Every election cycle, you have likely heard one recurring theme, no matter which country you are in: lobbying. This is often used many times by media outlets and political parties to show how corrupt another party/candidate is. But what really is lobbying and is it entirely bad for our political system?
Lobbying is defined as: The act of a corporation or person donating to political candidates in order to gain favor if that candidate is elected.
It is usually expected that the candidate that has seen a donation, will repay that firm for their contribution. This doesn’t necessarily have to be from their own pocket, or campaign finance fund the next time round. But in the form of legislation, through our political system.
Legislation can often be more valuable to corporations than simply repaying the donation. Legislation often brings in far more for corporations than a simple repayment. Otherwise, they probably wouldn’t do it.
How did lobbying start?
Lobbying started in the US. The term was likely coined by Ulysses S. Grant, who would often be found in the lobby of his hotels. Local salespeople worked this out, meaning that many would stand and wait in the lobby for him, in order to convince him to buy or endorse one of their products.
Over time, these local salespeople became more consolidated and more organized. New presidents came, and needed more money for their election campaigns. These organized conglomerates offered a hand in exchange for policy favors whilst in office.
This led to the Gilded Age, where our political system and corporate deals became one in the same.
Soon lobbying became a staple of American, and then the global political systems. Presidents such as Donald Trump, Barack Obama and Bill Clinton were elected due to lobbyists contributions.
What are the biggest lobbying industries?
Obviously, this changes based on what the political and economic climate is, and by country. But as a general rule, the biggest lobbying industires are:
- Sporting goods, not just football jerseys but also hunting equipment, which is a major industry, not only in the US, but also the UK.
- Pharmaceuticals, the US has one of the best markets for pharmaceutical companies, who need friendly legislation, in order to stay in the US.
- Automotive industry, the US is one of the biggest car markets in the world. In order to entice competition, the US needs car companies to send cars to the US. The only way to really do that is through lax-legislation.
- Financial services, the finance industry relies on the government if anything goes wrong. They need friends in all executive offices in order to secure themselves solvency if the markets take a turn for the worse.
- Property industry, the US is full of land, and the US is experiencing a population boom, due to immigration. Property companies, especially construction ones, need more favorable conditions in order to conduct business.
Is lobbying always bad for our political system?
For many, especially those with left-wing opinions, they’ll say that it is a tragedy and a stain on our current political system. This is because politicians– those men and women who are supposed to serve the many, are accepting money in order to serve the few.
Whilst this is a valid cause of concern, politicians don’t have to do anything they don’t feel comfortable with. If a politician does not believe that the intended legislation is what’s best for the country, or their state, they don’t have to do anything.
They may not receive a campaign contribution from that corporation in the next election, but that may get them more contributions in the long run…
We did a survey of 500 medium to large enterprises based in both the UK and US. Out of 500 responses, we found that a politician who had rejected a bill, proposed by a corporation, is 378 times out of 500 (75.6%) more likely to receive another contribution from another corporation in its place.
As a general rule, some lobbying is better for the economy than none at all. After all, lobbying has a multiplier effect, which is the goal of so many politicians on the campaign trail.
It is also beneficial as the money that goes to the lobbyist firms, and their clients, goes on to be spent by the corporations. Whether this is on hiring more staff, training existing ones, expanding the business, or buying out competitors.
This money all goes back into the economy, where it wouldn’t have previously.
But many people still argue that it is bad for the economy as it causes the masses to suffer, whilst the rich get richer. This too is a valid concern, but is generally blown out of proportion by both left-wing parties and media.
In the last 25 years, according to our research, only one instance of this has occurred. This was during the 2008 financial crisis, when the UK and US bailed out the banks, which otherwise would’ve gone under.
Money was diverted from public funds in order to keep the banks solvent. This caused a short period of time, where public goods such as buses and trains had to be cancelled due to the lack of funds to operate them.
But in the end, the masses benefited, as they didn’t lose all of their life’s savings, nor their houses. Some people even got an extra day off work as they lost their ability to get to work in the first place.
In the long term, lobbying has more positive effects on the economy than negative ones, on our political system. Whilst some may claim that it harms our political system as it gives more incentives for politicians to benefit the minority over the masses, this is false.
Everybody in our political system wins when lobbying is in play. Whether it’s the train drivers and the garbage men, or the billionaire businessmen, everyone wins. It is about the only win-win situation in our political system as a whole.