main reason why is there is still so much money in German politics is the German state: on average around 37% of the budgets of the main political parties is paid for by the state; the same goes for basically 100% of the party-affiliated foundations, at least 50%, but probably more like 70%, of the think tanks, and probably at least 10% of the advocacy groups. Very conservatively, that means that only around 60% of the total (around $1.8bn) is paid for by private actors. Again, I’d expect it to be much smaller, so probably closer to $1.2bn. Germans spend around six times as much on chocolate.
For what it’s worth, this total is more in line with my expectations: Party donations beyond membership dues are very rare in Germany from what I know and large scale philanthropy for political influence is basically unheard of (the Bertelsmann Stiftung being the main notable exception). It’s just not something you do with your money. And you could do a lot with it. The three wealthiest German families have assets of around $38.1bn, $32.6bn, and $17.4bn respectively. That kind of money could buy a lot of chocolate and a lot of influence.
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