Understanding corruption versus lobbying
Corruption vs. lobbying: an overview
Corruption and lobbying are often associated in the public mind: Critics of lobbying suggest it is corruption in a lawsuit. While the two seek a favorable outcome, the two remain separate practices. Corruption is seen as an effort to buy power – to pay to guarantee a certain outcome; lobbying is seen as an effort to influence power, often by offering contributions. The main difference: corruption is considered illegal, unlike lobbying.
Key points to remember
- Lobbying is the organization of a group of like-minded people, industries or entities to influence an authoritative body or legislator, often through financial contributions.
- Corruption involves the payment of something – whether it be money or property or an intangible favor – in subersion of normal practice, for special gain or treatment, or in order to gain an advantage.
- In the United States, lobbying is legal, while corruption is not.
- Corruption is an effort to buy power, while lobbying is only an effort to influence it, but it is true that the distinction between the two can be opaque.
Lobbyists try to shape laws, legislation and public policies to benefit the group or entity that employs them. Their campaigns (which are legal) can sometimes be public (or channeled to the media to influence the public), but they more generally target politicians, elected officials, lawmakers, and government agency employees – the influencers on Capitol Hill and across the country. Capitol Hill. state capitals too.
Lobbyists are required to register with the Secretary of the Senate and the Clerk of the House, and to file disclosures of their activities and expenses, in accordance with the Lobbying Disclosure Act, 1995.
Lobbyists – the term refers to both individuals and organizations – have been around as long as governments; they have traditionally been seen as ‘information givers’, a valuable source of facts and data, even though it is true that they support their cause or their industry. Lobbyists systematically build support for their causes over the years and decades. Often times, they fund a study or poll or research that might influence the opinion of a politician – or the opinion of his constituency.
But more often than not, they act more directly: by giving money. Increasingly, lobbyists ensure that contributions are made from the ground up to influence decision makers at all stages. These contributions are not paid directly to any civil servant or legislator. But they can go to that person’s election or re-election campaign – buy advertising, fund a fundraiser – or a politician’s favorite cause or charity or a hometown / state project. There is a tacit agreement, even a pure and simple consideration: we have supported you and your interests; in return, you support us, us and ours, by voting for (or against) this bill, by financing this subsidy, by extending this exemption, by relaxing this regulation….
But if they’ve been around forever, why have lobbyists been garnering such contempt lately? This is partly because of their greater notoriety. In the past, they tended to operate quietly, behind the scenes and out of public view. Over the past few decades, however, they have grown bigger and more daring, operating very openly as a profession. (In Washington DC, “K Street” is shorthand for the realm of lobbying, as many are centered there, the way “Wall Street” in New York City symbolizes the financial industry). Not a month goes by without it being publicly announced that a former statesman or stateswoman is joining a lobbying firm, capitalizing on their knowledge of how the machinery of government works.
And the money involved, both what lobbyists earn and what they pay, keep increasing. Total lobbying spending increased from $ 1.44 billion in 1998 to $ 3.53 billion in 2020. According to OpenSecrets.org, the top three spenders in 2020 were the National Association of Realtors ($ 84.1 million), the United States Chamber of Commerce ($ 81.9 million), and the Pharmaceutical Research & Manufacturers of America. ($ 25.9 million).
How lobbyists work
For example, cigar lobbyists campaigned so that cigars were not lumped together with cigarettes. They have lobbied for years to avoid government control and to spread the image that cigars are not harmful, when in fact cigars are as dangerous as cigarettes.
Or take the financial sector. Securities and investment firms spent $ 104 million in 2020. This amount is consistent with previous years. In the aftermath of the Great Recession of 2010 and 2011, this sector was spending $ 103 million per year. Most of this money has been spent to ensure that the government does not regulate the hedge fund industry.
The impact of lobbying is enormous. It affects politics by influencing policy makers and therefore citizens, rather than just individuals. Whether paid directly by entities or through professional lobbying firms, contributions – this “special interest money” as it is imaginatively called – that make lobbying associated with corruption .
In contrast, a bribe usually occurs at the individual level. And it’s anything but public. A bribe usually makes an offer of money “under the table” in order to subvert standard processes. This could include paying a tax officer to clear reports with underreported income or sending goods without an invoice.
The bribe can take the form of a gift or a favor in kind. The purchasing manager of a company may award an order to a supplier in exchange for an undue favor in the form of money, against his company’s policy of awarding orders on the basis of quality and price criteria. Public officials are offered bribes to enable tax evasion and related obligations at the individual or corporate level.
Either way, a bribe, along with its cousin, the bribe, results in an unfair advantage for the bribe giver. Bribes may seem like small amounts compared to lobbying contributions, but this is where the problem lies: they often cannot be counted.
Corruption is the first step in the subversion of the economic system. Slowly but surely, a corrupt parallel system is forming. It creates inefficiencies and short-term obstacles; over time, it erodes the country’s economic foundations, hurting the most vulnerable members of society and filling the middle class with a sense of hopelessness and cynicism.
If bribery-based corruption becomes rampant, it can be at the heart of systemic failure in some countries. In a World Bank report, “Does the Fat of Money Speed the Wheels of Commerce?” the relationship between bribe payments and various measures of official harassment (wasted management time with bureaucracy, regulatory burdens and cost of capital) was investigated. Evidence suggests that there is no support for the “efficient fat” hypothesis, that corruption can be an effective tool that leads to better business practices. In fact, a constant trend is that corruption and official harassment measures are positively correlated between companies. It also increases the cost of doing business.
Real examples of corporate corruption
Walmart has been accused of bribing Mexican government officials to get new permits faster to open stores earlier.
In 2011, Johnson & Johnson agreed to pay $ 70 million in civil and criminal fines to settle a lawsuit filed against her by the Department of Justice, filed under the Foreign Corrupt Practices Act (FCPA). The SEC had accused Johnson & Johnson and its subsidiaries of bribing Greek government doctors who had selected J&J surgical implants; hospital administrators in Poland in exchange for contracts; and Romanian public doctors to prescribe J&J pharmaceutical products. J&J affiliates also paid Iraq bribes to secure 19 contracts under the United Nations Oil-for-Food program, the SEC accused.
Corruption appears to have no morally redemptive characteristic: it is a direct purchase of favor or advantage. Lobbying, on the other hand, is also used by civil rights and environmental groups in their battles against commercial and for-profit interests. In this sense, lobbying becomes an essential and important tool for influencing public policies and balancing the scales between different groups.
But all too often, the broker where lobbying influence ends and outright corruption begins can be difficult to understand.