Should the Lobby Industry Be Legal? Ich don’t think so — A Few Thoughts and Numbers

[This article was originally published in Portuguese on Poder360, a political newsletter in Brazil, in November 2018]

In his first press conference after accepting the invitation to become Brazil’s Justice Minister, Sergio Moro made a statement that went largely unnoticed — he said he intends to regulate the lobby industry in Brazil. But if Moro really wants to fight corruption, the proposal is wrong. Regulated lobby does not end corruption — it legalizes it. Changing the legal status of an immoral practice does not make it more acceptable. In a reverse sense, it would be like thinking that animal torture was less reprehensible before the law came and qualified it as a crime.

Lobbying, especially in the United States, is a dystopian example of the preponderance of economic power over popular interest. And one would be wrong to think that this is the apotheosis of capitalism — it is really more like its death sentence.

Imagine a country where the largest individual purchaser of medicines is forbidden by law to negotiate prices, even though its average purchase is in bulks of millions and millions of units. Now imagine that this buyer is the government, and that the one who made the law prohibiting it from negotiating prices was the government itself. That should tie a knot in most brains. If this were in a fiction book, as an editor I would have vetoed it for its absence of verisimilitude. But this country exists, and it is considered by the least informed as the Mecca of capitalism — the United States of America. A Forbes report from August 2018 shows what’s going on.

For those who value the healthy competition of the free market and think the United States is its epitome, I am sorry to disappoint. American capitalism is a farce. And this is due in large part to the lobby industry. In a simplified form, lobby in the US is the work of influence exercised by companies for the approval of laws and regulations that favor them. Lobbying outfits are often powerful law firms that use legal and illegal tricks to persuade legislators and the executive powers at all administrative levels and at federal, state and municipal jurisdictions.

Nongovernmental organizations and non-profit institutions can also lobby, but as this article intends to show, the power of “persuasion” is directly related to the money spent on the task.

Among the 10 sectors that spend the most money on lobbying in the US are the pharmaceutical industry, the military armaments industry and firearms factories. It is no mere coincidence that the US has the highest per capita number of deaths due to overdose from analgesics, an unprecedented number of gun deaths among developed countries, and the world’s largest expenditure on wars and armaments.

The correlation between corporate profits and the size of their lobbying expenditures has been well established, and the findings have been published in newspapers whose “capitalist credentials” are undeniable. There are reports that demonstrate the abnormal strength of lobbying published by Bloomberg, Reuters, The Atlantic, The Washington Post.

The British magazine The Economist published in 2011 a study by Strategas that shows that lobby is an excellent investment. According to the report, this activity produces profits comparable only to those of the most successful hedge funds. But almost no data is as compelling as the bizarre reality that has become the norm in a country like the US.

Americans are on average 10 times more likely to die by firearm than residents of any other developed country. If we only include the 22 highest-income countries, the chance of death by firearm becomes 25 times higher in the United States, according to a study in The American Journal of Medicine published in 2016.

After the latest mass murder in California [P.S.: there have been a few more since then, appipolilogies], the mother of one of the victims said in tears that she did not want any more prayers — she wanted a change in legislation. But this mother has little power. Even though she represents millions of Americans, she does not have the same millions of dollars spent by gun lobbyists, the National Rifle Association (NRA), which is increasing its investment in lobbying almost at the same rate as the massacres.

The lobby of the pharmaceutical industry also helps explain other blemishes in what used to be great democracy. The data is terrifying, and the stories that cannot fit in this article are nightmare-inducing. Few people know this, and it’s hard to believe, but the third biggest cause of death in the US is medical error. The US is also the country where about 100 people die each day from overdose of prescription painkillers.

Lobby action also explains why the United States has the highest rate of children under 6 years of age on psychoactive drugs. Those surreal statistics are the outcome of laws and regulations that facilitate or even provoke such tragedies.

It was the lobby of the pharmaceutical industry that managed to get the government to pay for the use of medicines for Attention Deficit and Hyperactivity Disorder (ADHD) in such young children. It was also the lobby industry that persuaded the Food and Drug Administration (FDA), a drug-controlling agency, to increase the dosage of opiates and broaden its indications. This is why the US consumes 2/3 of all painkillers sold in the world, according to research by the Associated Press and the Center For Public Integrity.

The lobby of the pharmaceutical industry is also responsible for another calamity, one that is even more somber because it is slower: the death of Americans who do not have enough money to buy drugs that in other countries cost a mere fraction of the price charged in the US.

It is astounding, and contradictory, that in a country where the free market is revered, drug prices are controlled — and controlled upwards. The methods of control are varied, and almost all have been influenced by laws suggested — sometimes directly written — by the pharmaceutical industry.

Patent protection, for example, is one of the ways used to secure monopoly and guarantee that exorbitant prices will be charged. This rule exists to compensate companies for investment in research and development. Often, however, the ones who paid for such R&D were the taxpayers themselves, through government grants.

This is the case, for example, of the infamous EpiPen, or epinephrine auto-injector, the life-saving tool whose absence means certain death for allergic people suffering anaphylactic shock. Its price has risen 500 percent in a decade, and despite costing the manufacturers a mere US$ 30, it costs the consumer US$ 600. The same company that produces the EpiPen has raised the price of its asthma medicine by 4,014 percent, from US$ 11 in 2013 to US$ 434 the following year.

These episodes are no exception — they are the rule.

I’ll use a personal anecdote to illustrate the commonality of this situation. I recently researched the side effects and effectiveness of two remedies, one for menstrual cramps and the other a medication that also has veterinary use (for my dog), mefenamic acid (Ponstan) and Albendazole.

I conducted my research in English and by chance I came across the prices charged in the United States. The difference to what they are charged in Brazil is dizzying. In Brazil, Ponstan costs about US$ 5; in the US, the corresponding amount of mefenamic acid costs US$ 200. But you won’t find the prices on the internet so easily available, because even that has been a victory to the pharma lobby in detriment of the consumer: the pharmaceutical industry managed to evade the need to disclose the price before the customer produces the prescription, making price comparison even harder.

It is worth taking some time to read about the efforts of US President Donald Trump to get something that would be easy almost anywhere else: forcing the drug makers to expose their prices on their advertisements, as a 2018 Bloomberg report shows.

Albendazole, a medication that has existed since 1975 and is on the list of essential medicines of the World Health Organization, costs in Brazil about one to two dollars. In the US, its price is approximately US$ 200.

The arms industry lobby also explains why the US Congress — both Republicans and Democrats — approves ever greater spending on military weapons. For the year 2019, expenditures of US$ 717 billion have been authorised.

The Iraq war has cost the American taxpayer the direct sum of US$ 5.6 trillion, according to a study by Brown University. This in a country where 12% of the population live below the UN-defined poverty line.

Even the monstrous financial crisis of 2008 — one of the biggest to hit the United States — is directly related to the lobby conducted by the financial industry. And the one who says so is not the US left-wing magazine Jacobin — it is rather the boogieman of the left, the International Monetary Fund. A study conducted by the IMF shows, according to a New York Times report, that “ the heaviest lobbying came from lenders making riskier loans and expanding their mortgage business most rapidly during the housing boom.”

Barack Obama agreed to cover the banks’ mess with trillions of taxpayer dollars. Not coincidentally, the banks that most benefited from this aid were the ones that had invested the most in lobbying.

There is another phenomenon related to the lobby industry that is worth exploring with more time at another time — that of the revolving doors. Revolving doors refer to the fact that a number of former industry lobbyists now act directly in the government as advisors to congressmen, or even as regulators at government agencies, or vice-versa — members of the government now work at the lobby industry pressuring their former colleagues.

There are hundreds of examples of revolving door in the US government. The most recent, to only stay on one, only caused an uproar after the killing of Saudi journalist Jamal Khashoggi, when newspaper readers discovered that one of the men appointed by Donald Trump to the White House Presidential Partnership Committee was at the same time a registered lobbyist of the Saudi monarchy working for the interests of Mohammad Bin Salman.

Advocates of the lobby industry say that regulating the activity helps expose something that would be done in the dark, and that this would allow more transparency to the activity and to corporate activity. That argument doesn’t hold water.

First, there is nothing to prevent lobbyists from continuing to work under the radar, even after the legalisation of their activity. In the US, even under the current law, no lobbyist has the obligation to disclose in what sense he tried to influence a lawmaker, whether it was against or in favor of something, or even if the lobbyist wrote the law with his own hands.

In Brazil, a bill on the subject does not even require the use of a badge in the premises of the congress to identify lobbyists. But the biggest problem in the US — which would also be a problem in Brazil — is that, while the lobby law limits the price of presents given to politicians, it does not limit the participation of corporations in the financing of political campaigns through Political Action Committees (PACs). It is here, perhaps, where the biggest problem is — not in the right that companies legally have to try to persuade a politician to support corporate interests, but in the power those corporations have to reward those politicians for it afterwards.

Another argument in the defense of the lobby activity is that lobbyists effectively help congressmen understand minutiae of legislation and breaches of the law — which is true, but it is also equivalent to asking the fox to help build the chicken coop because the fox knows the smarter ways to get in.

Lobbying critics say the government should give congress more money so that congressmen and senators could get better legal assistance in the process of drafting new laws. At present, the investment of lobbyists in the US Congress outweighs their official household expenses.

Yet another argument used by lobbying advocates is that it allows for action and counteraction by stakeholders. By letting different groups fight for their interests through deputies and senators, regulated lobby would be allowing a chance for a debate in the open, with arguments for and against clearly exposed on the floor of the two legislative houses. This allegation is one of a disconcerting naiveté, for the power of persuasion is directly proportional to the money used to persuade.

The battle between opposing ideas — in the rare moments when opposing ideas have equal power to debate — is not being decided by arguments, but by money instead. How can we expect, for example, that family farmers of organic crops have the same financial power as Bayer or Monsanto when they need to fight against the unbridled use of pesticides? Which entity has enough money — or even the momentum gathered in an cohesive association — to fight against Monsanto for information on the label of genetically modified food products?

Alternatives to the lobby industry are not easy or obvious, but must necessarily go through ending the power of money in politics. And that begins and ends with private funding of campaigns, however legal the funding may be.

Those who defend private funding on the grounds that the taxpayer should not pay to elect anyone, paradoxically are the same people who know that there is no free lunch, and that any private “aid” will be charged interest, plus the middleman commission — a bill that ends up getting even bigger for the same taxpayer it pretended to spare.

When Aécio Neves warned that he would give up his salary if he was elected president, holders of two or more neurons understood the absurd implication of this supposed generosity: only people with money would afford to enter politics. But that is exactly what has been happening: the campaigns are still expensive, and the candidates are increasingly hostage to the moneyed interests that support them.

It is true that the lobby industry is also made up of entities that defend what we have understood as essential rights, not private interests: protecting the environment, animal rights, reducing poverty, supporting the homeless, helping orphaned children, defense and maintenance of health services, decent and affordable transportation, public education, accessibility for the physically disabled. But not all of these causes can attract a cohesive, organized interest group that has the size, power, or money to be persuasive. In other words, although legal and open to all, in practice the lobby activity becomes a tool of few (with money).

By regulating the lobby industry, the lobbyist market is created, and private interests become commodities and treated as such. If there is a risk of selectivity from the beginning of the process, the greater risk still is at the end — when there comes the time to award a politician for his support of private interests.

As long as there are ways to financially reward a politician for his legislative help, there will always be a problem with the lobby that initially convinced him.

For all this, public campaign funding is fairer and infinitely more economical to the taxpayer, and this is an idea being increasingly debated in the United States.

Lawrence Lessig, a law professor at Harvard and a political activist, suggests that citizens receive vouchers equivalent to US$ 50 so that they can be used to support their candidates or their favorite causes, which would give each citizen equal power of persuasion. This persuasion, in turn, would increase as each cause is supported by a greater number of people, allowing the system a democracy based on what is best for most people, not for a single powerful minority.

It could be argued that regulated lobbying might compel society to organize itself better, and to create its interest groups. This has to some extent been done organically and imperfectly through social networks.

Democracy and its instruments will undergo serious transformations, including and especially with the popularisation of the blockchain and its ability to facilitate direct choices with safety, anonymity and record speed. For now, however, we live a supposed democracy in which every citizen has a vote, but every penny has a much stronger argument.

For decades now, the widest and most efficient role of the American government has been that of a money transfer outfit — the government collects taxes from millions of people and transfers them to a few beneficiaries. It was so with the Iraq war, and with the financial bail-out of the banks that crashed the market and whose CEOs still received millions of dollars in end-of-year bonuses even as the crisis was happening.

Lobbyists, in writing laws and rules, end up defining where this money transfer will go, and thus they determine the life and character of a country. When the private profit of the few becomes the North of a nation’s compass, it turns that nation into a dystopia where thousands die of overdose with medicines bought at the pharmacy, or murdered in a bar with weapons purchased at WalMart, and where six-year-olds already use a cocaine substitute soon after they leave the kindergarten. Legalising lobby in Brazil is a terrible choice, and I hope Sérgio Moro — as Bolsonaro seems to be doing — has the wisdom to think better and retract from his original idea. Having been wrong is not a big problem; being wrong is.

Paula Schmitt is a journalist and is quite awesome at times. www.twitter.com/schmittpaula