Wednesday, June 6, 2012

Active Government Means More Lobbying

Copyright, The New York Times Company

As our government enters into new policy areas and revamps old ones, expect lobbyists and others to be more politically active than ever.

Government has undertaken a whole new range of activities in the last several years, from running a major automobile manufacturer to buying stock in banks to providing health insurance for able-bodied middle-aged adults. Other areas of government involvement, like education, military spending, Medicare and Medicaid have become increasingly costly over the last decade.

Some people think government activities in these areas are long overdue. Others say government expansion was unnecessary. Either way, both sides can agree that businesses, institutions and families have more at stake in their government.

It’s only natural, then, that businesses, institutions and families would spend more resources trying to influence public-sector decisions. Just as in many other types of behavior, political behavior is affected by costs and benefits. And the costs and benefits of influencing the government have continued to grow.

State and local governments have been cutting back some employees and reducing some activities. But in the short run, businesses and people have a lot at stake in state and local government activities, too. If nothing else, they can try to influence the composition of state and local government cuts.

Their interest in public policy is an important reason that businesses, organizations and individuals make campaign donations, and why these various parties protest against government actions in a variety of ways.

Some people have expressed dismay at the unprecedented amounts spent on 2012 political campaigns. But heightened political spending and other forms of political participation are an expected consequence of our more active government.

As explained by a pioneer in political economy research, Gordon Tullock, the real surprise about spending on campaigns and lobbying is how little it is compared with the amount of resources controlled by governments.

The federal government spends about $4 trillion every year, and state and local governments another $2 trillion, not to mention the resources these governments control through regulatory activities.

At the same time, estimates of aggregate campaign and lobbying spending are well below than 1 percent of total government spending. For example, analysis of filings under the Lobbying Disclosure Act finds that $3.5 billion was spent on lobbying in the year 2010.

Although economists have trouble explaining why observed lobbying spending is so little in total, economic analysis has been successful at explaining why there is more lobbying in California than, say, Vermont and why lobbying expenditure often peaks at the height of legislative activity. More is at stake.

For better or for worse, an active government begets lobbying activity.


TGGP said...

It says June 6 up there, but I'm pretty sure that didn't appear on the site before July.

Unknown said...

I agree with TGGP. Not seen until today.