2020 was a strange year in many ways, yet 2021 has begun with something truly bizarre: lobbyists have voluntarily reduced their lobbying. Without new regulations, without a whistleblower, without a pressurized publicity campaign, lobbying of the US federal government by corporations in the form of Political Action Committees (PACs) and other political donations has been lowered, or even stopped, by over 60 companies. It’s an impressive list with the likes of Amazon, AT&T, Citigroup, Coca-Cola, Disney, Facebook, GE, GM, Hilton, Intel, Major League Baseball, McDonald’s, Microsoft, Nike, UPS, Walmart, and 3M, among many others. What can we learn from this that will help us move in the direction of partnership -- mutual benefit for us as both citizens and customers, mutual benefit for our government and companies?
How did this come about? The short version is that it is fallout from the January 6 attack on the Capitol. That event and the political rhetoric associated with it caused many companies to reconsider their political donations.
In other words, the most successful way in recent memory to curb lobbying had nothing to do with government distancing itself from the distasteful effects of corporate money but corporate money distancing itself from distasteful politics. The political atmosphere became so toxic that companies chose to stop getting involved, quite of their own accord.
In our book Better Capitalism, we describe how lobbying is detrimental to the very companies that lobby. Solely for the self-interest of a value-creating business, there are compelling reasons for companies to use their resources on making their business more competitive rather than on lobbying that coddles their business. In Partnership Economics, those business interests dovetail with the interests of the public and the public’s government. The public benefits from a government that is not distorted by “special” interests away from serving the common good and from companies that are using all available resources to improve their business; companies compete with each other thus spurring constant improvement, and entrepreneurs have the lucrative opportunity to bring new ideas to an open and level playing field. These mutual benefits can (and should) be pursued as part of a healthy political and business atmosphere.
Reduced lobbying is good for both business and politics, but ironically the current reduction in lobbying has nothing to do with good politics. Compounding the irony is the fact that government officials are complaining about the reduced lobbying. You read that correctly -- lobbying has gone down, and “public servants” are complaining about it. For instance, The Wall Street Journal reported on February 1:
“Lawmakers from both parties are pushing back against companies that have suspended campaign donations…”
“Democrats friendly with business have complained … that they are being penalized for actions taken by Republicans...”
“Republicans who voted to challenge the election are responding as well, warning that companies are denigrating politicians whom they have come to rely on for advancing favorable legislation…”
This is sad, but also revealing. Some lessons:
1) While companies benefit from lobbying in a very narrow and short-term sense (getting favorable treatment at the expense of the overall business landscape and at the expense of their own competitive edge), politicians benefit more. Note: Government does not benefit, the endeavor of seeking public good does not benefit, politics does not benefit -- individual politicians receive an outsized self-serving-only benefit when lavished with corporate funds. A reduction in lobbying that should be celebrated as a silver lining of a dark moment is instead being bemoaned by “public servants” who are not even trying to disguise their self-serving. Corporations are not innocent in the corruption that is lobbying, but politicians are showing themselves to be the greater miscreants.
2) While companies are not democratic in a direct voting sense, they do respond to popular pressure for the good of the brand, and sometimes very rapidly. In this instance they have been willing to endure narrow and short-term harm, including narrow and short-term harm for politicians who in some ways support the companies, for the greater good of their brand. In this way some corporations here are acting for a broader good than some “public servants.”
3) More constructively, this episode has at least demonstrated that lobbying can go down. Reducing lobbying is widely recognized as a good goal to pursue, yet it is extremely challenging to accomplish because, as economist Luigi Zingales colorfully puts it, expecting the moneyed political process to restrain itself “would be like expecting turkeys to vote for Thanksgiving.” Yet in the early parts of 2021, this has happened: the corporate “turkeys” have chosen, at least for a time, to restrain themselves! The political “turkeys,” not so much. Nevertheless, something that seemed impossible has occurred -- we should do our best to learn from it.
What can be learned from this sudden decrease in lobbying that could be implemented in more intentional, proactive, healthy-political-and-business-atmosphere ways?
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