There is no room for cronyism in the U.S. democratic process


Anirudh Rumalla

Some may say that the United States government is free or impervious to corruption. Others say corruption comes in the form of lobbying. Lobbying has reached an insatiable level and may lose its influential ability. It is a waste of time and money for both corporations and politicians attempting to allocate capital and policy.

Lobbying is simply communicating with government officials on what a group of citizens wants, a privilege granted through the principles of American democracy. In reality, lobbying goes beyond mere communication.

Special interest groups, the primary clientele of lobbyists, influence government policy to maximize the wealth of their members through involvement in policy making. More often than not, special interests are composed of corporations. Unfortunately, this “norm” has become typical and is now called cronyism. Politicians “fall victim” to cronyism because of incentives, institutions and the ignorance of voters who have no incentive to stay informed.

The goal of politicians is to get re-elected by maximizing votes. They do this through campaigning for populist programs, yet allocating funds and policy towards special interests. Often times, voters pay little attention to policy making and more to TV friendly spectacles. Because of this, the rationally ignorant voter is “captured” by politicians who align with corporate interests.

Policies are more politically feasible when they benefit small groups of people. These entrenched interests are usually supported by powerful corporations with immense resources, and often out-mobilize large groups of voters. This concentrated benefit is a diffused cost spread among taxpayers and voters. Taxpayers and consumers suffer the economic consequences of policies that have been influenced by special interest groups – tariffs, tax dollar subsidies, quotas, regulations, bailouts, corporate welfare, etc.

Whether or not programs are beneficial in the long run is irrelevant in the eyes of some politicians, due to the short-sightedness bias. During times of crisis, voters usually fault policy makers currently in office. Thus, those who implemented the policy face no incentives to plan future consequences, and are an easy subject of regulatory capture.

Due to the rapidly changing political climate, it is likely that the majority political party will change, along with regulations. Changed regulations create an incentive for new companies to enter and snatch market share, threatening to put competitors out of business. Regulatory capture is inefficient because the corporations are wasting resources to persuade political agents and in the long run will suffer the consequences of shortcomings.

Putting an end to lobbying contradicts the principles of the American free market economy. Under law, some corporations are given similar rights as citizens. They can freely conduct business, so long as it falls within the realm of the law. And lobbying is a legitimate business that has not been blacklisted. The ideal that makes for laissez faire is the economic freedom from the government that the private sector retains.

Lobbying can sometimes yield positive results for the American public. To resolve the issue of cronyism lobbying without infringing upon the principles of American capitalism, Congress should entertain legislation for new policy to ensure that lobbying is done in a positive way. Perhaps one that allows more transparency in fiscal policy, rather than corporate welfare thus preventing a negative externality. This new policy could include regulations that prohibits Congress from passing laws whose underlying authors, and only beneficiaries are corporations.

With the enlarging income gap, taxpayers are becoming far more informed and less rationally ignorant, paying closer attention in politics. The delicate, yet resilient nature of the U.S. economy has been tested time and time again, and has shown that there is no room for cronyism if we are to remain a global economic leader.