The Tullock paradox: why is there so little lobbying?
…the economist Thomas Stratmann has estimated that just $192,000 of contributions from the American sugar industry in 1985 made the difference between winning and losing a crucial House vote that delivered more than $5 billion of subsidies over the five subsequent years.
That is one example of many. Our government controls trillions, but lobbying expenditures are a small fraction of gdp. One explanation, which Tim cites, is that our government is not for sale. This is true for most major programs, such as social security. Voters have the dominant say.
But how about the details of smaller policies? Why aren’t the benefits of those redistributions exhausted by lobbying expenditures? My preferred explanation involves competition. In principle, more than one coalition is capable of winning a political game. If your winning coalition demands too high a bribe from interest groups, you will be undercut by another coalition able to deliver the policy for less. Government is not a unitary agent. This also helps explain, by the way, why democracy is stable rather than wracked by intransitive cycling. If you just write down different voting profiles, it appears any winning coalition can be outdone by another (at least for a multi-dimensional policy space). But if you add differential costs of organization to the mix, and make collecting the votes part of an explicit but imperfectly contestable market, you are much closer to getting a unique or near-unique outcome.
Ideas in this post are drawn from a paper by Roger Congleton and Bob Tollison. Here is a recent paper on the same topic.