What Big Government Is All About 16:06

How does government really work? Boaz talks about special interests, electoral politics, and lobbying.

Transcript

David Boaz: So how does government really work? We know what it says in the civics books. Every little boy can grow up to be president, now every little girl too, or Congress or run for the city council. And people run for office, and all the voters listen carefully and measure their character and the issues that they promise, and then they vote for them. And then they go into Congress, and you’ve all seen how a bill becomes a law. And people introduce bills, and then they debate them and they go through committee, and then finally, they get passed into law and implemented by public-spirited bureaucrats in the public interest. The reality is a little different. In a modern mixed-economy democracy, we’ve all got lives. We’re too busy to be full-time involved in politics. In a way, this model assumes that we’re like the ancient Greeks, that we have somebody else to do all the work of the business of life for us, and we have time to sit around all day in the arena and debate ideas and politics. 

But the reality is most of us have families and lives, and we’re not that interested in politics. So who is interested in politics? Well, special interest groups. So the people who specialize in politics and public policy are going to have a lot more influence than the people who don’t. Special interest groups could be the oil industry or Wall Street. It could be farmers or senior citizens or organized college students, organized environmentalists. What it’s generally not is just average citizens, average consumers, average taxpayers. It’s very hard to organize the majority. It’s much easier to organize a minority, and in particular, a minority that has a direct financial stake in whatever the government is doing. So in between elections, all these special interest groups dominate Washington. And I always say when I speak to interns and other groups in Washington, “Walk down K Street. Look at the directory of each of the big office buildings there. You can see who’s busy in Washington. It’s corporations, it’s trade associations, it’s industry groups, it’s unions, and so on.” That’s why Washington is full of lobbyists, because there’s money here. The famous bank robber, Willie Sutton, was once asked, “Willie, why do you rob banks?” And he said, “Because that’s where the money is.” Well, that’s why lobbyists come to Washington. That’s why special interests come to Washington. This is where the money is. I mean you can go out and you can make money by inventing something or drilling an oil well or repairing somebody’s shoes or delivering a pizza. There are all kinds of ways to make money. But some people are particularly good at making money by lobbying Congress, by delivering campaign contributions, by taking people out to dinner, whatever the ways of influencing Congress might be. A couple of years ago in an interview about lobbying, the nature of lobbying, how many lobbyists there are. A guy who works for the Ralph Nader organization, Public Citizen, said, “The amount spent on lobbying is related entirely to how much the federal government intervenes in the private economy.” That is the key point. The amount that gets spent on lobbying is related entirely to how much the federal government intervenes in the private economy. That intervention can take the form of taxation, spending, bailouts, handouts, subsidies, or regulations. One little regulation might determine whether you or your competitor or your supplier pays a tax. A comma in a tax law could determine who pays a particular tax. So special interest groups that are constantly alert to what’s going on in Congress and the bureaucracy, those are people who are going to have an influence. 

Now who pays these lobbyists? Well, obviously, unions and trade associations and businesses and so on. And why do they do it? Because there’s so much money at stake. So the point is related entirely to how much the federal government intervenes. One of the things that happens – and I think this is a very unfortunate aspect of the way Washington works – is that a company may stay, let’s say, out in Silicon Valley, just working on making better products to sell to people for money. And then somebody notices, hey, that company is making a lot of money and they’re not giving any of it to our campaign funds. So maybe they need to learn what it takes to keep Washington happy. And then you start getting anti-trust investigations, new taxes, immigration restrictions, technology restrictions, changes in copyright law, anything that might get this company’s attention. And then what happens? The company comes to Washington and hires lobbyists. Who does it hire? Former members of Congress, former members of the congressional staff, former regulators, people who have a rolodex of policymakers in Washington. So they try to fight this particular thing, this particular regulation tax or whatever. And one of the  problems is once they’ve got the lobbyists, then the lobbyists start saying to them, “You know, if we change that comma in that tax law, your competitor would pay the tax but you wouldn’t.” And you’re already paying the lobbyists, so you say, “Well, yeah, sure, why not. Let’s do that.” And at that point, another company has gotten sucked into the parasite economy, the economy that is not about serving customers but is about getting from Washington, or from a state capital or from a European capital, what you can’t get in the marketplace. And I think that’s a very sad thing. It’s not even just the money. Take somebody who is a great engineer or entrepreneur, a Bill Gates, a Steve Jobs, a Sam Walton, people like that. The most important thing they have to offer to our society is their minds. And if their minds get distracted toward fighting the predation in Washington or actually becoming a predator in Washington, then that’s a part of a brilliant mind that isn’t being used to increase consumer satisfaction, to find products and business strategies that will make a higher standard of living for all of us. So that’s really one of the worst aspects of the parasite economy.

Now let’s go back and take a little more historical look at this. What are we talking about? Where did all of this come from? Well, the sociologist, Franz Oppenheimer, about a hundred years ago, talked about where does the State originate. It’s all in prehistory, of course. And some of this is an understanding of history, some is a typological understanding what must it have been. But what he said was, “The state does not originate in civics book or in a convention. One group of people find a way to conquer another and to exploit them.” And one of the ways this happens is the early band of thieves or robbers or bandits or an incipient state sweeps through every now and then, takes everything you have, and moves on. And then they figure out, “You know, we could get even more if we just stayed. Just take 25 percent of the crop every year.” And to some extent, even the people being exploited thought that was a better deal. Better to know you have to give up 25 percent of what you own every year than to never know when Genghis Khan is going to suddenly descend on your village. So according to Oppenheimer, that’s kind of the origin of the state.

And he distinguished between the economic means and the political means of gaining wealth. The economic means is you find something consumers want. Maybe they don’t even know they want it yet. Who knew they wanted an iPad? Who knew they needed the Internet? Nobody even thought of these things. But you find something consumers will want, and you deliver it to them at a better price than anybody else does. That’s the economic means of gaining wealth. And it’s the dominant means in a capitalist society. And whether you are running a grocery store or working as a seamstress or working in a factory or creating the iPhone, you’re getting your wealth through the economic means. 

But other people figure out that it’s easier to steal what somebody else has produced. Now some of these people are just robbers and muggers and thieves, and we have a pretty good system for dealing with them. We have police. We arrest them. We throw them in jail. Some of them are embezzlers and fraudsters. They may be a little harder to catch. 

And then there are the people who realize that getting involved with the State, the government, that’s the best way to get a piece of what somebody else has earner, without actually creating any value yourself. And Oppenheimer said, “The State is the organization of the political means.” It could be just a rapacious king and his nobles ripping off the production of the peasants, but in our modern world, it tends to be members of Congress and the lobbyists who surround them. Now in theory, if we know this is true, we should vote out the people who are doing it. And everybody who runs for president says I’m an outsider, and I will go in there and I will clean up the mess of big money and Washington lobbyists, the Washington that has become as rich as the capital in The Hunger Games, that takes the produce, the wealth that’s produced all over the rest of the society, and makes a fabulously wealthy capital city. I will clean that up. I’m an outsider. 

But the reality is a little different. If you want to elect the right people and then monitor what they’re doing to make sure that they start cleaning things up, you run into a lot of obstacles. One of them is instead of simple bills saying we’re raising taxes on the rich or we’re providing money for student loans, much of government’s business in these modern days is in 1000-page, 2000-page bills. Nobody could understand them. Even the members of Congress don’t understand them. But certainly, a citizen who has a job and a family doesn’t have the time to read these bills and try to understand them, so they can’t figure that out. 

And then the parties aren’t all that different. The fact is the Republican Party and the Democratic Party are both promising to move about 5 percent in one direction or the other. They’re not really offering a different alternative. There’s the old joke that goes back at least to the 1964 presidential campaign. They told me if I voted for Barry Goldwater, we’d find ourselves at war in Vietnam. And they were right, I did, and we are. Now Goldwater lost. We still went to war in Vietnam. You could say of George W. Bush, they told me if I voted for Al Gore, we’d get a much larger and more expensive federal government that took more of what I produce. And they were right, I voted for Al Gore, and we got a larger and more expensive government, even though Gore lost; it was George W. Bush who won. They told me if I voted for John McCain, we’d still be involved in the war in Iraq eight years later. I voted for John McCain, and here we are. Eight years later, we’re still involved in the war in Iraq, even though the other guy got elected. So it’s pretty hard to change things in the direction you want by voting for parties who aren’t all that different.

Another problem with changing things through politics is that politicians present you with a package deal. If you go out shopping for groceries, you could find an infinite number of meals to make over the coming week by going to a simple grocery store. You can get a lot of different choices in a smartphone or a computer or an automobile. When you go to a department store, you can dress in many different ways after buying clothes at the department store. But in election, you’re usually given a choice of two candidates, and it’s a package deal. And one candidate says, “I’m going to get out of Iraq and raise taxes.” The other candidate says, “I’m going to stay in Iraq and cut taxes.” Well, if you think Iraq is a bad idea and you’d also like your taxes cut, or for that matter, if you think war and taxes are a good thing, either way, you don’t have a candidate who offers what you want. And when we broaden it from two issues to four, six issues, the chances of getting a candidate who really reflects what you want are not very good, which is a reason not to spend much time learning what the candidates are promising because you know it’s going to end up being this kind of package deal where you don’t like it at all. 

So people become what economists call rationally ignorant. If you’re going to buy a car, it makes sense for you to learn about cars. Get a copy of Car and Driver. Get a copy of consumer reports. Talk to your friends. Talk to your brother. Talk to your father, always good to talk to your father before you buy a car. But that’s because when you end up buying a car, you’re going to get the car that you made a decision to buy. In politics, after you do all the research and decide, “Well, I still prefer this package deal to this package deal, so I’m going to vote for this guy.” Your vote is not going to make a difference. There’s no presidential election decided by one vote. There’s no congressional election decided by one vote. You can go years between city council elections decided by one vote. So economists say voters decide to be rationally ignorant. It makes sense not to learn a whole lot about politics because it’s not going to do you any good anyway. And then I always figure sort of the final point is the candidates are probably not telling you the truth anyway. They may know they’re going to raise taxes and they’re not telling you that. They may know they’re not going to get rid of Obamacare, even though they’re telling you they are. They may know it’ll take them eight years to get out of the Iraq war the way they’re planning to do it. So what’s the point of learning about politics? And what it means is that the politicians who get elected don’t really rely on delivering what they promised or persuading voters. Voting the bastards out doesn’t really work. There are too many obstacles to making a political market work. We talk about the political market, but it’s very different from the market market. You go into the market. You have a pretty good chance of finding the product you want. In the political market, very unlikely that you do.