Lobbying pays — is anyone surprised?

Lynne Kiesling

Perhaps the only thing surprising about the research described in this Washington Post article is how demonstrable and quantifiable the effects are:

In a remarkable illustration of the power of lobbying in Washington, a study released last week found that a single tax break in 2004 earned companies $220 for every dollar they spent on the issue — a 22,000 percent rate of return on their investment.

The study by researchers at the University of Kansas underscores the central reason that lobbying has become a $3 billion-a-year industry in Washington: It pays.

I like the way Mr. Coyote put it:

We have a sense that there is more corruption than ever in politics, but I think its demonstrably true that people and politicians are not any more or less evil than they were 100 years ago.  The only difference is that the sums in play from political influence are so much larger.  Its a concept I try to explain to people all the time.  The way to fix corruption in politics is not through campaign finance reform, it is through reducing the size of government.  Because no matter what restrictions one puts in place, if we set up a system where it pays to invest in politicians, then people will find a way to do so.

Yes. This statement is a variation on my oft-made claim that the way to reduce corruption, lobbying, wasteful rent-seeking, and the inefficiency and distortion that political processes induce is to remove as many important decision from the political process as possible.


4 thoughts on “Lobbying pays — is anyone surprised?

  1. “…the way to reduce corruption, lobbying, wasteful rent-seeking, and the inefficiency and distortion that political processes induce is to remove as many important decision from the political process as possible.”

    I’m sympathetic, but does that include, for instance, decisions about whether or not to regulate certain economy-threatening financial instruments of mass destruction? Oh, we can? Good.

    Let the lobbying begin.

  2. “… financial instruments of mass destruction …”

    My my, and some people accused Bush of melodrama. I’ve heard many an exaggeration but this one takes the cake. Congratulations, you are the new recipient of the G.W. memorial prize in Hyperbolic Genocide.

  3. 1) “… financial instruments of mass destruction …” is the right word wrt the effect on our financial system. Buffett was right.

    2) Your point is EXACTLY right — the only way to shrink corruption is to shrink government. Libertarians have the it right: Since you can’t trust government to do the right thing (GOP) and you can’t make it work “for the People” (dems), you should just minimize the damage…

  4. Lynne, naturally I agree with your basic premise — as it’s sometimes put, when politicians control buying and selling, the first thing to be bought and sold is politicians. However, what do you make of the old Tullock puzzle, reexamined recently by Ansolabehere, de Figueiredo, and Snyder, that given the huge potential gains from lobbying, there isn’t even more lobbying? Given the rates of return cited in the WaPo piece, we might be surprised how little is spent.
    Federal subsidies to many industries are in the billions (for financial institutions, the trillions), yet campaign contributions and other forms of influence-buying are comparatively small. I’m not sure I buy the Ansolabehere et al. conclusion, which is that campaign contributions represent consumption, not investment, but I’m not satisfied with our usual explanations either. Thoughts?

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