Indirect Bribing with Plausible Deniability

by on February 17, 2014 at 7:23 am in Economics, Political Science | Permalink

From a new working paper by Stefano Della Vigna, Ruben Durante, Brian Knight, and Eliana La Ferrara

We examine the evolution of advertising spending by firms over the period 1994 to 2009, during which Silvio Berlusconi was prime minister on and off three times, while maintaining control of Italy’s major private television network, Mediaset. We predict that firms attempting to curry favor with the government shift their advertising budget towards Berlusconi’s channels when Berlusconi is in power. Indeed, we document a significant pro-Mediaset bias in the allocation of advertising spending during Berlusconi’s political tenure. This pattern is especially pronounced for companies operating in more regulated sectors…

In the United States, Lyndon Johnson made his fortune, working through Lady Bird, in similar ways. As Robert Caro wrote in Means of Ascent:

As one businessman puts it: “Everyone knew that a good way to get Lyndon to help you with government contracts was to advertise over his radio station.”

Jack Shafer, drawing on Caro, summarizes the details in The Honest Graft of Lady Bird Johnson.

Hat tip: John van Reenen.

1 Benjamin Cole February 17, 2014 at 7:37 am

The surge of money into and out of DC after 9/11 was breathtaking.

2 Age Of Doubt February 17, 2014 at 9:14 pm

In a country like India, it is a known fact that you can’t get much done without bribes. So I wonder how that fact plays with companies who have strict, no-bribery ethics policies when they build an off-shoring facility, say in Bangalore or Hyderabad. How do they explain their success in getting something like that done?

3 Dan Weber February 17, 2014 at 8:23 am

This meets my priors so I want to believe it.

But what’s the counter-factual?

4 Rahul February 17, 2014 at 8:30 am

A Halliburton Cheney study would be interesting.

5 Z February 17, 2014 at 8:57 am

The wackos have picked all the meat off that dead horse.

6 Rahul February 17, 2014 at 9:35 am

As if LBJ & Berlusconi are novel.

7 Zynik February 17, 2014 at 11:44 am

“The politician who steals is worse than a thief. He is a fool.
With all the grand opportunities around for the man with a political
pull, there’s no excuse for stealin’ a cent.”

>> George Washington Plunkett of New York City Tammany Hall


8 msgkings February 18, 2014 at 5:30 pm

Rahul 2, Z 0

9 dearieme February 17, 2014 at 8:33 am

Was LBJ an even worse president than W and JFK? How about O? Then there’s FDR. Is there some hoodoo on presidents known by initials?

10 TMC February 17, 2014 at 11:53 am

Certainly worse than JFK or W. Better than O, or Carter. Probably better than FDR.

11 Alexei Sadeski February 17, 2014 at 12:15 pm

LBJ is a lock for worst president of the modern era.

JFK doesn’t strike me as particularly bad, especially his handling of Cuban Missile Crisis seemed solid.

How one ranks O vs W likely has much to do with one’s personal political affiliations.

12 JWatts February 17, 2014 at 5:16 pm

“How one ranks O vs W likely has much to do with one’s personal political affiliations.”

I think it’s pretty hard to get any kind of reasonable evaluation of a President until at least 20 years or so after they left office and at least 10 years after they are out of public life and/or dead.

13 So Much For Subtlety February 18, 2014 at 4:26 am

JFK’s handling of the Cuban Missile Crisis was solid? How can you claim that?

The Soviet Union wanted to protect their vassal state despite not having the power to do so. So they huffed and they puffed. They created a scare. They bluffed JFK. And he fell for it. The USSR couldn’t have won a war with the West over Cuba. They would have been lucky to be able to destroy New York even if they had been insane enough to use nuclear weapons. But JFK fell for it.

And he blinked. He gave in. He ripped up the Monroe Doctrine – the cornerstone of US foreign policy in the Western Hemisphere. He guaranteed that the Cuban regime would be safe. And for what? A Soviet promise not to blow up the world which they had no intention of doing anyway?

One of the worst US Foreign policy disasters in the Cold War.

14 bob February 17, 2014 at 8:49 am

Aha, so that’s what the point of advertising is.

15 Rob February 17, 2014 at 10:13 am


16 johnnyz February 17, 2014 at 8:58 am

LBJ was worse than W and JFK.
The way to judge how bad a president was is to look at their “permanent” programs–the ones that live on and have permanent ill effects.
That makes Prof. Wilson the worst prexy every, as the Fed is the worst government institution ever created. The income tax is a bad one too.
Under FDR we got the New Deal communism with lots of laws and regs that still exist. Social Security was one of the worst.
LBJ gave us the Great Society communism, Mediscare and Mediscam.
O scores a dud with OcommieScar.sov, which hopefully will be repealed in 2017.

17 eccdogg February 17, 2014 at 9:06 am

You can also score them by the body count, LBJ looks worst than O and W on that count too.

18 johnnyz February 17, 2014 at 9:36 am

LBJ beats O and W in the body count award, but the Dishonest One, Lincoln, is the all-time U.S. career winner.
Truman wins the one-day mass murder award.
Happy Anti-President’s Day.

19 Finch February 17, 2014 at 10:28 am

He also presided over the transformation of the Cold War nuclear threat from pretty serious to potentially civilization destroying.

I understand Kennedy and the Soviets share some of the blame, but LBJ was the guy in charge when things went from not-good to catastrophically bad.

20 Bob February 17, 2014 at 5:37 pm

By your own standards, I’d say that LBJ did pretty well. We just happen to disagree about good and bad programs.

W gave us the DHS and the security theater. Pretty darned bad, if you ask me, but then there’s Pierce.

21 TMC February 18, 2014 at 12:35 pm

W was against DHS. He went along eventually when Congress was going to do it anyways.

22 Foobarista February 17, 2014 at 8:10 pm

Wilson also gave the world “self-determination” as a goal, which split the empires as it was interpreted as “each ethnic group deserves its own state”. One wonders how much awfulness would have been avoided if the Ottoman Empire and Austria-Hungary had stayed intact, instead of splintering into dozens of little countries whose ill-defined borders cause wars to this day.

23 Brenton February 17, 2014 at 10:20 pm

So the best presidents are the ones who decided to not do anything, for fear that it might turn out poorly? How is it a president’s fault that a bad program isn’t removed after they leave office? Is the ghost of Wilson preventing us from getting rid of the Fed?

24 The Anti-Gnostic February 18, 2014 at 9:15 am

In answer to your first question, I would say generally yes. There is no end to the bad things that have resulted from government heads trying to do good.

Government programs mean a whole bunch of people whose standard of living depends on the programs’ continued existence. We still have a Postal Service, for example.

25 Z February 17, 2014 at 9:01 am

I’d file this under the category “Studies of the Blazingly Obvious.” Money follows power. We’ve known that since Halliburton won the contract to restore the Ziggurat of Ur from King Nabonidus after they “handled” the Labashi-Marduk problem for him.

26 Ruben Durante February 17, 2014 at 11:18 am

Yes, the problem is that often the obvious cannot be documented.

27 Z February 17, 2014 at 11:41 am

No, the problem is people have so little confidence in their eyes and ears they demand social scientists produce proof of what we used to know as common knowledge. Observing is so dangerous, no one bothers to do it. But, when reality is infinitely negotiable, what’s the point of observing anything anyway?

28 Rahul February 17, 2014 at 2:55 pm

Never encountered a situation where what you thought was obvious, wasn’t obvious in hindsight?

29 DK February 17, 2014 at 5:50 pm

Yes but only a small percent of the really obvious.

30 chuck martel February 17, 2014 at 11:04 am

On President’s Day it can’t hurt to actually review some of the things the founder of the country had to say:

And some other reflections on the CinC:

31 Z February 17, 2014 at 11:42 am

I find it offensive we have a holiday celebrating the patriarchy.

32 Alexei Sadeski February 17, 2014 at 12:17 pm

Happy Bloody Mary Day!

33 Z February 17, 2014 at 1:27 pm

If memory serves, the Bloody Mary was invented, or at least popularized, by one of the worst chauvinists in American letters. The pale penis people cast a long shadow.

34 Steve Sailer February 17, 2014 at 9:04 pm

Michelle Obama received about a quarter of a million dollar payoff from the U. of Chicago Hospitals when her husband was elected to the U.S. Senate.

35 chuck martel February 17, 2014 at 9:31 pm

When the BHO family moved to DC and Mrs. Obama resigned, the position she had there was eliminated.

36 Seamus February 18, 2014 at 7:26 pm

Any data or backup here, stevie – or just some unfounded slander off of briebart.stupid…

37 Seamus February 18, 2014 at 7:25 pm

Ronald Reagan delivered a speech in Japan after his presidency ended. He was paid an enormus sum, something like $4,000,000 – went to his library maybe. This was a short while after some presidential decree he made that helped the Japanese sell tv sets in the USA.

38 nike air max 95 March 13, 2014 at 4:54 am

BEIJING, Feb. 21 (Xinhua) — A Beijing-based Tibetology scholar has criticized the Dalai Lama’s Friday meeting with U.S. President Barack Obama in the White House, saying it was another “anti-China farce.” “Once again, the Dalai Lama slipped into the White House Map Room for a so-called ‘unofficial meeting’ with Obama. This was another farce against China,” said Lian Xiangmin, a researcher with the China Tibetology Research Center, in a signed article.

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