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The Worst Investment California Has Seen

This article was written by in Economy, Featured. 30 comments.


I wouldn’t gamble more money than I could afford to lose. I also wouldn’t spend my own money in order to win an election, but I’m not, and nor will I ever care to be, a politician. Even those living outside of California have heard, the former CEO of eBay, Meg Whitman, spent more than $160 million of her own money, more than 10% of her reported net worth, to ultimately lose the election for governor of that state.

Had she won the election, her investment might not have been a waste from at least one political point of view. Avoiding the obvious political debates played out ad nauseam elsewhere, would you gamble 10% of your net worth? A complete loss might be an acceptable risk if you believe you have a good chance to be on the winning side of the investment.

People who want to be politicians should be driven by the possibility of making a positive difference in the world — or country, state, or town. Two of Whitman’s goals were to create jobs and improve public schools. With $160 million to spend, someone could take great strides with both of these goals by investing in businesses and supporting the secondary education system directly. It’s easy to argue that Whitman hoped that by spending the money to win the election, she’d be in a better position to have a greater effect than she could with just her own money.

It’s interesting to note that the most expensive self-financed race in history didn’t win — an example that defies the general rule that the political victor is the opponent who spends the most money.

Updated November 5, 2010 and originally published November 3, 2010. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 30 comments… read them below or add one }

avatar Ron

She may indeed have spent 10% of her net worth, but somehow I don’t think she’ll be eating rice and beans while she builds her emergency fund back up.

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avatar Tom Dziubek

I look at it three ways: First, it’s possible that, if elected, she could have made her money back…if not more…down the road, via speaking engagements, book deals, etc. (just hopefully not corruption). Second, if you have ludicrous amounts of money and you have a dream like this, why NOT pursue it? Third, while she might have ultimately lost $160 million dollars, that money didn’t disappear into think air…it provided job opportunities for the people around her and all the businesses she dealt with.

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avatar The Biz of Life

At least it was her own money, and not taxpayer money, and she is free to blow it anyway she likes. California seems hellbent on going bankrupt, and Gov. Moonbeam will help them get there faster.

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avatar Investor Junkie

Better yet, at least it was her money and not other corporate cronies asking for favors in the future.

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avatar ZFarls

Yikes, thats tons of cash but its hers to lose. Linda McMahon also dropped around 40 million dollars. Part of me thinks it is in the spirit of running (willing to put alot on the line for a dream, then the other part is, barely anyone else has the access to those resources and therefore wouldnt run, or run like that.
I commend her though, its her money and maybe she would have made a difference or honestly thought she could (im from Mass)

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avatar herbert

Maybe it’s because of the fact that she spent so much money that people thought you can’t buy the election.

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avatar Justin

If my net worth were around $1,600,000,000.00, I’d be willing to risk 10% of it for this, probably even more, if I really wanted to become governor.

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avatar Stevedh

Elections are expensive but ultimately it’s the message that gets the votes. Even though I’m a confirmed political cynic it really doesn’t make any difference where the money comes from but you’ve got to have enough to get your message out. I don’t believe political contest are won by the one with the most cash but, they can certainly be lost because you don’t have enough to be seen and heard.

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avatar TakeitEZ ♦549 (Dime)

All investments involve risk. Although 160 million is a ton of money for us poor folks, it really doesn’t put much of a dent in her lifestlye or her family’s future stability. She could afford it and was pursuing a dream to help others in the long run. Nothing wrong with that.

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avatar Harm

Why is she talking about creating jobs? That’s not a job for politicians,
that’s a function of the economy. the only way a politician can affect job growth
is to get out of the way.

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avatar Aryn

Not only did she spend way too much money, but she spent much of it going negative way too early. Her ads ran so often and for so long that everyone tuned out. On top of that, she hadn’t bothered to VOTE for two decades. Why should a person who didn’t even vote get to be governor? There were a lot of strikes against her, but there was a perception that she was looking to buy the election for a job that she never really cared about until she didn’t have anything better to do.

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avatar Robert @ The College Investor

I read an interesting piece on how Meg Whitman could have better spent her campaign money. She outspent Jerry Brown by almost $60 million. If she had taken that $60 million difference, she could have balanced almost 70% of the counties in California’s budgets. That would have saved countless police and fire jobs, as well as other public services. I think that would have gotten her some votes!

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avatar Stella

Even more mind-boggling than the fact she spent $160 MILLION dollars on her race for governor is the fact that it represents a mere 10% of her net worth.

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avatar Eric

Ha! It’s a hot topic here in CA that’s for sure.

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avatar eric ♦1,549 (Half-Dollar)

Oh and I think you’re on to it. IMO, Californians felt she was trying too hard to “buy” the seat. Plus, it didn’t help that some of us associated her with the Govern-ator himself.

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avatar Randy Barnett

I think I agree with most of the commenters here, especially Tom. First, it was her money to spend, she could spend it anyway she wanted. Second, she probably created some (albeit temporary) jobs. The money was invested, mostly in California, so she probably helped the economy.

Yes, it was 10% or her net worth and no, I wouldn’t spend that much. But there’s a major difference. She won’t even miss that 10%. As Ron pointed out, she won’t be on a rice & beans diet because of it.

It’s easy to say she could have done something else with it, but isn’t that her business?

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avatar Kay Lynn @ Bucksome Boomer

Randy, if you had to listen to her incessant ads you probably wouldn’t think it was okay. :)

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avatar Randy Barnett

Kay, isn’t that true for all politicians? I’m on the other coast (SC) and we had competing ads from candidates for governor where they called each other liars. Sometimes one ad would appear right after the other. I chose to watch some of the shows stored in my DVD (sans ads)

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avatar Kay Lynn @ Bucksome Boomer

It would be if that had that much money :)

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avatar skylog ♦368 (Nickel)

the mere thought of this makes me shake my head. clearly, she is free to do whatever she wants in this regard, but imagine all the good that could have been done with that money. now it is gone, as if it vaporized. perhaps she is set up in some ways for another run or made connections that will lead her down another similar road, but this is just another example of just how “messed up” our political system is.

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avatar Mrs. Money

That’s a ton of money! I can’t understand this at all. Some people are just crazy.

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avatar Dave@50plusfinance

I agree it was her money to spend and no one should have anything to say about it. If you feel so strongly about being governor, of the toughest state to manage financially, I would of voted for her just because of that. Arnold is can’t get out of there soon enough. Its a thankless and impossible job. California goes from one crisis to the next.

How people ever voted for Jerry Brown again is beyond me. Future politicians need to be master financial planners and economists to do any good. From the future governor we will see raised taxes and more handouts. It’s simple, cut your expenses, spend less. Its a forgotten concept in our day.

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avatar Matt T

Would I wager 10% of my net worth? I could probably afford the $60. On the plus side, it’s positive?

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avatar jim

She stimulated the economy with $160M of spending. Good for her.

If I were a billionaire then I wouldn’t mind gambling with 10% of my fortune on something like that if I really felt it was important to me. She’s still a billionaire so she’ll be just fine.

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avatar Santos

California is a lost cause. I feel sorry for that state.

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avatar Darwin's Money

Yeah, that investment was almost as bad as when eBay bought Skype :>

But seriously, I applaud her spending so much of her own money in an attempt to serve the public. She’s so wealthy, she could have easily rode off into the sunset. As far as bad investments in California, there are numerous. I keep hearing about how her $160 Million could have gone to education. Here’s what California does with eduction dollars – they spend 4 times that on a single school to benefit a few kids while they lay off teachers and pay state employees with IOUs.

http://gawker.com/5619636/is-a-600m-school-too-fancy

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avatar Luke Landes ♦127,500 (Platinum)

I heard about that. In fact, the school that received the silver medal to that California school’s gold medal for spending is literally down the street from where I live. It’s just an example of the misuse of cash in the public education system. I see it as a separate issue, however, because if someone were to donate $160 million directly to a school district, they would be able to designate the specific use of those funds.

When I was in high school, my district received a donation that was designated for something specific — to install a satellite dish at the high school. Was it necessary? Could the money had been used for something else? The donor designated the funds must be used for a satellite dish, so the district accepted the money and installed the dish. We can only hope that those who have lots of money to give to a public school system have the sense to allow the funds to be used for what will most help the students.

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avatar Kay Lynn @ Bucksome Boomer

I agree with Aryn. She overloaded us with her constant, primarily negative ads for over a year (first for the primary and then the general election).

Even if I did agree with her views I would have voted against her to try to get back at her for that punishment.

To Santos: This is still the best state to live (outside of Hawaii).

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avatar ib ♦174 (Cent)

*EXCELLENT* post, dear flexo.

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avatar KNS Financial ♦404 (Nickel)

I actually think it would be worse to enter an election, lose a huge chunk of money, and then have to drop out because you ran out! At least she still has 90% left over to pursue anything else that she desires. But as for me, I wouldn’t do it unless I had a clear plan for the other 90%!

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