How Competition is Stifled by Government

Recently, I have been reading Jonah Goldberg’s book entitled Liberal Fascism. For conservatives, and liberals who are not afraid of a little constructive criticism, I recommend the book. Goldberg exposes some of the reasons that people on the political left initially formulated their opinions on issues. At its core, the book explains that fascism is not an ideology but a desire for ever-increasing state power and that it is neither an inherently right or left wing phenomenon.

Something really caught my eye is his argument that lobbyists exist, and are dramatically increasing in number, because the government continues to insert itself into different areas of our lives via regulation. Lobbyists are a product of this increased regulation. Each new arena invaded and regulated by the government will motivate individuals, or businesses, to hire lobbyists to fight on their behalf during the legislative process. Lobbyists exist because regulation frequently expands into new arenas. As such, hoping that more regulation will decrease the influence of lobbyists is a paradoxical idea.

I, too, wish that lobbyists representing special interests played a significantly smaller role, or no role at all, in crafting legislation. The only feasible way that my hope can become a reality is if the government will stop meddling in business and in peoples’ lives. It stands to reason that if increased regulation is positively correlated with increased lobbyist presence, then less regulation will result in fewer lobbyists. Goldberg’s assessment is that the relationship is not only positively correlated but causal; I agree.

Lobbyists are hired by interest groups to ensure that legislation will be as painless for that interest group as possible. ExxonMobil hires lobbyists whose sole purpose is to ensure that legislation is as favorable, or does as little damage as possible, for the company. Less able to hire lobbyists are smaller oil companies; they are less powerful in the political actors in the political process as a result. Because of this, large companies like ExxonMobil are relatively more likely to receive friendly terms in the legislation than the smaller, less powerful oil companies. If this is indeed the result, that larger companies receive more favorable treatment in the legislative process, then regulatory legislation necessarily squeezes out small business in favor of big business.

Ironically, the same politicians, usually the liberal ones, that berate big businesses like ExxonMobil are the same politicians that criticize the massive companies’ market power. So, the liberal politicians are critical of the results of their own meddling. They, too, are critical of the lobbyists that their regulation is the cause of.

Question is, why do politicians give in to special interest lobbyists? The answer is simple; because large corporations donate massive amounts of money to candidates hoping to buy favor with the candidate should he get elected. Campaign donations are essentially buying future favors. Republicans and Democrats are both guilty of caving into special interests and crafting legislation favorable to interest groups. Since 1990, ExxonMobil, the parent company, has donated over $10 million to political candidates.

Regulatory structures and government meddling in the private sector necessitates the existence of lobbyists. The result is less competition in the free market because large companies, which are more politically powerful, receive favorable legislation that squeezes small business out of the market. Government, when led by either party, meddles in private affairs is in bed with big business and is thus stifling competition in the American economy.