The Effects of Corporate Lobbying, Pt. 2

By Josh Sager

 

Virtually nothing in society or politics happens in a vacuum -- policies which regulate or tax one group have a ripple effect which impacts the lives of many other members of society. Since lobbying has such a pronounced effect on policy aimed towards the welfare of those with lobbyists, it stands to reason that there will also be a significant impact on the rest of society.

Lobbying affects those who lack the resources to lobby as well as those who voluntarily abstain from lobbying in several negative ways: As tax revenue from those who lobby decreases, services are cut, taxes are increased on everybody else, or the national deficit increases; regulations which could benefit society are not passed, causing people to needlessly suffer from avoidable injuries such as toxic chemical exposure; our government eventually moves away from a system which respects the will of the people, and becomes a society where only the rich have a say in the public policy which is created.

Tax revenue is required by any government to sustain its operations. When tax revenue is lowered on a single segment of society, there is a ripple effect on policy which affects the rest of society. When tax cuts are given to a certain group in society, taxes can increase on other groups (imagine a pie where there are fewer slices, causing all slices to be larger if the pie is to remain the same size). In addition to tax increases on others, a reduction in overall spending and services by the government can be used to compensate for tax cuts obtained by those who lobby (imagine a pie where slices have been removed, thus reducing its volume). If, in the face of lobbied tax cuts, the government wants to sustain its spending, while not increasing taxes or the government, it can take out a debt (deficit) in order to operate. A deficit can be used to fund the government in the short term, but sustained and growing deficits are a serious risk to the integrity of a government (e.g., Greece).  

As corporations and the wealthy in the USA have used lobbying in order to lower their taxes, national and state tax revenues have been gradually depleted. The US government has compensated for decreased revenues from those who lobby politicians with a combination of austerity aimed at the middle class and the poor, combined with massive deficit spending. Throughout the national and state governments, public institutions have been receiving decreased funding (e.g., cutting the budgets of schools and police departments), particularly if their services are geared towards those who have no lobbying presence; this makes sense, as those with lobbyists wouldn’t let their services be cut when there are ways to offset the costs onto others. Cuts have simply not been deep enough yet to fill the gaping hole in our tax revenue, so the government has been required to drastically increase the national debt. The unwillingness of some politicians to tax those who supply them with lobbying money and campaign donations is slowly strangling the government, and rendering our taxing/spending policies unsustainable in the long run.  

Due to the high prevalence of industries which pollute or cut corners in order to make a profit, regulations are vital to the health of the modern society. By lobbying the government, corporations can decrease their regulatory burden far below the safe levels, creating the potential for disaster. Citizens are allowed to be harmed by corporations, just because certain corporations have rigged the legislative process in their favor. Unfortunately, for as long as money decides regulation rather than objective scientific analysis of the potential consequence, people will be harmed due to chronic under-regulation of dangerous industries.

In the USA, deregulation due to lobbying has caused several severe, yet entirely avoidable, disasters. Among these disasters, the financial collapseof 2008 and the BP oil spill are probably the best examples of catastrophes which have occurred directly due to lobbying-driven deregulation. 

Banking lobbyists were instrumental in the removal of banking and mortgage regulations during the last decade. Where previous banking regulations would have prevented the decisions which led to the collapse, deregulation removed these rules and paved the way towards the banking collapse. Even after the 2008 collapse, lobbying has prevented any serious regulations on the banks from being passed, opening us up to another potential collapse. 

The deregulation of oil drilling, both in the fields of rig safety and cleanup requirements, as pushed for by lobbyists spending billions over the last decade, was the major cause of the BP gulf oil spill. BP used inferior materials in the construction of its rig and didn’t construct a redundant shaft, thus creating a perfect storm for an oil spill. BP was allowed to operate so negligently because the extraction lobby in the USA is among the largest and most well-funded lobbies; they have killed regulation, pay virtually every politician involved in deciding oil policy, and get their people into positions of power in regulatory agencies. Any attempts to regulate extraction safety and pollution standards is seen as an attack by the oil lobby and is pushed back against immediately, creating a system where regulations are perpetually sub-par.

The effects of lobbying do not stop at the corporations and wealthy interests which use lobbyists. Every member of society is affected by decisions made by politicians controlled by lobbyist money, sometimes in ways which are not immediately apparent. We must remember that nobody in society is an island, and that the increase in profits for some may lead to increased cancer rates, ecological degradation or even economic collapse for the rest of us. 

 

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published this page in Blog 2012-05-31 13:05:10 -0400

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