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. The $787 billion stimulus act and major spending proposals have ratcheted up the lobbying frenzy further this year, even as President Obama and public-interest groups press for sharper restrictions on the practice.
From the Washington Post. We will never get the money out of politics until we get the politics out of money.
We will never get the money out of politics until we get the politics out of money.
Then what would our congress critters do? Focus on the basics?
Seriously Alex, you hit the nail on the head. But it’s easier to focus on the former, especially for incumbents.
It is incredibly naive to think we can “get the politics” out of money. This has been going on
since the days of the Roman poet Juvenal who coined the phrase “bread and circuses” as the
cornerstone to successful governance. Its even more naive
to think that all those billions were spent on electing the Obama to do so. Whether or not
he actually bowed before the Saudi King (he did and the spin otherwise
just strains credibility and insults intelligence) its the perfect picture of a politician’s
subservience to money.
We can’t even stop our state and local governments from handing over billions for the modern
“circuses” equivalent; municipally financed sports stadiums. The game remains the same;
threaten to leave, get money-and player salaries reach higher into the stratosphere.
Meanwhile, Joe Sixpack gleefully supports this venture with his vote and wallet.
There was a reason the founders limited the federal government’s ability to tax the citizenry
directly, Lincoln dispatched that with the Civil War and five decades later, the federal income
tax was permanent.
So I ask; how will we ever get “politics out of money” when politicians can take what they
want from who they want when they want?
We will never get the money out of politics until we get the politics out of money.
Just because it’s chiasmus, doesn’t mean it’s true (in either direction).
How can we honestly trust our politicians to run the economy if they can’t even price their own services correctly?
(Not withstanding Bloomfield’s point)
You know what doesn’t work? Democracy.
Tyler would ask: with a 22,000% RoR how come we don’t see more lobbying? Could this be a sign that the checks and balances in the US system already work reasonably well?
The thing about corruption is that it pays both ways. For the rent-seeking lobbyist, the return on investment that they get from their Congressional “investment” can be really substantial while the politicians at the opposite end of the transactions realize gains through something a lot like a dividend yield.
The reason why the politicians’ dividend yields are so low is because this kind of corruption has become a highly competitive, high-volume, low-margin business.
I agree with sd. The remarkable thing is how much smaller $3bn of lobbying is than $3+ trillion of federal spending. And how is one to interpret the high rate of return? Certainly it suggests that the market for government influence is not a normal competitive market. What one really would like to know, of course, is what rate of return the *marginal* dollar of influence-buying earns.
Another question: Would we be better off with less money in politics, or more? Grower interests who have helped to eviscerate evil immigration laws are American heroes in my book.
[i]We will never get the money out of politics until we get the politics out of money.[/i]
Sorry, what does this even mean? How do we get “politics out of money”? The institution that we call government is the social near-monopoly on force. Situations will always come up when individuals and organizations in government will have every incentive to have “politics in money.” And at the same time, separate outside institutions and individuals will see situations where manipulating the government is in their best interest.
It’s hard to envision a situation where this is not the case; even if there were an “optimal” government-society state where every person would unambiguously benefit if we transitioned to it, there’s no way to get there. Hundreds of millions of separate individuals just can’t coordinate to reach it. The most anyone can hope for is for people to build other separate, competing outside institutions.
The strongest analogy I can find to Tabarrok is to a flower-child of the Sixties.
[i]Imagine there’s no politics
It isn’t hard to do
Nothing to kill or die for
And no corruption too
Imagine all the people
Living life in peace…[/i]
This strikes me as inaccurate reporting. It’s like calcualting the profits from oil prospecting based on one giant strike. The 22,000 percent return is spectacular precisely because it is rare.
For every lobbyist successful at bringing home the bacon there must be another one on the other side of the issue lobbying for some result they didn’t get.
I vaguely recall some public choice literature from around 30-40 years ago claiming that the government cannot give away money because the total cost of lobbying for it will equal the amount given away in equilibrium. I cannot find any citations on the web in a hurry.
We will never get the money out of politics until we get the politics out of money.
Hey, that’s my line!
Seriously, did anyone think there would be all this lobbying if it didn’t pay?
sd: The 20,000% return is not to marginal case! It’s an extreme example of something that happens all the time, though usually to a lesser degree.
Zephyrus: “Get[ting] the politics out of money” means getting the government out of the business of determining who gets money. Examples range from agricultural and industrial subsidies to narrowly-defined tax breaks to professional licensing rules to zoning to redistributive taxation to the sugar import quota (good for the maker of corn syrup!). Obviously, we could not get 100% attainment of “get the politics out of money” — after all, Congress would have to buy from somebody the paper to print the Congressional Record. But the government was a lot less in the business of money in the past, and it could in there be less in the business in the future.
“sd: The 20,000% return is not to marginal case! It’s an extreme example of something that happens all the time, though usually to a lesser degree.”
Ok, but to reprase what I was asking earlier: what does this tell you about the shape of the supply curve and the overall workings of the US system?
And you will never get politics out of money. The two are inextricably combined. The best you can do is be a responsible, informed citizen, exhort your peers to be the same, and hold your congresscritters accountable.
I also agree with sd. If these numbers are meaningful, then the proper conclusion is that companies are not spending nearly as much on lobbying as they should.
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I also agree with sd. If these numbers are meaningful, then the proper conclusion is that companies are not spending nearly as much on lobbying as they should.
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The study is a farce because it miscalculates the return the companies received on their money. If the bill had not passed, they would simply have left their money abroad. The government lost nothing and the companies gained nothing except the convenience of banking in the United States. If Obama restores inconvenience, the money will once again flow overseas.
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