Research on the effects of campaign contributions and lobbying is an ongoing topic for research and has generated a rather large body of often conflicting literature. There is probably more than a little self-interested bias in the mix. Cost-benefit effects are hard to pin down, with most research showing little or no significant effect on legislation or the value of a corporation. One study found that reduced campaign contributions increased the likelihood of corruption in congress. That researcher pointed out that even the definition of corruption is open to dispute.[1] The data on campaign contributions and effects is all over the place and so are the measures used to gauge the effects, good or bad.
A recent paper, Fundraising for Favors? Linking Lobbyist-Hosted Fundraisers to Legislative Benefits, finds evidence that lobbying groups sometimes seem to prompt legislators to introduce amendments the group wants. This study relied on “uncommon data sources and plagiarism software to detect a rarely observed relationship between interest group lobbyists and sitting Members of Congress. Comparison of letters to a Senate committee written by lobby groups to legislative amendments introduced by committee members reveals similar and even identical language, providing compelling evidence that groups persuaded legislators to introduce amendments valued by the group. Moreover, the analysis suggests that these language matches are more likely when the requesting lobby group hosts a fundraising event for the senator. The results hold while controlling for ideological agreement between the senator and the group, the group’s campaign contributions to the senator, and the group’s lobbying expenditures, annual revenue, and home-state connections.”
A complex issue: This approach to analyzing the effect of money and lobbying on legislation points to the complexity of the issue. Studies that try to find benefit to a contributor by looking at the value of a corporation may be missing a much larger point. That approach is described by one group: “We identified dates of key campaign finance regulatory decisions and measured changes in stock prices of firms affected by those decisions. These decisions immediately affected hundreds of millions of dollars of corporate giving, but they have no apparent effect on the markets valuation of the long-term profitability of firms. This conclusion suggests that the fundamental critique of campaign finance in America – that donations come with a quid pro quo and extract very high returns for donors – is almost surely wrong.”
If one looks for effects on stock prices of big companies, the return on investment could very well be nil, but that doesn't mean an actual return is nil. Impacts of legislation can be hard to see, hard to assess, and/or take years to bear fruit, e.g., have future value by preventing reduced revenues in future years or by making it harder for competitors to enter a market a company wants to defend. Also, corporate value measures ignore social effects that are distant from immediate stock price changes.
Studies of campaign contributions and lobbying impacts on society appear to be limited. One study observed that the slush funds business organizations used to influence and distort regulations in the 1960s and 1970s caused a strong public reaction that led to strict accounting and reporting requirements in the Foreign Corrupt Practices Act (Joan T.A. Gabel et al., Letter vs. Spirit: The Evolution of Compliance into Ethics, 46 AM. BUS. L.J. 453, 459–60, 2009). That evidence suggests the American public did consider corruption a significant problem, at least for businesses doing business outside the US. Presumably, that attitude extended to businesses doing business with politicians in the US.
The public trust factor: Poll evidence indicates that public trust in democratic institutions has fallen in recent decades. Trust in congress is fairly low, running at about 40%, which is up due to increased republican trust in the republican congress. Presumably that will reverse to some extent once democrats take control of the House this week.
Poll data indicates that the millennial generation, roughly, people born 1980-1997, are losing faith in democracy, not just liberal democracy. One source reports that about 30 percent of millennials think it’s essential to live in a democracy, while about 75 percent of Americans born in the 1930s believed that.
Perception of corruption associated with campaign contributions and lobbying is a factor in the loss of public trust in congress. That loss of trust damages faith in liberal democracy, and in turn, that is correlated with an increase in acceptance of the corrupt authoritarianism that characterizes President Trump’s governing style. It is reasonable to think that in this case, correlation probably reflects causation to some non-trivial extent.
If that is basically true, then measures of the effects of campaign contributions and lobbying on public trust in democratic institutions is a component that must be included somehow for the measure to have better context and meaning. Ignoring the fact that many American see campaign contributions as a corrupting force, whether that is mostly true or false, cannot be ignored. The appearance of corruption has real impacts on the stability and well-being of the American experiment in liberal democracy.
Footnote:
1. The definition of corruption that study used was: “The abuse or misuse of public office or trust for personal rather than public benefit.” That definition was stated to embrace “aspects of the public interest and public office definitions, and also refers to incentives in a manner that echoes market-based definitions.” One can wonder what abuse, misuse, public trust and personal benefit mean. All those terms are open to dispute.
B&B orig: 1/2/19
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