Suckers!

Washington's parasite class keeps growing and growing and growing and...

Jonathan Rauch from the May 1994 issue

(Page 2 of 3)

4) Transfer-seeking investment tends to be self-fueling, sucking in capital which tends to suck in yet more capital. This is a kind of whirlpool effect, and it is the reason I refer to the transfer-seeking industry as a "parasite economy." Parasites in nature force you to spend energy and resources fending them off. Transfer seekers are analogous, because they require their targets to fend them off. It takes a lobbyist to stop a lobbyist, and in a society where everyone can lobby, everyone needs Washington representation to defend against raids by everyone else's Washington representatives. When environmentalists lobby more, business lobbies more, and vice versa.

The cycle never seems to stop of its own accord. Because the best defense is a good offense, interest groups constantly angle for new goodies. Retirees' groups seek long-term care and prescription-drug subsidies, dairy farmers seek higher price supports, utility companies seek laws mandating electric cars, and so on. When the sugar people win a benefit, the corn-sweetener people need to try to even up the score. Each group's angling induces its competitors to redouble their efforts, and, as more lobbies dicker and more is invested in lobbying, it becomes all the more important not to be the poor sucker who gets taken to the cleaners. The more people play this game, the more people need to play. Demand creates more demand, business generates more business.

5) Further fueling the cycle, professionals in the transfer-seeking sector can churn up business, and do. Transfer-seeking professionals--politicians and lobbyists and interest groups--are good at stirring the pot, and so at creating jobs for each other. Whether they do so out of idealism or financial interest--usually the former, I believe--the end result is perpetual motion. Other things being equal, the more contention, the better. The parasite economy as a whole benefits when problems are solved with a maximum of fuss but a minimum of success--a pretty good description of Washington at present. Significant bills revising the tax code were enacted in 1981, 1982, 1983, 1984, 1986, 1988, 1989, 1990, and 1993 (another was vetoed in 1992), yet no one seemed particularly happy with the tax code. Well motivated or not, constant tax-law churning is good business for one group above all: professionals in the transfer-seeking business.

This is not to say that most or even much of what Washington does is drummed up by lobbyists and politicians purely to generate fees. Not even Washington is quite that cynical a place. The point, rather, is that the lobbying dynamic is self-perpetuating: Activity generates lobbying generates activity. As the activity level rises, with it rises the public's ire, because:

6) Transfer-seeking professionals win no matter who else loses. This is what so infuriates the public (and Jerry Brown). Yes, it's better to win than lose, and better to have a good track record than a bad one. But any fight over resources benefits transfer-seeking professionals as a class, because they reap the fees. In that respect, lobbyists, politicians, and interest-group professionals are like lawyers: Though some clients lose, the fee takers, as a class, all win. They're like plumbers in a city that's springing more and more leaks.

Year after year, in budget after budget, the Reagan and Bush administrations proposed abolishing the Economic Development Administration, which dishes out grants and subsidies to localities. Reagan and Bush always failed, but they did succeed in reducing the EDA's budget, notably by eliminating general revenue sharing. "We figure our programs were cut about 70 percent," says Aliceann Wohlbruck of the National Association of Development Organizations, a group of EDA beneficiaries. Yet in 1979, before Reagan, the group had only one full-time staff person; it now has four, plus part-timers. The program's budget got smaller, but its lobby got bigger--a neat trick. This pattern is not inevitable, but it is common. Over time, lobbies tend to grow. Having grown, they are very hard to get rid of; in fact, attacking them can perversely help them to mobilize and consolidate their bases. One implication is:

7) As a class, transfer-seeking professionals don't much care who is in power. President Clinton came to office promising an assault on high-priced lobbyists: "They are the defenders of decline." And were the defenders of decline alarmed? Crowed one exultant lawyer-lobbyist in the Legal Times after the election, "We are all expecting about a 33 percent increase in fees." At firms with good Democratic connections, "the jubilation was palpable," reported the newspaper. But Republicans were hardly less elated, citing, as one prominent lobbyist told National Journal, "an almost automatic defensiveness from the corporate community on most issues it faces." Oh happy day!

Bill Clinton generally takes an expansionist view of government. Ronald Reagan generally took a reductionist view. Interestingly, however, the numbers of lobbyists and interest groups and campaign contributions rose impressively under Reagan. And that, really, is no surprise. If government expands, you need a lobbyist or an interest group to get a piece. But if government contracts, you need a lobbyist or an interest group to defend your piece. Remember, it is the level of contention and activity, not the size of government per se, that primarily influences the lobbying sector's growth. Reducing the size of government may be worthwhile on the merits, but it is unlikely to reduce the population of parasites, except perhaps temporarily.

So the beat goes on, come Republicans or Democrats, liberals or conservatives. In 1993, the American Automobile Manufacturers Association moved to Washington; so did the National Association of Independent Schools, saying it "wanted to be closer to the source"; so did the Business Roundtable. Washington offices opened left and right: the Society of Manufacturing Engineers, the Christian Coalition, MasterCard and Visa, even Major League Baseball. The latest trend, reports Eliza Newlin Carney in National Journal, is for universities (including public ones) to open their own offices in Washington: Rutgers, Princeton, Harvard, Vanderbilt, the University of California, MIT, and more to come.

Where does it all end? Maybe it doesn't.

8) There is no apparent limit to growth of the parasite economy. There are constraints on the speed of its growth, such as the scarcity of politicians' time and attention; and some particular lobbies will stagnate or contract or disappear altogether, as presumably buggy-whip lobbies have done. Other sectors, however, will expand quickly or even explosively. The health industry's congressional giving was up 25 percent in 1993 over its comparable 1991 level, and the number of health groups in Washington has more than sextupled (!) since 1979. On balance, given the deep pool of potential capital for lobbying, plus the virtually infinite supply of potential goodies to lobby for (or against), plus the tendency of lobbies to accumulate, plus the tendency of lobbying to create more demand for lobbying, it is hard to see why the lobbying sector as a whole would stop growing and start shrinking.

Few trends, of course, go on forever. To say that at present one can see no limit isn't to say that no limit exists. One may hope that at some point the lobbying buildup will go into reverse of its own accord. One might suppose, for instance, that after a while there would be so many lobbies that many of them, like bees swarming a puddle of honey, would be unable to penetrate to the food and would simply go away. Yet even this might only slow, rather than stop, the accumulation. Remember: A lobbyist doesn't need to actually pass a bill or win a new subsidy to earn his keep. In fact, in any given year the typical lobbyist never comes close to a big score. However, he doesn't need to score, as long as someone else does. Then he need only persuade some folks that they should look after their interests in Washington. And that is an easy case to make.

Suppose, then, that the worst turns out to be true: that, at least for the foreseeable future, lobbying activity grows and grows no matter who is in power, albeit with lulls and spurts. New lobbies keep appearing and old ones only rarely go away. What would that mean?

The first reflex is to predict economic disaster, both because the product of lobbying is a heavy burden of subsidies and special-interest benefits, and because lobbying itself sucks in more and more resources. But disaster need not happen. In fact, it probably won't happen. I'm not saying that the growth of a self-feeding parasite sector is economically innocuous; it isn't. Only that it needn't be the end of the world--if American society stays as open as possible to new competitors and innovations.

In a closed economy, like India's or the old Soviet Union's or Mexico's until recently, entrenched lobbies and reactionary interests can drive the country to penury. Lobbies are like fungus: They thrive in stagnant, sheltered places. For decades, Japan sealed its rice market, giving shelter to a ruthless farmers' lobby that drove food prices up, held farm productivity down, and bought and bullied politicians on a massive scale. By contrast, America's farm lobby, though strong, is weaker than Japan's, yet America's farmers are more productive than Japan's--all thanks to the comparative openness of the American agricultural market.