Corruption

Regulate it and They Will Lobby

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Writing in New Hampshire's Union Leader, 20/20 star and friend o' reason John Stossel makes a familiar-to-reason-readers yet always underappreciated point about the influence of lobbyists and perversity of reform. Clip 'n' save for the Naderite (or McCainiac, or Obamaphile) in your family.

The Public Choice school of economics calls this the problem of concentrated benefits and dispersed costs. Individual members of relatively small interest groups stand to gain huge rewards when they lobby for government favors, but each taxpayer will pay only a tiny portion of the cost of any particular program, making opposition pointless. […]

"Good government" types rightly abhor this influence-peddling, but they propose pointless reforms like bans on lobbyist-sponsored gifts, junkets and rides on corporate jets. They also back a vicious assault on free speech: campaign-finance restrictions designed to reduce the influence of lobbyists in political campaigns. Despite all these "reforms," influence-peddling goes on.

For good reason. None of the reforms gets near root of the problem.

The root is government power. When government is free to meddle in every corner of our lives and regulate the economy through taxes, regulation and subsidies, then "special interests" have every incentive to work on the politicians to preserve their turf or gain an advantage. […]

The irony is that the "good government" types favor big government, so they undermine their own efforts to eliminate corruption. […]

There is one way to rid the political system of this sort of corruption: severely restrict government power as the founders intended. Only when we eliminate the state's ability to meddle in business will business will stop meddling in government.

Whole thing here. Stossel in reason here.

NEXT: Spitz Take No. 35: Semi-Tawdry Details, His Whoremonger Code Name, and How this All Got Found Out

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  1. I don’t care for campaign finance restrictions but I also don’t know if I’d characterize them as a “vicious” assault on free speech. They’re more like wrist slapping assaults.

  2. So, is it’s Reason’s, or Stossels’s, stance then that government should stay completely out of business activity? Pollution problems would be handled only through the courts? Ditto for health and safety regulations? Foods should not be required to list ingredients on them? Etc. etc.

    I do agree that most regulations are unnecessary infringements yet I’m not sure of the wisdom of the laissez faire route, especially when it comes to issues where it’s difficult to find exact parties to blame (air pollution) or when there are de facto monopolies at work or when the conditions are such that the powerless have few options to switch place or work when the working conditions are dangerous to health or safety

  3. OK, let me see. Controlling government is pointless.

    The problem is government power, which it is of course pointless to attempt to control.

    So we should be like the founders and control the power of government. Which would of course, be pointless.

    No wonder libertarians continually support people who increase government power.

    No wonder libertarians can’t see the damage their “small government conservative” hero’s do to the nation. Small government conservatives first attack the peoples ability to control government. Than complain about that lack of control.

    Bravo Mr. Stossel, bravo for putting the way to endorse out of control government, which is pretty much all he is doing.

    Cause after all, controlling it, as the founders wished, would be pointless.

  4. REGULATORY CAPTURE in antitrust is also very very common.

  5. I think that we should realize that realistically, the only thing that would “reduce” the size and power of government at this point is the “Jefferson Solution”.

  6. Pollution problems would be handled only through the courts?

    So why is global warming supposedly still happening?

    Ditto for health and safety regulations?

    So people don’t get hurt at work anymore?

    Foods should not be required to list ingredients on them?

    So nobody is malnourished or obese?

    The point is not whether government regulations are needed, but rather whether government regulations work.

    I argue that they don’t…

  7. “No regulation” and “less regulation” are two different things. I’m fighting for the latter, not the former.

  8. No, the point is whether humans are capable of acting with rational self interest, and to that end, what is the form of government that will least impede them?

  9. In Libertopia we will have just as much freedom of speech (or of any kind) as we can buy. Taxes will be replaced by protection money and other forms of extortion. Death squads will be a growth industry. You marxists of the right can go fuck yourselves.

  10. Episiarch,

    Well, I don’t see us revolting, unless we can do it with our Wiis from the comfort of our own homes.

  11. Business has been working to buy government since long before government was interested in regulating business.

    Look at the eminant domain powers given to the railroads in the small-govenrment early 1800s. Look at the judges that the coal companies could buy for the Penn Coal case. Look at the National Guardsmen killing strikers’ families. The government was as a small as anyone could want when that was going on.

    Poor widdle corporations, just trying to defend themselves as other people grow the government. Yeah, right.

  12. Limited government, not no government. That’s the point. Most libertarians favor property rights and rule of law–really need some form of government to maintain such things.

    joe,

    That’s not entirely accurate. Businesses aren’t going to waste resources and effort in buying influence if the influence they’re buying is weak. In any event, federal government is the only form of American government that was ever very limited. Local and state governments have wielded much greater power in their more limited purviews.

  13. Wow, Democrat, I didn’t know a post about mild mannered, mustached, cuddly little teddy bear John Stossel could conjure up such hostility.

  14. Right, joe: bigger government is what we need. You’re really a twisted fuck.

  15. Pro Libetate,

    I understand the logic of your argument, but the historical record says otherwise.

    If the influence is weak, business will buy the government for the purpose of expanding it.

  16. Wow, what a compelling counter-argument to the notion that business itself uses its influence to grow the government.

    I am blessed in the stupidity of my haters.

  17. joe,

    The simple answer is that there are many forces that combine to increase the power of government. Larger enterprises probably do prefer centralized power, because it’s easier to deal with and to influence. Of course, the people who want government power to increase the most are those in government.

    In my mind, we do ourselves a major disservice in running to the government with all of our problems. Civil society solutions may be harder to achieve, and getting consensus (as opposed to forcing people to behave in the “preferred” manner) is very hard, but I think the end results are superior.

    Not that any of this matters. The concept of limited government is comatose in the United States.

  18. If the influence is weak, business will buy the government for the purpose of expanding it.

    If government, oh, I don’t know, obeyed the law, it wouldn’t have any room to expand.

  19. some guy, here’s your counter argument – civilly.

    If it were true that business itself uses its influence to grow the government, that is still an argument for a smaller government.

  20. That’s fine, Pro Libertate, but it still leaves us with the question of how to keep parties with influence from co-opting the government?

    The answer is for some competing party to check their power. Big buisness is always going to try to expand its power, and will always try to co-opt the government. Rules to get them to act nice are meaningless. The only answer is for them to run up against someone else their own size.

    This is a pluralistic theory of politics, and it only really works if none of the competing interests have outsized power to tip things in their direction.

  21. Gook luck with that , Taktix. I know, let’s write the law down on some really nice parchment in fancy script. Maybe make the Ss look like Fs. Then we can just fire and forget.

    Cab,

    It’s not an argument for how to achieve smaller government. Like Taktix’ comment, it’s just a “shoulda.”

  22. Here’s another thought. Government regulation of speech is wrong, whether or not it leads to better or worse “governance.” So of course we’ll see more and more of it.
    (But I’m a card-carrying member of the NRA and the ACLU. At least I can shoot the fuckers when they come to take away the First Amendment.)

  23. I know it’s early, but God, what’s wrong with some of you people?

    The point is that the less you regulate industry X, the less incentive industry X has to be involved with the government at all. The real problem with regulation is that big business likes regulation. Regulations always end up favoring big business because 1- big business has the financial resources to comply with regulation that smaller companies do not and 2- big business can exert influence on policy makers to pass regulations skewed in their favor.

    Can regulation work at all? Sure, if it’s simple and designed to regulate the harms traditionally litigated after-the-fact through the tort system. The problem is, regulation is rarely simple.

    What we need is drastically scaled back government, but the problem- as Stossel points out- is that the vast majority of the public don’t get to see the intricacies of how this all plays out. Most Americans think we need to regulate business, but have never spent even a minute thinking about just what that means.

  24. “At least I can shoot the fuckers when they come to take away the First Amendment.”

    I hope the gun misfires and shoots your dick off, you dickless nutbar.

  25. The money quote –

    The irony is that the “good government” types favor big government, so they undermine their own efforts to eliminate corruption. […]

    If your don’t want vermin, you don’t leave food out.

  26. A nobler class of Legislators would shun those pesky rent-seekers.

  27. The answer is for some competing party to check their power

    And who should that be Joe?

    I don’t see that counter-party existing in any real substantial way

  28. Oh, Demo. You’re such a clever card!

  29. And Demo, how could I shoot off my dick if I”m already dickless? Inquiring minds want to know.

  30. mk,

    It depends on the situation. Sometimes, there are relatively stable, permanent interest, like Big Business and Big Labor (from out 1900 to 1970) that square off. In other situations, ad-hoc coalitions grow up around an issue or set of issues.

  31. dickless nutbar

    Kind of sounds like some weird Japanese candy…

  32. Keeping the goverment from confiscating a citizens land under eminent domain to give to developers would be a good start, hopefully wouldn’t upset Joe’s sensibilties. How about not paying for random school’s band uni’s, assorted museums of narrow interst, and of course, the nefarious ‘studies’ and ‘consultation’ expenditures that always result in more taxes being spent on ‘something or other’ could all be cut without harming our ability to screen food and drugs. And tell the busy bodies to let us eat fois-gras if we want, smoke in our own homes, eat fries cooked in oil or drive vehicles that are big and fast without big brother hounding us.

    To much to ask for?

  33. joe,

    The only answer is for them to run up against someone else their own size.

    A mob with guns is bigger than any company. It is a government of/by/for the people. If we let the businesses expand the government, then we get the government we deserve.

    Episiarch had the only reasonable solution at this point in time, Im afraid. My tree may need some new blood.

  34. My fault, Democrat, I now see you are joking.

  35. The answer is for some competing party to check their power.

    Being that a business cannot survive without it’s consumers, I would say that’s a pretty good check.

  36. It depends on the situation. Sometimes, there are relatively stable, permanent interest, like Big Business and Big Labor (from out 1900 to 1970) that square off. In other situations, ad-hoc coalitions grow up around an issue or set of issues.

    [poking joe in chest] Peanuts! Im going to take away your stock options!

  37. I think regular posters should realize by now that, rightly or wrongly, most folks on this board believe there is a basic difference between economic “power” and goverment power. joe seems not to. That’s the crux of the issue. (Sorry, joe, if I’ve misinterpreted you.)

  38. Look at the eminant domain powers given to the railroads in the small-govenrment early 1800s. Look at the judges that the coal companies could buy for the Penn Coal case. Look at the National Guardsmen killing strikers’ families. The government was as a small as anyone could want when that was going on.

    The only point you’re making here is that government has always been for sale.

  39. Power is the work done per unit of time.

    Government Power may be an oxymoron.

  40. A physics joke! No day is complete without one.

  41. Citizen Nothing,

    Joke? Thats the only definition of power I recognize (even though it was 15th in the dictionary.com list).

  42. Pain,

    Being that a business cannot survive without it’s consumers, I would say that’s a pretty good check. But only in the area of the product they put on the shelves. People in California aren’t even going to know about the company’s business practices at their plants in Indonesia. And if we’re talking about, say, KBR or some company that provides cleaning ladies for Wal-Mart – what customers?

    Citizen Nothing,

    Apparently not, since everyone on this thread, John Stossel, and Matt Welch have all accepted that corporations can quite easily trade their economic power for political power if they are so motivated.

    I guess it’s just you.

  43. Russ2000,

    Not quite, but close. My point is that the government doesn’t only become “for sale,” or even worth buying, upon the creation of a modern regulatory state.

  44. Just me?
    joe, I was afraid that could be the case. That’s usually the way of it, though, so I’m used to it.

  45. This whole discussion is a perfect example of why I am an anarcho-capitalist. Super-limited government would be best, but it will never stay that way and will always grow, so the only solution is not to have a government.

    Can we talk about Spitzer now? I am still doing cartwheels and clapping my hands.

  46. Pro Lib writes,

    In any event, federal government is the only form of American government that was ever very limited. Local and state governments have wielded much greater power in their more limited purviews.

    Abe Lincoln, before he ran for office, was a lobbyist for the railroads, working the Illinois government on behalf of his clients.

  47. joe,

    And if we’re talking about, say, KBR or some company that provides cleaning ladies for Wal-Mart – what customers?

    Ummm…Wal-Mart. They are KBR’s customer. And that proves the point. If KBR was lobbying the government in some way Wal-Mart didnt like, Wal-Mart would put a stop to it in a hurry by threatening to pull their business.

    Im sure one phone call from Wal-Mart’s CEO and KBR would stop their lobbying activities immediately.

    Obviously, for an individual consumer the ability to stop their action via threat is smaller. But, combined together, they can make the same difference.

  48. I think joe was referring to Kellogg Brown & Root as KBR, but I get your point.

  49. Episiarch,

    This thread is why Im not an anarcho-capitalist. As horrible a track record as limited government has, at least its a relatively slow process. Anarchy gets to leviathan faster.

  50. Fuck you, you dickless libertard nutbars! You’re all loony! Loony, I say! And fuck you too, Urkobolds!! Whoops…

  51. robc,

    Ummm…Wal-Mart. They are KBR’s customer. And that proves the point. If KBR was lobbying the government in some way Wal-Mart didnt like, Wal-Mart would put a stop to it in a hurry by threatening to pull their business.

    And this gets us exactly where, when we’re talking about the ability of “the people” – as opposed to the Board of Wal-Mart – to check KBR if they become abusive?

    Nowhere.

    Whoopie, Wal-Mart has power. No kidding.

  52. To my way of thinking, though, joe, Stossel et al are saying that governmental power is like any commodity that can be bought and sold. Better to try to limit the commodity than pretend we can make a difference tinkering with the buying and selling. Sort of like trying to eliminate fissile material at the source rather than try to plug the border between Turkmenistan and Iran. (Probably a silly analogy but I think you get my drift.)

    And now I’ll stand back to avoid the taint-whithering rays…

  53. joe,

    We were talking (or someone up above you responded to was) about “customers” (not people) checking the power of businesses. Wal-Mart is a customer in this instance.

  54. And governmental power is only worth buying because it can accomplish things that economic “power” cannot. Hence, the difference between the two.

    OUCH! Watch that richocet, Urkolbold!

  55. robc,

    Put in the language of pluralism, I have no doubt that Wal-Mart and KBR can check each other if one tries to prey on the other, with or without conscripting the government. The question is, who can check either if they try to prey on less powerful groups?

    CN,

    Better to try to limit the commodity than pretend we can make a difference tinkering with the buying and selling. And my point is that you will never limit the government from becoming a captive of a powerful group, which includes growing to carry out its wishes, without a check on the power of that group.

  56. joe,

    Exactly. Before federalism went to the wayside, the states were much more powerful within their borders than the federal government. In Constitutional Law courses, there’s usually a couple of days spent discussing the general “police power”–something the states have but the federal government doesn’t (i.e., the Commerce Clause was expressly not a general grant of police power). At least in theory.

    I was sad that Spitzer didn’t say, in his “apology” speech, that “mistakes were made, taints were withered.”

  57. robc,

    We were talking (or someone up above you responded to was) about “customers” (not people) checking the power of businesses. Wal-Mart is a customer in this instance.

    Yes, and then I explained how leaving it their “customers” isn’t adequate, since they will only be able (including knowledge) to check them in limited areas that don’t overlap well with the public good.

    And governmental power is only worth buying because it can accomplish things that economic “power” cannot. Hence, the difference between the two. So? Are you under the impression this is a mystery, or relevant to the discussion?

    OUCH! Watch that richocet, Urkolbold! Why do you keep addressing the URKOBOLD, and why do you keep misspelling his name?

  58. People in California aren’t even going to know about the company’s business practices at their plants in Indonesia.

    joe,

    I would argue that in earlier eras that was true. Now? I know more than I ever wanted about Nike’s labor practices. The larger problem is that most people don’t care, myself included. I do not have the time to do a complete check on the corporate practices of the makers of everything I buy. Neither does anyone else.

  59. It’s like the name of God – You can’t write out the real one without repercussions. (The fake “Demo” above called down his wrath.)

  60. T,

    I do not have the time to do a complete check on the corporate practices of the makers of everything I buy. Neither does anyone else.

    Precisely: even with all of the information we have, it is beyond the capacity of a normal person going through his life to be part of an organized effort to use his purchasing power to check the power of Nike. I have enough trouble finding a pair of sneakers that fit. It is only in the relatively-limited sphere of influencing what product appears on the shelves that consumer-power is effective.

    Yes, CN, it is wise to avoid writing out *RK*B*LD.

  61. Before federalism went to the wayside, the states were much more powerful within their borders than the federal government.

    And my point is that you will never limit the government from becoming a captive of a powerful group, which includes growing to carry out its wishes, without a check on the power of that group.

    ProLib has the answer to joe. The states can limit the feds from growing. The 17th amendment allowed more unprecedented growth. Prior to it, the lobbyists (as joe himself pointed out with Lincoln) concentrated on the states. Federalism makes the companies have to work harder to get power because you have to lobby in 50 different places. If we can somehow flip the balance between the states and the fed back, the states can keep a tight(er) grip on keeping the fed from expanding again.

  62. Stossel et al are saying that governmental power is like any commodity that can be bought and sold. Better to try to limit the commodity than pretend we can make a difference tinkering with the buying and selling.

    If you limit the supply, the only thing that happens in the price goes up.

    Obviously we’re failing at limiting the demand, but all the added supply we’re getting is of very inferior grade.

  63. Business has been working to buy government since long before government was interested in regulating business.

    joe–This argument would carry a lot more water if the protestations from the politicos were more than just polite noises that the contribution suggested isn’t large enough to warrant such courtesy as a subsidy or barrier raising.

    This is not to defend rent-seeking businesses; a pox on both houses, screw both of the parties involved.

    Stossell is correct in his diagnosis, but the treatment is far from clear. I’m not naive enough to think that trimming along the edges is any kind of solution. In fact, we are too far along for any kind of “reform” to make any meaningful change. Unfortunately, the only real possibility is scrapping the current system and starting over from scratch, an unlikely proposition considering our relative wealth and high threshold of political pain.

    At this point, we’re only sweeping water with a broom, waiting for the flood.

  64. Russ 2000 – you can no longer buy a live dodo bird at any price. (Don’t ask me how this is relevant.)

  65. So, is it’s Reason’s, or Stossels’s, stance then that government should stay completely out of business activity?

    I believe it’s both Strawman Reason and Strawman Stossel that have taken that stance.

  66. My taint is nicely moist and robust, thank you. The Urkobold is my bitch.

  67. Um, I’m standing somewhere new, like over there.

  68. Federalism makes the companies have to work harder to get power because you have to lobby in 50 different places.

    One could argue that the overall total supply of government has been limited by the demise of federalism. Like 50 smaller retailers being swallowed up by 1 large one. Less government overall, so the price has shot up to the point where it costs too much to buy except for the richest consumers, but like Wal-Mart the mega-sied central government is happy to also provide plenty of inferior-grade government with limited utility.

  69. I, on the other hand, want more lobbyists. The more the better. Since Lobbyist A is busy buying favors at Lobbyist B’s expense it raises the ante for Lobbyist B. Lobbyist C doesn’t want to be left out of the 3 trillion dollar a year pie so tries to out-lobby A and B. With 1000s of lobbyists competing in the free market for lobbied dollars (favors = dollars) we grind lobbying to a standstill and us ordinary folks would break even. It’s a zero sum game, if unfettered.

  70. joe,

    I think you are grossly underestimating the power of consumers. Even a small minority of consumers can have a drastic effect on a company.

    An example:

    When Texaco execs got caught making racial remarks the ensuing outrage forced a corporate shakeup within weeks. Amazingly enough without any governement intervention.

    http://www-tech.mit.edu/V116/N59/texaco.59w.html

    http://www.socialfunds.com/news/article.cgi/131.html

  71. joe, you are wrong about the railroads.

    The successful railroads of the 1800’s were actually privately owned and run. The government wanted to expand to the west but the private rail’s knew that there was no market, that it was a bad business decision and refused to go there. The government then decided to make the deal sweeter by giving land for cheap and making the rail routes no compete. A few companies with government ties jumped at this and built the lines. Their lines were government granted monopolies and did not have to follow the laws of supply/demand. Shit hit the fan because of this and to totally fuck it up the Anti-trust laws were created to break up the government granted monopolies and try and create a market.

    This then caused the government to get involved in all railroads including the private, successful, market-driven rails that stayed out of the westward expansion.

    And thus railroad lobbying began.

  72. Episiarch | March 11, 2008, 9:17am
    I think that we should realize that realistically, the only thing that would “reduce” the size and power of government at this point is the “Jefferson Solution”.

    Move on up to a deluxe apartment in the sky?

  73. robc,

    The states can limit the feds from growing.

    Except it didn’t work, did it? You even had your preferred method as black-letter law, the law-behind-the-law, and it didn’t work.

    So we’re left with two facts that should make you very uncomfortable – the government is going to be larger than you’d like, and powerful interest groups are going to try ti capture the govenrment regardless of its size.

    Maybe it’s worth making some finer distinctions when discussing “the government.”

    Pain, your story is notable mainly for being unusual.

    adrian, that is nice fairy tale. The government decided, in the complete absence of any effort by the railroads, to grant them a great deal of power? No, not really.

  74. joe,

    Can you think of any current businesses with no-compete, government granted monopolies?

    I think you can…

  75. that was me. sorry.

  76. Adrian!

  77. I’d be curious to know, if anyone can tell me: Is there any monopoly out there that is not government enforced?

  78. joe,

    Except it didn’t work, did it? You even had your preferred method as black-letter law, the law-behind-the-law, and it didn’t work.

    Well, it did work, to some extent, for a while. Without the 17th amendment, it could even be stuffed back in the box. 26 states putting their foot down (and picking the two feet carefully) would put and end to lots of stuff.

    So we’re left with two facts that should make you very uncomfortable – the government is going to be larger than you’d like

    Why should a situation I know is going to exist make me uncomfortable? Of course government will grow, its what it does. You havent commented on the “Jefferson Solution” that has been brought up multiple times. I do think it is the only reasonable solution. And it only works via reapplication every few generations.

  79. Business has been working to buy government since long before government was interested in regulating business.

    All the more reason to keep government small, joe. Why give them a bigger, badder government to buy? Because buy it they will.

    Is there any monopoly out there that is not government enforced?

    I don’t believe any monopoly has ever survived for any appreciable length of time without government support.

  80. I don’t believe any monopoly has ever survived for any appreciable length of time without government support.

    unless, and this is a shocker, they are actually a lot better at what they do than anyone else. see Alcoa.

  81. unless, and this is a shocker, they are actually a lot better at what they do than anyone else. see Alcoa.

    Was Alcoa ever a monopoly? I don’t think so. They competed with other strucural, conducting and food packaging firms constantly, even if they had the aluminum market sewn up.

    And left alone, Alcoa would have gotten fat and lazy, somebody else would have entered the Aluminum market as a result.

  82. Stossel wrote, “Only when we eliminate the state’s ability to meddle in business will business will stop meddling in government.”

    Count me as one of those who believes in the basic truth of that statement, and in the proposition that the less government intervenes in private activity, including business, the better. Government ought to stick to things like defense and dealing with real crime and criminals.

    On the other hand, by Stossel’s logic, if we were successful in restricting the state to only meddling in invasions and crimes, then mightn’t government be primarily populated with invaders and criminals trying to meddle in IT? Would we not have a kleptocracy, a sociopathocracy, or some such? I have to wonder. Then again, how much would that differ from our actual situation? The “Jeffersonian Solution” tends to look better and better…

  83. Jsub: Alcoa was charged, tried, acquitted, tried again (gov appealed) and found to be a monopoly. check wikipedia.

  84. “So, is it’s Reason’s, or Stossels’s, stance then that government should stay completely out of business activity?”

    ‘I believe it’s both Strawman Reason and Strawman Stossel that have taken that stance.’

    The logic of the argument seems to do more than imply that government should not intervene in business activity at all. If this is not the case, kindly state where the True Reason and Stossel positions lie – exactly when and where do they believe government should intervene in business activity?

  85. The argument that there are still pollution, safety and health problems, despite regulation is that this proves that regulation doesn’t work. That’s one possibility. The other possibility is that the regulation is too weak, mitigated by other factors, or needs to be retooled to remove or lower perverse incentives.

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