Why So Little Lobbying?

University Of Chicago economist Casey Mulligan tries to answer the puzzle:

Some people have expressed dismay at the unprecedented amounts spent on 2012 political campaigns. But heightened political spending and other forms of political participation are an expected consequence of our more active government.

As explained by a pioneer in political economy research, Gordon Tullock, the real surprise about spending on campaigns and lobbying is how little it is compared with the amount of resources controlled by governments.

The federal government spends about $4 trillion every year, and state and local governments another $2 trillion, not to mention the resources these governments control through regulatory activities.

At the same time, estimates of aggregate campaign and lobbying spending are well below than 1 percent of total government spending. For example, analysis of filings under the Lobbying Disclosure Act finds that $3.5 billion was spent on lobbying in the year 2010.

Although economists have trouble explaining why observed lobbying spending is so little in total, economic analysis has been successful at explaining why there is more lobbying in California than, say, Vermont and why lobbying expenditure often peaks at the height of legislative activity. More is at stake.

For better or for worse, an active government begets lobbying activity.

Full post can be found here.

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