Tag: lobbying

Milton Friedman on Business’s ‘Suicidal Impulse’

In a Wall Street Journal column titled “Silicon Valley’s ‘Suicide Impulse’” (Google the title if you can’t access it), Gordon Crovitz cites Milton Friedman’s speech to a Cato Institute conference in Silicon Valley in 1999:

In 1999, economist Milton Friedman issued a warning to technology executives at a Cato Institute conference: “Is it really in the self-interest of Silicon Valley to set the government on Microsoft? Your industry, the computer industry, moves so much more rapidly than the legal process that by the time this suit is over, who knows what the shape of the industry will be? Never mind the fact that the human energy and the money that will be spent in hiring my fellow economists, as well as in other ways, would be much more productively employed in improving your products. It’s a waste!”

He predicted: “You will rue the day when you called in the government. From now on, the computer industry, which has been very fortunate in that it has been relatively free of government intrusion, will experience a continuous increase in government regulation. Antitrust very quickly becomes regulation. Here again is a case that seems to me to illustrate the suicide impulse of the business community.”

You can find the full text of Friedman’s talk here.

For more on business’s suicidal impulses, see “Why Silicon Valley Should Not Normalize Relations With Washington, D.C.” by entrepreneur T. J. Rodgers; “The Sad State of Cyber-Politics” by Adam Thierer; and my own “Apple: Too Big Not to Nail.”

Apple: Too Big Not to Nail

In Sunday’s New York Daily News, I deplore the efforts of politicians and regulators to drag successful companies into the parasite economy of Washington, the most recent example being Apple. As the article says,

Heard of “too big to fail”? Well, to Washington, Apple is now too big not to nail.

I was prompted to these reflections by a recent article in Politico. The Wall Street Journal used to call itself “the daily diary of the American dream.” Politico is the daily diary of the rent-seeking class. And that class is very upset with Apple for not hiring many lobbyists, as illustrated by Politico’s front-page cartoon:

The story begins:

Apple is taking a bruising in Washington, and insiders say there’s a reason: It’s the one place in the world where the company hasn’t built its brand.

In the first three months of this year, Google and Microsoft spent a little more than $7 million on lobbying and related federal activities combined. Apple spent $500,000 — even less than it spent the year before.

The nerve of them! How do they expect lobbyists to feed their families? Then comes my favorite part:

The company’s attitude toward D.C. — described by critics as “don’t bother us” — has left it without many inside-the-Beltway friends.

“Don’t bother us”—yes! Don’t tread on me. Laissez nous faire. Leave us alone. Just let us sit out here in Silicon Valley, inventing cool stuff and distributing it to the world. We won’t bother you. Just don’t bother us.

But no pot of money can be left unbothered by the regulators and rent-seekers.

Apple is mostly on its own when the Justice Department goes after it on e-books, when members of Congress attack it over its overseas tax avoidance or when an alphabet soup of regulators examine its business practices.

And what does the ruling class say to productive people who try to just avoid politics and make stuff? Nice little company ya got there, shame if anything happened to it:

“I never once had a meeting with anybody representing Apple,” said Jeff Miller, who served as a senior aide on the Senate Judiciary Committee’s Antitrust Subcommittee for eight years. “There have been other tech companies who chose not to engage in Washington, and for the most part that strategy did not benefit them.”

As I noted in the Daily News, back in 1998 Microsoft was in the same situation—a successful company on the West Coast, happily ignoring politics, getting too rich for politics to ignore it—and a congressional aide told Fortune’s Jeff Birnbaum, “They don’t want to play the D.C. game, that’s clear, and they’ve gotten away with it so far. The problem is, in the long run they won’t be able to.” All too true.

Watch out, aspiring entrepreneurs. You too could become too big not to nail.

The Solyndra Story Keeps Unfolding

Is the taxpayers’ lost $535 million in the green-energy company Solyndra just an unfortunate business failure, or is there something more scandalous involved? You should read every word of this front-page New York Times article. Sure, it says that “no evidence has emerged that political favoritism played a role in what administration officials assert were merit-based decisions.” But the story is full of smoking guns.

Here’s the opening:

President Obama’s visit to the Solyndra solar panel factory in California last year was choreographed down to the last detail—the 20-by-30-foot American flags, the corporate banners hung just so, the special lighting, even coffee and doughnuts for the Secret Service detail.

“It’s here that companies like Solyndra are leading the way toward a brighter and more prosperous future,” the president declared in May 2010 to the assembled workers and executives. The start-up business had received a $535 million federal loan guarantee, offered in part to reassert American dominance in solar technology while generating thousands of jobs.

But behind the pomp and pageantry, Solyndra was rotting inside, hemorrhaging cash so quickly that within weeks of Mr. Obama’s visit, the company canceled plans to offer shares to the public. Barely a year later, Solyndra has become one of the administration’s most costly fumbles after the company declared bankruptcy, laid off 1,100 workers and was raided by F.B.I. agents seeking evidence of possible fraud.

Solyndra’s two top officers are to appear Friday before a House investigative committee where, their lawyers say, they will assert their Fifth Amendment right against self-incrimination.

And there’s more:

[Solyndra’s] lobbyists corresponded frequently and met at least three times with an aide to a top White House official, Valerie B. Jarrett, to push for loans, tax breaks and other government assistance… Energy Department preliminary loan approvals—including the one for Solyndra—were granted at times before officials had completed mandatory evaluations of the financial and engineering viability of the projects.

…[T]he company spent nearly $1.8 million on Washington lobbyists, employing six firms with ties to members of Congress and officials of the Obama White House. None of the other three solar panel manufacturers that eventually got federal loan guarantees spent a dime on lobbyists… Solyndra’s loan guarantee was the highest of the four companies…

Five lobbyists employed by the McBee group eventually worked on Solyndra’s behalf, including Michael Sheehy, a former top aide to Representative Nancy Pelosi of California, the House Democratic leader. Solyndra has paid McBee Consulting $340,000 since 2009…

Solyndra and its lobbyists continued to provide assurances to the White House and the Energy Department, which still could have stopped the flow of federal money…

The story might well be read in conjunction with yesterday’s Washington Post story, which stressed “questionable spending by management almost as soon as a federal agency approved a $535 million government-backed loan for the start-up… ‘Because of that infusion of money, it made people sloppy.’”

Corrupt Obamacare Waiver Process Is Like a Scene from Atlas Shrugged

In a column about the revolving door between big government and the lobbying world, here’s what the irreplaceable Tim Carney wrote about the waiver process for folks trying to escape the burden of government-run healthcare.

Congress imposes mandates on other entities, but gives bureaucrats the power to waive those mandates. To get such a waiver, you hire the people who used to administer or who helped craft the policies. So who’s the net winner? The politicians and bureaucrats who craft policies and wield power, because this combination of massive government power and wide bureaucratic discretion creates huge demand for revolving-door lobbyists. It’s another reason Obama’s legislative agenda, including bailouts, stimulus, ObamaCare, Dodd-Frank, tobacco regulation, and more, necessarily fosters more corruption and cronyism.

This seemed so familiar that I wondered whether Tim was guilty of plagiarism. But he’s one of the best journalists in DC, so I knew that couldn’t be the case.

Then I realized that there was plagiarism, but the politicians in Washington were the guilty parties. As can be seen in this passage from Atlas Shrugged, the Obama Administration is copying from what Ayn Rand wrote – as dystopian parody – in the 1950s.

Nobody professed to understand the question of the frozen railroad bonds, perhaps, because everybody understood it too well. At first, there had been signs of a panic among the bondholders and of a dangerous indignation among the public. Then, Wesley Mouch had issued another directive, which ruled that people could get their bonds “defrozen” upon a plea of “essential need”: the government would purchase the bonds, if it found proof of the need satisfactory. there were three questions that no one answered or asked: “What constituted proof?” “What constituted need?” “Essential-to whom?” …One was not supposed to speak about the men who, having been refused, sold their bonds for one-third of the value to other men who possessed needs which, miraculously, made thirty-three frozen cents melt into a whole dollar, or about a new profession practiced by bright young boys just out of college, who called themselves “defreezers” and offered their services “to help you draft your application in the proper modern terms.” The boys had friends in Washington.

This isn’t the first time the Obama Administration has inadvertently brought Atlas Shrugged to life. The Administration’s top lawyer already semi-endorsed “going Galt” when he said people could choose to earn less money to avoid certain Obamacare impositions.

So if you want a glimpse at America’s future, I encourage you to read (or re-read) the book. Or at least watch the movie.

When the Government Lobbies Itself

“National Public Radio (NPR) is paying the lobbying firm Bracy, Tucker, Brown & Valanzano to defend its taxpayer funding stream in Congress, according to lobbying disclosure forms filed with the Secretary of the Senate,” reports Matthew Boyle at the Daily Caller. Once again, a government-funded entity is using its taxpayer funds to lobby to get more money from the taxpayers.

When the bailouts and takeovers started in 2008-9, I noted that there was lots of outrage in the blogosphere over revelations that some of the biggest recipients of the federal government’s $700 billion TARP bailout had been spending money on lobbyists. And I wrote:

It’s bad enough to have our tax money taken and given to banks whose mistakes should have caused them to fail. It’s adding insult to injury when they use our money — or some “other” money; money is fungible — to lobby our representatives in Congress, perhaps for even more money.

Get taxpayers’ money, hire lobbyists, get more taxpayers’ money. Nice work if you can get it.

At the same time, Dan Mitchell wrote that companies that received government money and then lobbied for more “deserve a reserved seat in a very hot place.” Taxpayer-funded lobbying is a scandal, but it’s a scandal that has been going on for decades:

As far back as 1985, Cato published a book, Destroying Democracy: How Government Funds Partisan Politics, that exposed how billions of taxpayers’ dollars were used to subsidize organizations with a political agenda, mostly groups that lobbied and organized for bigger government and more spending. The book led off with this quotation from Thomas Jefferson’s Virginia Statute of Religious Liberty: “To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical.”

The book noted that the National Council of Senior Citizens had received more than $150 million in taxpayers’ money in four years. A more recent report estimated that AARP had received over a billion dollars in taxpayer funding. Both groups, of course, lobby incessantly for more spending on Social Security and Medicare. The Heritage Foundation reported in 1995, “Each year, the American taxpayers provide more than $39 billion in grants to organizations which may use the money to advance their political agendas.”

In 1999 Peter Samuel and Randal O’Toole found that EPA was a major funder of groups lobbying for “smart growth.” So these groups were pushing a policy agenda on the federal government, but the government itself was paying the groups to lobby it.

Taxpayers shouldn’t be forced to pay for the very lobbying that seeks to suck more dollars out of the taxpayers. But then, taxpayers shouldn’t be forced to subsidize banks, car companies, senior citizen groups, environmentalist lobbies, labor unions, or other private organizations in the first place.

Lobbying Wolves on the Prowl

The other day I noted that the budget cuts agreed to last week contained lots of familiar faces. Many of the agencies and programs getting a trim were also cut in 1995 in a rescissions package put together by Gingrich Republicans. In the fifteen intervening years, federal spending exploded across the board, which means that an occasional trim job doesn’t accomplish much if the goal is to limit government.

The reason why is that if the scope of government activities isn’t curtailed, the cuts will be short-lived. As long as the agencies and their programs remain, special interests won’t stop agitating Congress to continue, or more likely, increase, funding.

A recent article in The Hill reports that lobbyists are already hard at work:

Groups that advocate for everything from more foreign aid to bolstering the nation’s transportation system saw several of their favorite government programs suffer deep spending cuts in the fiscal year 2011 budget deal.

With millions of dollars now axed from what they consider key federal initiatives, groups are planning to redouble their efforts and lobby to restore as much funding as possible in next year’s budget.

(Note to reporter: A lot of adjectives could be used to describe the spending cuts. “Deep” is not one of them.)

A fellow who lobbies for foreign aid argues that cutting it won’t balance the budget and that “We need to be planting the seeds for future economic prosperity around the world.” It’s true that even eliminating foreign aid wouldn’t balance the budget, but every little bit helps. But what’s striking is his arrogant pronouncement that “we” (taxpayers) need to be forced by the federal government to send our money abroad for the causes he fancies.

A lobbyist with the National League of Cities is relieved that the GOP didn’t get the small cut in local handouts that were originally proposed, but is nonetheless concerned about the “anti-spending climate in Washington”:

‘We’re talking about staff layoffs at the city level. Cities are also going to have completely reorganize their budgets mid-year and prioritize some things out.’

‘In this environment, the numbers from fiscal year 2011 might be the new baseline but our message isn’t going to change,’ Wallace said. ‘We’re focusing on those local programs that create jobs and spur economic growth.’

Cities prioritizing spending? Heaven forbid. Suck more money out of the private sector in order to save bureaucratic deadweight in local government? That doesn’t sound like a recipe for economic growth to me. (See here for more on the problems with federal subsidies to state and local governments.)

Then there are the transportation lobbyists. These folks would probably argue that a giant escalator to nowhere would be a wise use of taxpayer money:

Dean’s group is lamenting spending cuts made to the high-speed rail program, transit security grants as well as funding for “fixed guideway” projects, which include commuter trains, cable cars and ferryboats among other public transit systems.

For the fans of The Simpsons who didn’t catch the escalator reference, see this link for my feelings on government-funded rail projects. (Fans and non-fans should check out these essays on urban transit subsidies and high-speed rail.)

In Washington, it’s the squeaky wheel that gets greased. Lobbyists for government programs exist to make sure that Congress hears their wheel squeaking. Yes, the deck is stacked against those who are forced to foot the bill, but if taxpayers want federal agencies and their programs to get more than a trimming every fifteen years or so, now is the time to make a lot more noise.

Your Tax Dollars at Work (1)

The District of Columbia pays outside lobbyists hundreds of thousands of dollars, but its top in-house lobbyist, who heads a staff of nine, doesn’t know about them:

The District pays outside lobbyists, who were hired when Adrian M. Fenty (D) served as mayor, but their work has attracted little notice.

U.S. Senate records show that Mitch Butler — a former Interior Department official in the Bush administration — has lobbied on behalf of the District since October 2009 on “public lands issues” and “land development.” Through the end of 2010, the city paid Butler at least $100,000 for his efforts.

Separately, the D.C. Office of the Deputy Mayor for Planning & Economic Development has paid the firm Van Ness Feldman $200,000 since November 2009 for “Anacostia Waterfront Initiative appropriations, St. Elizabeths development matters and federal land transfers,” according to registration forms.

Neither [Del. Eleanor Holmes] Norton nor Janene D. Jackson, the director of the District’s Office of Policy and Legislative Affairs, was aware the city had lobbyists on the payroll until they were informed by a reporter.

Maybe if nobody knows about them, the city could save a few bucks by terminating their contracts. But then again, maybe the best lobbyists are the ones who slip money silently out of the appropriations process and then melt away in the night, drawing no attention to themselves.