Special-interest contributions to Congress are up sevenfold in the last nine years, but the new giving has just raised the price of influence.
Prominent lobbyist J.D. Williams laments, "The edge you get from raising money has been diluted. A few years ago, when fund raising as we now know it was in its infancy, it was vitally important. … Now … there is such an availability of funds that it's not as important as it used to be." But fund raising goes on.
Pity the poor lobbyists. Every time they learn a new technique -- PAC contributions, direct mail, grass-roots campaigns, junkets to Las Vegas -- everyone else learns it, too, and soon there's no profit in it. But they can't stop doing it as long as their competitors are doing it.
Should any of this surprise us? Business people know that you have to invest to make money. Businesses invest in factories, labor, research and development, marketing, and all the other processes that bring goods to consumers and, they hope, lead to profits. They also invest in political processes that may yield profits.
If more money can be made by investing in Washington than by drilling another oil well, money will be spent there.
Nobel laureate F.A. Hayek explained the process 40 years ago in his prophetic book The Road to Serfdom: "As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of this directing power."
As the size and power of government increase, we can expect more of society's resources to be directed toward influencing government. And indeed that is just what we have seen: Federal spending has risen from $200 billion in 1970 to more than $800 billion today. The staff size of regulatory agencies (a very rough estimate of the impact of regulation on society) has risen two-thirds in a decade.
Recognizing this increasing opportunity for political profits, interest groups have responded as we would expect. In 1971, New York had twice as many national trade associations as Washington. Today, Washington has 3,136 associations -- 500 more than New York -- with 80,000 employees. Within the past decade, the number of Washington offices of out-of-town law firms has tripled. In 1970, five state governments had Washington offices; today the figure is 34. Total campaign spending rose from $425 million in 1972 to $1.2 billion in 1980. Now, 65% of the chief executive officers of Fortune 200 companies come to Washington at least once every two weeks, up from less than 15% a decade earlier.
What do all these people want in Washington? Money, of course, first of all. Every dollar spent by the federal government ends up in someone's pocket as a salary, a transfer payment, a subsidy, a purchase or a loan. But there are other valuable services available, too: regulations that eliminate or hamstring your competitors, for instance, or a tax provision that induces consumers to purchase your product.
In its successful effort to obtain a $1.1 billion loan guarantee for a shale-oil project, Tosco Corp. hired the Republican firm Black, Manafort, & Stone and former Reagan adviser Peter Hannaford, along with Democratic lobbyist Marcus Sisk, former Democratic Rep. William Moorhead and former Carter White House official Anne Wexler. Charlie Black explained candidly, "By using Moorhead and Sisk and Wexler on the Democratic side and us and Hannaford on the Republican side, they got better quality and better access for less money."
Efforts to restrain this growing special-interest influence on government have predictably failed. After the Watergate scandal, Congress placed severe limits on individual contributions to federal candidates. What happened? PAC spending soared. When the government taxes or regulates private economic activity, people find ways to get around the restrictions and continue supplying goods and services to others at a profit. And as long as there is a profit to be made by influencing government, people will find a way around those restrictions as well.
Despite our attempted restrictions, Mr. Hayek's dictum seems to remain true: When government decides "who is to have what," political power becomes "the only power worth having." Before the special-interest bidding for control of a powerful government gets completely out of hand, can we find a way to treat causes rather than symptoms?