Free Minds & Free Markets


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

"Let us give this capital back to the people to whom it belongs!" cries Bill Clinton, in his inaugural address. Take government back from "the people who always figure out a way to prosper even as more Americans suffer," says former California governor Jerry Brown, during his 1992 presidential campaign. Take government back from the "permanent class of career legislators," writes the columnist George F. Will. Take government back from "the awesome power of the Washington nomenklatura," says Will Marshall of the Democratic Leadership Council's think tank in Washington. Everyone is getting into the take-government-back act.

Conservatives have always spoken of Washington as being, in some worrisome sense, out of control, but recently consternation has washed centerward. Sen. Robert Kerrey of Nebraska (like Jerry Brown, a 1992 Democratic presidential contender) talks grimly about the strangely self-referential, self-feeding quality of modern government. "We allow interest groups to create new bureaucracies and then the bureaucracies serve the interest groups," he says. Across Capitol Hill, Rep. Timothy J. Penny (D-Minn.) says glumly, "It's a control game we're playing now. It's an insider's game." From Penny and Kerrey and Marshall and Will and Brown and Clinton and others comes a chorus of demands to "give this capital back to the people to whom it belongs."

The issue at hand is not just the size and growth of government but the size and growth of the professional lobbying industry attached to and feeding upon government. It was said of the Soviet military complex that when we built, they built, and when we didn't build, they still built. Something similar seems to happen with lobbies: When government grows, they grow, and when government doesn't grow, they still grow, though maybe not as fast.

The take-government-back crowd assumes that, somehow, Washington can be restored "to the people." But what if they're wrong? Few have yet confronted this question: What if government cannot be "taken back" from the entrepreneurial professionals who increasingly dominate it? Emergent theory and postwar experience give reason to think that the infestation of parasites in Washington is ineradicable. Worse, the infestation isn't stable. It grows.

On this score, the facts speak without ambiguity. By all known measures, the transfer-seeking economy has grown spectacularly over the past 30 or so years, with no end in sight. The number of groups listed in the Encyclopedia of Associations more than quadrupled between 1956 and 1990, from 4,900 to more than 22,000. Those groups represent only a fraction of the total. The number just of environmental groups, including local cleanup coalitions and the like, is now estimated at 7,000; the number of gay groups listed in the Washington Blade's resource guide grew from 307 in December 1990 to 405 earlier this year. Not all groups lobby, of course, but many do. Evidence suggests, indeed, that groups have become more likely to engage in lobbying; the proportion of trade associations based in Washington has been steadily rising, which suggests deepening political involvement.

Counting lobbyists is hard, but all counts show increases. The number of active lobbyists registered with the U.S. Senate has jumped from 3,000 in 1976 to around 8,000 last year; between 1961 and 1982, the number of corporations with Washington offices increased tenfold. The number of lawyers in Washington quadrupled between 1972 and 1987, from 11,000 to 45,000. And the investment in politics, as measured by real campaign spending, has tripled since the early 1960s.

One could go on and on this way. The data leave no doubt that the past several decades have witnessed explosive growth in the lobbying sector—a trend quite unruffled by the comings and goings of Democrats and Republicans, conservatives and liberals, Reagan or Clinton or whomever. Why?

At the heart of the problem are the curious internal mechanics of the goody-hunting industry, with its virus-like ability to convert the organs of government into factories producing more lobbies. To understand why this parasitic subeconomy grows and grows, ascend some steps in the spiral logic of lobbying.

1) Transfer seeking—the chasing of existing wealth—is inherently alluring to individuals yet inherently hazardous for society. The concept of transfer seeking (or "rent seeking," as professional economists more obscurely call it) is intuitively familiar, though its economic implications are not. For any individual, there are two ways to become wealthier. One is to do something productive. The other is to redistribute existing resources in one's own favor. From an individual's self-interested point of view, the two kinds of enterprise are more or less interchangeable, because either can make you richer. But from a social point of view, they are very different. If we all work, we create wealth, and society is better off. But if we all do nothing except try to get our hands in our neighbors' pockets, we will all be very busy, yet we will all eventually starve.

One major form of transfer seeking, theft, is prohibited. But not all forms of transfer seeking are illegal. Indeed, some large quantity of it is inevitable. We call it "lobbying," in the broadest sense of the word: pressuring government to give us things we value.

2) Any government that's strong enough to govern is vulnerable to entrepreneurial exploitation by lobbies—there's no getting around it. It is government's very power to be government that creates the market for legal transfer seeking—a point that deserves emphasis, because so many people refuse to face up to it. Inherently, government transfers and assigns resources, whether by levying taxes to pay soldiers or by setting patent rules. This power would be unproblematic, except that resources will always be contested, and one reason we have politics is to decide how to assign them. Some people daydream about ways to adjust the Constitution or otherwise fine-tune the process so that government is empowered to deliver only "wise" or "necessary" or "legitimate" benefits. But that's a tall order.

Was the Superconducting Super Collider a national-interest (or even world-interest) project? Or was it a pork-barrel handout for hard-lobbying scientists and harder-lobbying Texas construction contractors? Are the advocates of lower capital-gains taxes out to revitalize the economy, or to line their pockets? The answer, of course, is that there is no answer. It's all a matter of opinion, and government's job is to decide—so we're back where we started.

Transfer seeking is as old as government itself. A century ago in America, veterans and manufacturing industries wielded considerable lobbying clout. Being both inevitable and hallowed, lobbying might not be much of a worry if it stayed constant over time. But the rude surprise is that it doesn't. Lobbying, a physicist might say, is dynamically unstable.

3) The transfer-seeking economy, like any lucrative enterprise or sector, is a magnet for capital. In a developed economy, a marginal dollar invested in a new die-cutter or inventory-control system might produce a return of, say, 10 percent a year. Compare that with a shrewd investment in lobbying. In 1992, The New York Times reported that a handful of sugar refiners donated $8,500 to Sen. Alfonse D'Amato (R-N.Y.) and received his successful support for a tariff rebate worth $365 million—a return of about 4 million percent. Only a fool would pass up such an investment, or even the occasional shot at one. "If I throw in a million here or a million there, I might get a hundred million back," a Washington lobbyist once told me. "And there are probably enough cases like that so they keep throwing money in."

Not only does lobbying offer a rich assortment of investment opportunities, today it also enjoys unprecedented access to investment capital. In the old days of the smoke-filled rooms, access to lobbying was restricted mainly to the privileged ("special interests"). Democratization of the system justifiably opened the doors, but with a side effect: Today, in the age of mass-membership organizations and computerized mailing lists, the pool of people who can invest in lobbying comprises the entire adult population. To invest in lobbying is as easy today as to invest in a mutual fund: Find an interest group you like, if one doesn't find you first, and write a check.

Of course, any growing industry attracts capital—until further growth becomes superfluous, at which point profits vanish and investment dries up. But the lobbying sector, unlike conventional industries, doesn't seem self-equilibrating. To the contrary:

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.

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