By James M. Hohman, Mackinac Center for Public Policy
On chips, stadiums and other subsidies, elected officials blind themselves to lobbyists’ self-interest
Semiconductor manufacturers lobbied for federal subsidies to build semiconductor plants and got them from the CHIPS and Science Act. Some people noticed that there may be some self interest at work from the companies lobbying for federal cash. But this is a demonstration of how influence works in state capitols and in Washington. Money in politics does something, but it’s rarely the grimy and illegal quid pro quo that many Americans think goes on.
Some people think that lobbyists buy politicians. Sure, there are corrupt lawmakers out there happy to sell their votes, and there are corrupt people who try to bribe their way to profit. The FBI anticorruption work yields results. Most lobbying, however, is not that. It is people exercising their First Amendment rights to argue their interests directly to lawmakers. The lobbyists’ goal is to inform and to persuade in service of their employer or their clients.
They can be too good at their job. The people they lobby forget that lobbyists are arguing on behalf of their employers and clients. It may seem strange, but elected officials become blind to the obvious point that the lobbyist is arguing for client’s self-interest and not the public’s. Often they will believe in earnest that chipmakers are trying to protect domestic interests. That the manufacturers will be collecting big checks from the government on profit-earning ventures does not seem to trouble legislators.
People ought to be afraid that their lawmakers become blind to basic self-interest. It leads them to deliver private benefits to self-serving interest groups at the public’s expense.
For instance, some businesses want money at the taxpayer expense. They get it, too, when they issue an ultimatum to states: Either pony up or lose out on jobs. Despite the promises of jobs, giving companies extra cash is ineffective at creating jobs. It is expensive to the state budget, and simply an unfair way for states to conduct business.
A coalition of groups tends to support company handouts anyway. It’s composed of the people who are going to get the subsidies and the local economic development agencies that get to hand them out. The lobbyists for those groups are somehow able to get lawmakers to ignore their clear self-interest in collecting cash and getting to hand it out.
Some legislators are so blind to that self-interest that they suspect critics of the spending, somehow, to be the ones serving some ulterior motive. So on a bill that hands out hundreds of millions to select businesses, beneficiaries accuse opponents of being self-interested, even though the supporters of the subsidies are the people getting clear direct benefits.
This has been the case on stadium subsidies. The poor economist JC Bradbury gets accused of self-interest for demonstrating that stadium subsidies don’t pay for themselves, but the self-interest of team owners who are asking for subsidies goes unnoted.
It’s not just in corporate handout policy. There are a lot of lobbyists who are good at their jobs. So legislators get confused and make alcohol control policy that enriches a handful of people in the business rather than protecting the public from alcohol’s harms. Occupational licensing rules are there to protect providers from competition rather than protecting people from harmful practitioners.
There is a lot of this at the state and national levels. Brink Lindsey and Steven Teles dwell on how intellectual property rules, land use regulation and financial regulation are used to deliver benefits to special interests in their book, The Captured Economy. Or follow Colin Grabow’s work on domestic shipping regulations that cost consumers to protect shippers.
The blindness of legislators to the clear motives of lobbyists is also nothing new. As James Madison wrote in Federalist 10, people are happy to split into factions to use the power of government for private advantages. This is a “dangerous vice,” that creates “mortal diseases under which popular governments have everywhere perished.” The tendency is unavoidable, “as long as the connection subsists between [our] reason and [our] self-love[.]”
To Madison, the antidote was a vigilant electorate which elects wise representatives who won’t fall for the trap. And maybe that will happen in the future, but too many lawmakers fall short of this standard. Voters ought to care more when their elected officials blindly serve interest groups at the public’s expense.
Originally published by the Mackinac Center for Public Policy.
James M. Hohman is the director of fiscal policy at the Mackinac Center for Public Policy.