September 6, 2013
Wednesday’s 10-7 vote in the Senate Foreign Relations Committee supporting an authorization of military attacks on Syria may have been affected by varying levels of financial support the senators got from political action committees representing the defense industry, and from the companies’ employees. As The Daily Mail reports, on average, a ‘yes’-voting senator received 83% more money from defense contractors than one who voted ‘no.’ Committee members who voted Wednesday to support the proposal collected an average of $72,850 in defense campaign financing between 2007 and 2012, Wired magazine reported, based on data collected by the Center for Responsive Politics. Those who dissented in the committee vote averaged $39,770, with the four senators who received the least amount of defense dollars, ranging from $14,000 to $19,250, all voted no. At a Pentagon-estimated cost of around $5 billion per month (for a 2-month deployment) – and in light of our previous discussion on lobbying ROIs – is it any wonder?
Among the biggest contributors to senators involved in yesterday’s vote were Lockheed Martin, Boeing, United Technologies and Honeywell International, companies that make everything from stealth bombers to long-range missiles and aerial drones.
While members of Congress have complained that Pentagon budget cuts due to the 2013 budget sequester will hamper any military effort in the Middle East, those giant contractors will likely benefit from any military action.
A single Tomahawk cruise missile costs the government between $700,000 and $1.4 million, according to published estimates. And each unmanned Predator aerial drone sets the Defense Department back a whopping $4 million.
In 2012 A Pentagon spokesman told CNN that it costs another $815,000 per year to pay, deploy, feed, house, arm and maintain every soldier on the ground in Afghanistan.
Applying that math to the 75,000 troops the Pentagon has said it will need to secure Syrian chemical weapons sites, a two-month deployment at similar costs would cost $5.09 billion per month.
And as a reminder, here again is the Greatest ROI opportunity ever… if only to corporations:
The dream of virtually anyone who has ever traded even one share of stock has always been to generate above market returns, also known as alpha, preferably in a long-term horizon. Why? Because those who manage to return 30%, 20% even 10% above the S&P over the long run, become, all else equal (expert networks and collocated flow-frontrunning HFT boxes aside), legendary investors in the eyes of the general public, which brings the ancillary benefits of fame and fortune (usually in the form of 2 and 20). This is the ultimate goal of everyone who works on Wall Street. Yet, ironically, what most don’t realize, is that these returns, or Returns On Investment (ROI), are absolutely meaningless when put side by side next to something few think about when considering investment returns.
Because it is the ROIs for various forms of lobbying the put the compounded long-term returns of the market to absolute shame. As the following infographic demonstrates, ROIs on various lobbying efforts range from a whopping 5,900% (oil subsidies) to a gargantuan 77,500% (pharmaceuticals).
How are these mingboggling returns possible? Simple – because they appeal to the weakest link: the most corrupt, bribable, and infinitely greedy unit of modern society known as ‘the politician‘.
Yet who benefits from these tremendous arbitrage opportunities? Not you and I, that is for certain.
No – it is the faceless corporations – the IBM Stellar Sphere, the Microsoft Galaxy, Planet Starbucks – which are truly in the control nexus of modern society, and which, precisely courtesy of these lobbying “efforts”, in which modest investments generate fantastic returns allowing the status quo to further entrench itself, take advantage of this biggest weakness of modern “developed” society to make the rich much richer (a/k/a that increasingly thinner sliver of society known as investors), who are the sole beneficiaries of this “Amazing ROI” – the stock market is merely one grand (and lately broken, and very much manipulated) distraction, to give everyone the impression the playing field is level.
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