Barack Part IV: The Political Economy of "Change"

A final post on Barack Obama, because I keep thinking about his "change" mantra. As I noted recently, both a white male Iowan and a black female Floridian recently complained about Obama's repetition of change, without ever saying specifically what he would change. But I think they miss the point. Vague change is a great campaign slogan, and it's not because the voters are stupid, but because Obama is a capital intensive business in a mass market. It's a great example of how using economic concepts helps explain politics.

Capital intensive businesses usually need to try to capture as much of the market as possible, because, having have high costs, they need as many customers as possible to cover those costs. Low cost businesses often are happy to niche market, because a smaller number of customers will pay the bills. If you're in a niche market, you want to make your handful of customers deeply devoted to your product, even if that alienates others (e.g., bizarre porn niches). That is, while it's better, all things being equal, to expand your customer base, it can be better to have a small core of faithful, than a larger set of noncommittal, customers.

Consequently, mass marketed products tend to be similar. In the neo-classic equilibrium model, like-products are all identical and identically priced. It's a form of blandness: everyone can stomach it, no-one's offended. (Fortunately, the real world never reaches equilibrium, as Schumpeter and Hayek pointed out.)

Barack is in the position of needing the largest market-share he can get, with the market being voters. By talking about something many people want in the abstract, he gets their support. But if he started talking about specific types of change he'd be niche-marketing himself, and while he might build a very devoted base of followers--the Ron Paul model--he'd lose the election.

So Barack's hit on a great marketing strategy for a mass-market election. I wouldn't be surprised if his campaign headquarters has a sign on the wall reading, "It's the change, stupid."