Preferential lobbying: Money talks … loudly (Part 2 of 4)

Feb 16, 2021

Preferential lobbying drives powerlessness, environmental destruction and even in conventional economics is grossly inefficient. Parts 2 and 3 examine how it happens. If your electoral system is open to significant funding by the wealthy, then politicians get bought by lobbyists. And lobby firms are typically made up of former politicians and officials with substantial address books.

The ‘best’ example we’ve come across of election funding at work is that offered by the software company Intuit. Filing your tax return in the US is remarkably complicated. Even those with limited income hire tax advisers to do it: the tax authorities are feared for any error.

Intuit developed a software package for filing tax returns. So far so good. But what was even better for the citizen was a campaign to simplify tax returns. California did this. Other states thought this a good idea, as did Congress. Hang on, thought Intuit, what happens to sales of our software if it’s no longer needed? Their money piled in to candidates who would oppose simplification.

According to the Sunlight Foundation, the $28 million spent by commercial tax preparers worked. The push to simplify the tax system was defeated, not least because those who most benefit from easier tax returns cannot afford to lobby.

Ground zero for lobbyists is access to politicians – those with decision authority, those who can influence and those who may oppose. Lobby firms are typically made up of former politicians and officials with substantial address books – personal contacts happy to take a phone call or have lunch, or even a well-provisioned trip to a beautiful location conveniently near a site of proposed new infrastructure to be inspected.

Preferably a minister, adviser and a sprinkling of officials will take the decision in private. Outside influence and examination is thus prevented.

It helps if the officials have a limited grasp of the issue in question. The more ‘generalist’ the officials, the less they will actually know and understand of the industry. For any government department to contain all the relevant know-how and grasp of the ‘tricks of the trade’ is a challenge in our complex world.

Government ministers in fact often welcome company lobbyists. As one put it: ‘what’s the alternative to listening to business – superficial civil servants and daft academics?’ Harsh but with a point. After all, the business actually runs the electricity supply, knows its operations, and has to operate at a profit and under many other disciplines. Academics and officials have none of this knowledge.

Money talks. If your electoral system is open to significant funding by the wealthy, then politicians, in effect, get bought. The worst case of this is in the US, where funding is crucial to election. The Federal Election Campaign Act of 1971 and subsequent amendments imposed substantive restrictions on direct and indirect candidate and party spending and funding. During the 1990s, ways round these restrictions emerged and became common through spending on ‘party-building’ activities and television advertising.

The Bipartisan Campaign Reform Act of 2002 responded to this, only for the Supreme Court in 2010 to rule that laws preventing corporations and unions from using their general funds for independent ‘electioneering communications’ violated the First Amendment’s guarantee of freedom of speech.

One week later President Barack Obama remarked in his State of the Union address that the decision would ‘open the floodgates for special interests … to spend without limit in our elections’. He was right, with both the Republican and Democrat parties enrolled as agents of ‘Wall Street Government’.

The ‘floodgates’ case had been brought by a conservative not-for-profit organisation, judging that unlimited funding would serve their political agenda and the business interests of their donors. The Supreme Court had a majority whose interests and sympathies lay with the Republican Party, which was perceived to benefit most from large donations.

Crucially in the US, federal judges are political appointees and thus court decisions can be politically influenced. A cardinal rule for any truly democratic constitution is the independence of the judiciary from politics and politicians, otherwise the rule of law can be bent and twisted, as in Russia for example. By contrast, the strong and diverse independence of the courts in South Africa has been arguably the sole impediment to it being run as a one-party state.

In addition, the two-year electoral cycle for Congress means its members are perpetually up for re-election and therefore always on the phone to raise funds. This aspect of a system is termed a structural determinant – in other words, behaviour is determined by the rules and construct of the system. Again, people in power are not behaving this way because they are bad people but because that is what the system demands of them. The three-year federal election cycle in Australia affects behaviour by driving non-stop politicking on everything from climate change to unemployment benefits.

Tomorrow Part 3: No explicit deals, all unstated understandings. How it works behind the scenes. 

The Hidden Power of Systems Thinking: Governance in a Climate Emergency (routledge.com)
Applied Systems Thinking in Practice

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