So, how cynical are you about politics: or, Google's lobbying expenditure explained

By Tim Worstall , written on April 14, 2014

From The News Desk

The Washington Post has a lovely little piece about how Google's lobbying expenditure has changed in recent years. From being entirely disdainful of the whole process, only opening a one person office a few years back, the company has now climbed to near the top of the pack in throwing money around DC.

What your attitude toward this is could provide an interesting litmus test of quite how cynical you are about politics. On the one side we might say that the company is obviously off trying to bribe our brave and honest Solons into passing laws which benefit the company and its owners: capitalists defeating democracy. On the other we might view the politicians as parasites who will demand their share from any decent sized pot of money they can spot.

The story is here:

The behind-the-scenes machinations demonstrate how Google — once a lobbying weakling — has come to master a new method of operating in modern-day Washington, where spending on traditional lobbying is rivaled by other, less visible forms of influence.

That system includes financing sympathetic research at universities and think tanks, investing in nonprofit advocacy groups across the political spectrum and funding pro-business coalitions cast as public-interest projects.

The rise of Google as a top-tier Washington player fully captures the arc of change in the influence business.

Nine years ago, the company opened a one-man lobbying shop, disdainful of the capital’s pay-to-play culture.

Since then, Google has soared to near the top of the city’s lobbying ranks, placing second only to General Electric in corporate lobbying expenditures in 2012 and fifth place in 2013. What view you might take of this could well depend upon whether you've read much Mancur Olson or not. I have and tend toward the explanation of politics as predation upon wealth generation rather than wealth trying to buy politics.

That last certainly happens of course: there really are people out there who attempt to use the law for their own benefit to the detriment of everyone else. Think of the auto dealers insisting that Tesla not be allowed to sell direct, or Uber fighting with those taxi commissions. But the question becomes slightly different when we try to consider all lobbying and political donation expenditure. The question being, if a large company wanted to stay out of the system could it?

And the depressing answer there is that no, they probably couldn't. For the very fact that other people are willing to try to subvert a pure and clear governance system to their own ends means that it's necessary to counter their plots against you.

But that's not all, which is where Olson comes in. He viewed government as being like the difference between roving bandits and stationary bandits. Some little farming community out there on the steppes in antiquity might sometimes face raids by the nomads. And the incentive for the nomads is to come in and take everything at the time of that raid. The farmers therefore needed their own bandits to protect them: and that would obviously have to be a stationary bandit. At which point the incentives change: for you don't want to take everything in one fell swoop if you're going to be staying there and protecting that community. You are, after all, still a thug and a bandit but you're best bet is to exploit the farmers consistently and over time. The farmers put up with it because keeping something under the protection of the stationary bandit is better than losing it all to the roving ones.

While we didn't quite institute government in order to protect us from bandits it is certainly possible to take the view that some of the guttersnipes who end up in it are indeed our stationary bandits looking to exploit the rest of us. Which was Olson's conclusion. And this leads to the reason that large companies like Google spread a bit of money around the political classes. It's not so much to get them to change the law in the company's favor, it's rather more just to pay them off, to be exploited a little bit, so that they then get left alone while the political class gorges on its tribute. Or, pay the stationary bandits in order to dodge the roving ones.

You would have to be as cynical as I am to buy that in its entirety, but I think we all do recognize that this happens at least a little bit. Companies pay money to the political class simply because that's the best way to make sure the political class doesn't start demanding more. And fortunately politicians are cheap so it's a minor issue overall, however cynical one might want to be about it.

[Illustration by Aleks Sennwald for Pando]