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Putting the Lid Back on the Lobby

There is at least one thing upon which most Americans agree: We disdain corrupt political favors. Though it isn’t as frequent as the media suggests, politicians are sometimes paid off, and laws are written to benefit special interests. It’s prudent to remember that every piece of legislation dictates winners and losers, but it’s especially bothersome when the referee is working for the highest bidder. It is a betrayal of democratic principle and basic ethics. But it should not come as a surprise. As Lord Acton famously noted, “Power tends to corrupt. Absolute power corrupts absolutely.” The blunt reality is that certain individuals have a monopoly on force. They are called legislators. I am not saying they are necessarily evil, but that there is greater potential for harm without repercussion. Neither am I saying that special interests are bad, per se. What is a democracy but people bringing their concerns and desires to the seat of power? In Federalist #10, James Madison argues that diverse “factions” are a stabilizing feature in a large democratic state, offering yet another avenue of representation. But what we see today is not what Madison intended. Representation in the form of a voice and an argument is one thing; representation in the form of a financial payoff is another. How it works (from the horse’s mouth) I recently had a conversation with someone—let’s call him Jim—who ran a large operation in the shipping industry some years back. At that time, Jim had employed a lobbyist, and this lobbyist had an idea. Jim could be made a very wealthy man, and all he needed to do was make financial contributions to certain politicians in the Texas legislature, the lobbyist would take care of the rest. The resulting law forced other companies to use his Jim’s services. No doubt, this cost a lot of people money and opportunity, and prevented the industry—and region—from reaching its economic potential. But it made at least one company very profitable. Today, Jim has a new company, selling a product in small quantities directly to exclusive sellers. He has been working deals in various cities, but none in Texas. Why? Because Texas law requires that he forfeit half of his profits. He’s pretty miffed about it, but one can’t help but chuckle at the irony. It turns out, distributors in the state sought and passed legislation requiring any company distributing without their services to fork up part of the lost revenue. It’s classic protectionism. Economists call it “rent seeking.” However one wants to phrase it, it’s wrong. How did we get here, and how do we reverse course? Jim’s newfound anger came with a newfound solution: stricter laws against the hijacking of our political system by unions and elites. But the problem isn’t too few laws; more regulation will not free up the economy or make people less corrupt. To open markets and reduce lobbying in Washington, we need only to heed the Law of the Land—the Constitution—which limits the powers of the federal government. Madison’s factions are only harmless so long as the Constitution stands between business and politics. The frequency and fervency of lobbyists is directly dependent on government power. Where do stray cats go? To the house that feeds them. When progressivism took hold of the levers of the federal government around the turn of the 20th century, and heavy-handedly intruded in the private sector, special interests began springing up as people sought federal support for any cause worth supporting. The idea that Washington is a repository of funds for local initiatives opened the floodgates for today’s D.C. lobby machine. Once lawmakers assume unlimited powers and the “open for business” sign goes up on the Capitol Hill, any organization that does not send in lobbyists is setting themselves up on the losing side of the game. If you’re not at the table when the rules are being written, you might be written out. These modern developments have required companies to spend enormous sums of money on lobbyists just to make sure the field is level. We got here by abdicating our local responsibilities. We have ignored Constitutional constraints and pushed state and local concerns to the federal government, causing runaway debt, loss of liberties and a declining sense of responsibility. Our sugary diet has caught up to us. In his book Bowling Alone, Robert Putnam uses decades of data to reveal declines in civic associations—PTAs, fraternal orders, neighborhood clubs, bowling leagues, et cetera. These apolitical networks play an important role in developing what he calls “social capital,” which strengthens the bonds of society. When someone is going through a tough time, there are people to help; when community needs must be addressed, people can come together to address them. Unfortunately, America has pushed more and more responsibilities to the federal government, and citizens have largely disengaged from civil society. This is ultimately about A) responsibility on the part of citizens and communities to address local concerns, and B) accountability in government, which is much easier at the local level. There are certain things that must be handled at the national level, and those things are detailed sufficiently in the Constitution. The 10th Amendment leaves all other responsibilities to the states, where it ought to be. A strict wall of separation between government and business, and a decent respect for federalism will greatly reduce political favors and unjust legislation. If we want to reign in the lobbyist culture in Washington D.C., we must reign in its overreaching powers.