How Lobbying Affects Americans

Government corruption has lead to many issues in our country. Lobbying is a form of government corruption in which interest groups hires a lobbying firm. The lobbying firm then drafts bills to be put through Congress, persuade Congress members through their advisory staff to pass the bill, or try to stop the passing of regulations and other bills. Open Secrets, which is a database that keeps track of the money spent in the government and lobbying done in elections and in Congress, states that the term lobbyist originally comes from the early 1600s when people with political agendas would stay in the lobby of Parliament and try to persuade them to pursue their interest. The effects lobbying have been present throughout history. According to Open Secrets, the first instance of a lobbyist being hired occurred in 1792, when the Virginia veterans of the Continental Army hired William Hull specifically to lobby the newly formed Congress for additional compensation. Another example is The 2008 Housing Crisis where the interest groups of banks hired lobbyists that passed bills which helped to the build-up of the crisis where the economy became hyperinflated (Gandel) but there have also been examples of lobbying that benefits the people such as environmental group wanting new regulations. This leads to a complicated situation because then one would need to consider how ethical it is to lobby even if the end result would help someone. This leads to the main argument of: How can government lobbying be monitored to a point that would not lead to corruption? 

While lobbying can be used to benefit dominant corporations such as banks other interest groups that want things such as more regulations for environmental purposes could also use lobbying. In an article published by Will Hathaway and David S. Meyer that was found in the Berkeley Journal of Sociology, it stated that in the 1980s there was a lobbying coalition where interests groups banned together and started what is known as “The Nuclear Freeze”. Multiple interest groups came together and put multiple regulations on nuclear testing and the launching of missiles. The freeze seemed to stop the 1984 election, but institutional lobbying activity continued throughout The second Rega term. This important because it is an example of how lobbying it used beneficially. If lobbying could be used in the example brought up earlier then it is possible to find a way of lobbying that won't lead to corruption. 

Another way that government lobbying may affect us negatively is through the economy. Every year multiple firms spend billions of dollars in lobbying. Research done by the Midwest Political Science Association (MPSA) which is a professional association of political science scholars and students showed that when certain firms or interest groups increase the amount of money lobbying by 1% the following year their taxes seem to go down by .5 to 1.6 percentage points the next year. They also report that from 1998-2005 the amount spent on lobbying itself went from 1.44 billion dollars to 2.47 billion (MPSA). From this, we can see that corporate business spend more money to help further their own needs. This allows for more corruption for business and encourages more negative lobbying. 

Some of the main interest groups are lawyers and securities. The area of lawyers are mainly people from big global trade organizations and people from prestigious firms who are backed by former lawmakers and high ranking government staffers. The second group that has mainly been found to lobby for reasons that may pertain to tax reductions are Securities and Investment. These are people who run hedge funds and private investment firms and while they do lobby through something called “K Street” they mostly support them by campaign donations instead. This affects American because it is mostly helping the groups which have more money to lobby while the American people are let to deal with possible consequences such as what happened in 2008 with the removal of key regulations. Firms lobbying also leads to lower rates of fraud. In 2011 the Journal of Financial and Quantitative Analysis (JFQA) released their finds about how average, firms that lobby have a significantly lower hazard rate of being detected for fraud, evade fraud detection 117 days longer and are 38% less likely to be detected by regulators. In addition, fraudulent firms on average spend 77% more on lobbying than nonfraudulent firms, and they spend 29% more on lobbying during their fraudulent periods than during nonfraudulent periods (JFQA). It is also stated that with lobbying increasing the amount of it also affects welfare. Since low productivity firms want to pool with high productivity firms they invest and hire an excessive amount. This causes a dissertation in resource allocations because more people are getting higher. The study also states that the longer it goes on for the worse the allocation of resources gets (JFQA). This leads to investments in projects as well just to pool along with high productivity firms which also increases their total capital expenditure. Another section of the economy that is affected is through stocks. When business are committing lobbying to help the frauding insider trading has been seen to increase. Insider trading is where stocks are traded to one’s advantage because they have confidential information about the company (JFQA). Yet while lobbying has been shown to lead to corruption there have been studies done to show lobbying can be controlled. 

On November 8th, 1989 Margaret Thatcher gave a speech to the UN on how climate change is slowly becoming an issue throughout the world which quickly became an issue in the UN. This speech helped lead to the formation of the United Nations Framework Convention on Climate Change. On December 11th, 1997 the Kyoto Protocol was passed by the United Nation during the convention (UN). This law currently has 84 signatures (UN) but a study was done by Springer which is a peer-reviewed journal that focuses on Science and Business shows that governments with higher corruption rates were shown to sign on quicker because of lobbyist groups and that governments with more lobbyist groups were also seen to sign the bill faster. While this bill was passed to benefit the environment some of the signatures are mainly there due to lobbying which helps to support a positive way that lobbying can be used. Yet in Springer research, it was shown that even though America originally signed on to the treaty we never ratified it and drop it in 2001. This with the other data in how much American business have spent on lobbying to reduce things like fraud shows that America still has a high amount of corruption just not as much as these beneficial lobbying coalitions that have been seen to sign on and ratify the treaty. 

The main solution that was researched to help counteract this issue and have better lobbying groups that are not as corrupt was the use of CSR. Theresa Bauer released her research in The Journal of Corporate Citizenship (JCC) on how lobbying could be used in a responsible manner. First, she gives a visual on the 3 pillars that would help build up responsible lobbying. She suggests that the 3 pillars are a commitment to Corporate Social Responsibility (CSR) which is the coherence with lobbying, consideration on stakeholders perspectives and needs, and alignment with objectives and values of society as a whole. In her research, she suggests that corporations need to connect CSR to lobbying which would lead to more beneficial and less harmful effects. CSR is the concept that firms have learned to understand that business policies and strategies should not only be profitable but also desirable in terms of the objectives and values of society and have explicitly committed to corporate social responsibility (Bauer). While some experts state that responsible lobbying is an oxymoron due to the alleged inherently selfish, irresponsible nature of lobbying many firms do lobby and will continue to influence policy-making as long as influential political authorities exist finding a way to put the responsibility on corporations. That is why striving for responsible lobbying seems better than ignoring the issue. The first point into why a corporation would cooperate into committing to CSR it to help maintain their credibility. If a firm committed into CSR then that would help protect their reputation due to the way the public and business world view their actions. This is important because reputation and legitimacy are important factors when needed for lobbying (Bauer). The second pillar that revolves around business lobbying with stakeholders in mind. Bauer also states “... responsible lobbying implies accepting and considering the interests of other stakeholder groups such as employees, consumers, and NGOs.” with this it helps to define what type of stakeholders are considered when lobbying and not investors. Businesses and stakeholders also go hand in hand because excessive regulation may lead to decreasing profit for the firm, higher prices for consumers and loss of workplaces for employees as potential consequences. In other cases, the interests of stakeholders do not coincide with the immediate goals of the firm but still, deserve consideration. Within this pillar, she talks about how to communicate with the stakeholders of the company. She first starts off by saying “First, the information strategy aims at informing objectively through one-way communication. Second, the response strategy is two-way asymmetric communication enabling stakeholders to respond to corporate actions, e.g. through opinion polls or market surveys. Third, the involvement strategy allows for symmetric two-way-communication: stakeholders are involved, participate and suggest corporate actions.” These are important because they provide a way that CSR could work and be applied toward monitoring lobbying to something that won't lead to corruption. 

The third pillar is something simpler than pillar 1 or 2 but it could be the most ethically challenging for business which is “Alignment with the objectives and values of society as a whole”. The reason for this being the most ethically challenging than pillar 1 and 2 is because this pillar requires what is best for what society currently views. Pillars 1 would suggest that business would do what they would feel it right and pillar 2 is businesses thinking what’s best for their stakeholders and not the rest of society. Yet this is the most important because without this pillar true CSR could not be reached. In the end, each pillar is needed in order to achieve CSR because Pillar 1 offers a concrete reference point by focusing on the firm’s CSR commitment and alignment with lobbying. However, this part has its downsides: Although a firm’s CSR policy should incorporate stakeholders’ and broader society’s interests, it often takes a narrow firm perspective. Moreover, some firms lack a clearly articulated CSR commitment but still act responsibly due to internalized values or institutional conditions. Pillar 2 complements the model by pointing to the needs and perspectives of stakeholders. Nonetheless, some stakeholders are more likely to be heard than others and non-humans and future generations cannot raise a voice at all. Pillar 3 balances this caveat and allows for departing from a firm-centric view by incorporating society’s objectives and values. Further, the requirement of an ethical, democratic dialogue ensures that the lobbying process is responsible. 

In conclusion, lobbying, while lobbying is harmful to the American life by the way it has been used before such as to evade fraud and lower the taxes in business it has also been used beneficially by adding regulations on nuclear missiles and launching and with more signatures on the Kyoto protocol. Through this the best solution I found to monitor it was through CSR which would ultimately help monitor lobbying by the way it would affect business because they now have to think of stakeholders and society as they lobby. 

Works Cited

• Bauer, Theresa. “Responsible Lobbying: A Multidimensional Model.” The Journal of Corporate Citizenship, no. 53, 2014, pp. 61–76
• Fredriksson, Per G., et al. “Kyoto Protocol Cooperation: Does Government Corruption Facilitate Environmental Lobbying?” Public Choice, vol. 133, no. 1/2, 2007, pp. 231–251
• Gandel,Stephen. “Did Lobbying Cause the Financial Crisis?” ​Time​, Time, 26 May 2011, business.time.com/2011/05/26/did-lobbying-cause-the-financial-crisis/.
• Hathaway, Will, and David S. Meyer. “Competition and Cooperation in Social Movement Coalitions: Lobbying for Peace in the 1980s.” ​Berkeley Journal of Sociology​, vol. 38, 1993, pp. 157–183
• Center for Responsive Politics. “Lobbying Spending Database.” OpenSecrets.org, www.opensecrets.org/lobby/top.php?indexType=s.
• Richter, Brian Kelleher, et al. “Lobbying and Taxes.” American Journal of Political Science, vol. 53, no. 4, 2009, pp. 893–909
• Yu, Frank, and Xiaoyun Yu. “Corporate Lobbying and Fraud Detection.” The Journal of Financial and Quantitative Analysis, vol. 46, no. 6, 2011