Corporate Lobbying in the Public Interest (Seriously)

I had another public message this week from my friend Jonny Isham, professor of economics at Middlebury College. He raises an interesting question I’d like to respond to publicly. That is, is lobbying by business people for particular public policies necessarily suspect? How about if those policies will benefit their companies? Is that necessarily harmful to the general public?

No. Lobbying for policies in one’s business interest is bad only if the policies harm the interests of others. By contrast, lobbying for policies in one’s self-interest and also in the interest of others is a public service. It’s win-win.

Jonny’s message came with a link to the New Yorker article, “KOCH PLEDGE TIED TO CONGRESSIONAL CLIMATE INACTION.” The article finds fault with Charles and David Koch’s

persuading many members of Congress to sign a little-known pledge in which they have promised to vote against legislation relating to climate change unless it is accompanied by an equivalent amount of tax cuts.

The problem the author finds with this is that

[s]ince most solutions to the problem of greenhouse-gas emissions require costs to the polluters and the public, the pledge essentially commits those who sign to it to vote against nearly any meaningful bill regarding global warning, and acts as yet another roadblock to action.

(Note that it’s action by politicians and bureaucrats that is blocked; action on global warming by all kinds of other people and institutions in the private sector would be unblocked.)

My friend Dr. Isham agrees with the spirit of the article. His message to me is that it’s

Ironic and harmful to the cause that the Kochs are known as supporters of “ultra-libertarian policies … , policies that are often highly advantageous to their corporate interests.”

In the words I have italicized, Dr. Isham implies that it’s improper for the Kochs to advocate policies in their corporate interest, and that they advocate them not on principle, but selfishly, because Koch Industries is a major oil company whose bottom line would be hurt by taxes or other legislation that aims to reduce carbon emissions.

I think my friend and the New Yorker article are mistaken in criticizing the Kochs here. I think what they are doing is wise, prudent, and in the public interest.  I add, by way of full disclosure, that I work with and benefit from a number of the pro-free market organizations the Kochs support.

It is true that most corporate lobbying is blameworthy because it is what economists call rent-seeking. The corporation advocates government interventions in the economy—policies that restrict the freedom or infringe on the property of others—so that the corporation may escape some of the discipline of market forces, the necessity to create wealth for others in order to profit.

But not all corporate lobbying is that kind. Some of it is not offensive but defensive. In particular, corporate lobbying for a freer marketplace—for repeal of taxes, subsidies, restrictions, and mandates that make it harder for businesses to create wealth for others—are simultaneously in the company’s interest and in the interest of the general public. The Kochs’ lobbying in this case as always, as far as I know, is of this second, beneficial kind.

In the words of my teacher at George Mason University, Walter Williams, “In a free market, you get more for yourself by serving your fellow man. You don’t have to care about him! Just serve him.” The Kochs are lobbying for free markets so that they can get more for themselves by serving their fellow man, by creating wealth for the general public. This is night-and-day, black-and-white, good-and-evil different from lobbying for government interventions that give a company more for itself at others’ expense.

Let me explain why I think the No Climate Tax Pledge is a good idea.

I don’t want to get into the weeds of the climate change debate here; my point is about the dangers of government intervention in the economy in general. Accordingly, let us stipulate that human-caused global warming stands to cause net harm for humanity.  Even if this is so, the wisest course is still to keep politicians and bureaucrats the hell out of it, and the Koch brothers are wise enough to realize this.

Saddam Hussein surely caused net harm to humanity, and there were reasons to believe that he had weapons of mass destruction that might cause far more harm still.  Was the anti-Saddam policy of George Bush and Congress therefore justified? Was it a response that did net good, or made things worse? Ten years and how many trillions of dollars and thousands of casualties later, are we glad those people in Washington, D.C. intervened in Iraq?

Access to recreational drugs such as cocaine, heroin, marijuana, and alcohol surely causes a lot of harm. The drugs cause pleasure for users, too, but arguably they cause net harm to humanity. Let us stipulate that they do. Was the National Prohibition (Volstead) Act therefore justified? Was it a response that made the people of the U.S. better off? How about the Drug War that all presidents and congresses since Richard Nixon have supported? Are we glad they intervened?

If the American people stop blocking Congress and the President (any congress, any president) from “fixing” the problem of global warming, what is the probability that the legislation they pass will be based on science and economic analysis? What’s the probability that it will be based on their desire to get re-elected and to increase the amount of other people’s money they get to spend?

Global warming may be a problem, Jonny, but allowing politicians in Washington to do something about it would mean more problems still.

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One Response to Corporate Lobbying in the Public Interest (Seriously)

  1. Jon Isham says:

    Your final sentence here is utterly astonishing to me Howie, on so many levels. I will put together some data to refute it. In the meantime, you will no doubt find this of interest: Note the key para: “Tea Party members supporting the solar expansion see it as a simple free market issue. They believe consumers have the right to choose where their electricity comes from and shouldn’t be forced to remain dependent on a single source, especially in light of the rapidly declining cost of solar.”

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