In America we have a form of government in which power resides in a cadre of elected (and unelected) individuals who represent the interests of the citizens. Because of this structure, it is natural and necessary for people and groups to attempt to influence decisions made by government officials. After all, if we don’t tell our representatives what our interest are, how will they be able to represent our views?
This process, known as “lobbying”, is an organic function of our political way of life. But our representatives are human, and thus share the limitations common to all of us. Our representatives don’t have the time and attention to meet with and listen to each of us individually, so we form groups that lobby on our behalf. In this way we can pool our resources and leverage our individual power and influence at a relatively low cost to us.
The problem with this system is that it allows relatively small groups with adequate resources to lobby on behalf of their very narrow interest in a way that can be detrimental to the broader community. Large corporations, for example, once lobbied to reduce the regulatory burden on their industries. But many corporation realized they could gain a competitive advantage by lobbying for specific regulations that benefit their firm and hamstring their competitors.
That is why many corporations spend the GDP of a small nation on lobbying efforts. Since 2009, General Electric spent around $134 million on lobbying activities while AT&T spent $91.2 million and Boeing spent $90.3 million. Would for-profit corporations spend so much on influencing the goverment if it didn’t help their bottom line?
Surprisingly, this state of affairs is a relatively new phenomenon. Lee Drutman has a superb, in-depth examination of why business came to love lobbying and regulation and how it affects us all:
Prior to the 1970s, few corporations had their own lobbyists, and the trade associations that did represent business demonstrated nothing close to the scope and sophistication of modern lobbying. In the 1960s and the early 1970s, when Congress passed a series of new social regulations to address a range of environmental and consumer safety concerns, the business community lacked both the political will and the political capacity to stop it.
These new regulations, combined with the declining economy, awoke the sleeping political giant of American business. Hundreds of companies hired lobbyists for the first time in the mid-1970s, and corporate managers began paying attention to politics much more than they ever did before.
When corporations first became politically engaged in the 1970s, their approach to lobbying was largely reactive. They were trying to stop the continued advancement of the regulatory state. They were fighting a proposed consumer protection agency, trying to stop labor law reform, and responding to a general sense that the values of free enterprise had been forgotten and government regulation was going to destroy the economy. They also lobbied as a community.
Facing a common enemy (government and labor), they hung together so they wouldn’t hang separately. But as the labor movement weakened and government became much more pro-industry, companies continued to invest in politics, becoming more comfortable and more aggressive. Rather than seeing government as a threat, they started looking to government as potential source of profits and assistance. As companies devoted more resources to their own lobbying efforts, they increasing sought out their own narrow interests. As corporate lobbying investments have expanded, they have become more particularistic and more proactive. They have also become more pervasive, driven by the growing competitiveness of the process to become more aggressive.
A corporation is merely a group of individuals, specifically the stakeholders in the company, who have similar interests and goals. Like all citizens, they have a right to lobby their government and attempt to influence their representatives. But the natural sinfulness of man can lead corporations to put the interest of the firm ahead of society. We need a way to limit the outsized impact and considerable harm that can occur when Big Business is wed to Big Government in a marriage of cronyism.