Lobbying as investment -- does it pay? 

Does lobbying pay?

Journalists like me write all the time about how businesses make profit off of lobbying government, but there are plenty of times when lobbying is a waste of money (for instance, I wrote about Whole Foods getting sucked into the lobbying game). I also think K Street often is more about lawmakers influencing companies than the other way around (see, for instance, Schumer's Racket).

So, it's an open question whether lobbying pays off, or if it is ultimately a poor allocation of resources. I've seen studies that point both ways, but a forthcoming study of all those studies comes down on the side of yes, lobbying pays.

The Memphis Commercial Appeal reports:

Corporate investment in lobbying and political campaigns can directly benefit a company's bottom line, according to a new study by a trio of university researchers.

The study by University of Tennessee professors Russell Crook and David Woehr and University of South Florida professor Sean Lux found that corporate political activity typically results in 20 percent higher performance for companies.

"We wanted to investigate the relationships and interactions between companies and politicians and ultimately how that affects a firm's bottom line," said Crook, a management professor in UT's College of Business Administration.

What the researchers found was a "pretty strong correlation" between corporate political activity -- lobbying and campaign donations -- and a company's profit growth.

I'll throw in my theory: lobbying pays, but often in a vicious-cycle or nuclear-arms-race kind of way. If everyone eschewed it, everyone would be richer, but once some companies start engaging in publicly-policy-profiteering, others have to join.

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Timothy P. Carney

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