How Corporations Influence the Government
Part Two of the book, which covers Chapters 2, 3, and 4, deals with how corporations influence the government. Part Three, which consists of Chapters 5, 6, and 7, discusses how corporations affect us directly. Part Two is a little easier to understand because the concept of corporations influencing the government is a familiar one. In general, corporations influence government through campaign contributions, through lobbying, and through captured regulatory agencies. Although this is not always emphasized in American Government texts, this influence is certainly a common theme in many political discussions. In Part Three, we talk about how corporations affect us directly. This concept is not difficult to understand, but it involves ideas with which we unfortunately may be far less familiar.
One mechanism which corporations use to influence the government is campaign funding. Campaigns for federal office have become very expensive today. They were not always so costly. National campaigns came to be more and more expensive as the country expanded. With the rise of big business, we began to see corporations donating money to political campaigns. The first political campaign involving a large amount of corporate contributions was that of William McKinley in 1896. As a result of the way his campaign was run, large amounts of corporate donations were made. After that there were attempts to clean up political campaigning. For example, Teddy Roosevelt ran a "Clean Government" presidential campaign, under the influence of early reformers. And in the following decades, various laws were passed on campaign financing. We won't go into all of them, but one of the most important of those passed early in the twentieth century was the Federal Corrupt Practices Act of 1925. It limited both campaign contributions and campaign spending.
Federal Elections Campaign Act
In 1971 the Federal Elections Campaign Act was passed, banning corporate campaign contributions. That was followed by the Watergate scandal. As a result of that scandal, major amendments to that act were passed in 1974. Whether one considers the major act as that of 1971 or 1974 is not important. However, the major amendments of 1974 were clearly a result of Watergate.
Most people today do not know what Watergate was really about. Basically it was Nixon's attempt to use underhanded methods or "dirty tricks" to influence the politics of the Democratic Party so that their weakest candidate would be nominated to oppose him. He did succeed in accomplishing this in the election of 1972. So Watergate was really a crime against democracy. In that endeavor, Nixon's people got many corporations to contribute to his campaign organization, which was called the Committee to Re-elect the President or CREP (an appropriate acronym indeed).
The 1974 Amendment tried to limit campaign contributions and campaign spending. It also set up the Federal Elections Commission (FEC) to enforce the Federal Elections Campaign Act. This was very important because it was the first time an enforcement mechanism had been established in connection with a campaign finance law. Although the Federal Corrupt Practice Act of 1925 had contained very strong provisions, they were never enforced. The 1974 Act was thus a very significant step toward campaign finance reform when it was first passed.
However, it is very difficult to reform campaign financing. If you try to bar corporate campaign contributions, then the members of the board will contribute personally. If members of the board are not allowed to contribute, their wives will contribute, and so on. There are always loopholes that corporations will try to find. And, since they are well connected and have a lot of high paid lawyers on their side, they will find loopholes. It's very difficult to control this. We have been trying to control corporate contributions for the last 100 years now--without much success!
Buckley v. Valeo
As we noted, the 1974 Amendments put limits on both campaign contributions and campaign spending. However after the Act was passed in 1974, there was a very important Supreme Court case in 1976 called Buckley v. Valeo. The decision in that case was that campaign spending could not be limited. The Court felt it was a violation of freedom of speech to do so. Moreover, the Court ruled that individuals could contribute as much of their own money as they wanted to their own campaigns. The Court did let stand the other limits on campaign contributions. An individual could still only give up to $1,000 to a candidate campaign per election cycle. That meant $1,000 for the primary, and $1,000 for the general election.
What the decision allowing individuals to spend an unlimited amount of their own personal money on their own campaigns did was to increase the tendency of the Senate to be a "millionaires club." It also affected the House in a similar way. Since the Democrats don't want--or don't enjoy--as many corporate and wealthy connections as the Republicans, and therefore have trouble raising money, the Democrats tend to nominate candidates for the Senate who have a lot of their own money to spend on their election campaigns. For example, California Senator Barbara Feinstein's husband is very wealthy and so she has a lot of personal money to spend on her campaign. In fact if you look over the roster of Democrats in the Senate, you will find quite a few millionaires.
The 1974 Act also allowed for what is known as political action committees (PACs), and they are very important. A political action committee is a separate fund or organizations to which members of a group--such as a corporation, labor union, or trade association--can donate money. These funds, in turn, are used to contribute to political campaigns in the name of the group. PACs can contribute up to $5,000 per campaign per election cycle. The Democrats had been using union PACs as a source of funds and wanted to continue to be able to do so. They thought that corporate PACs would only be able to accept contributions from members of their boards of directors. However, a subsequent ruling by the FEC said that all employees of a corporation could make voluntary contributions to the corporation's PAC. This gave a lot of strength to corporate PACs.
PAC funds had to be totally separate from the funds of the labor unions or the corporations with which they were associated in order not to have direct campaign contributions from corporations or labor unions. You could also have PACs formed in association with civic groups. So, for example, there are liberal and conservative organizations that have their own PACs. These PACs give money to candidates who share the group's views. The amount PACs can collect is unlimited. But, as we noted before, they can only give $5,000 to any one candidate per election cycle. However, they can give to as many different candidates as they wish.
Corporations benefit greatly from the provision allowing for PACs. Moreover, even if your company has a PAC, you may also give to the PAC of a trade association that represents your company--let's say National Association of Manufacturers' PAC. In the period since 1974, corporate and trade association PACs have come to dominate PAC contributions and gain far more influence on the government than other PACs. Thus instead of limiting corporate influence, the 1974 Act set up a mechanism--the PAC--for legitimizing that influence. Here we see how, even when you try to level the playing field, in the end your attempts may have the opposite effect.
Furthermore, sometimes voluntary contributions to a PAC may not be so voluntary. If you are a junior executive in a corporation and a senior executive asks you to make a voluntary contribution to the company's Political Action Committee, you might find it difficult to say no. Sometimes companies have been known to set up a situation in which employees make voluntary contributions to the company PAC, and then get their money back in the form of a Christmas bonus. So the corporate contributions in these cases are not so indirect.
Since the 1970s, other ways have emerged to get around the law. One of them is called soft money. As PACs became major sources of funding, political parties began to lose some of their influence with their own candidates. So Congress amended the Act in 1979 in such a way as to try to strengthen political parties. What these amendments said was that political parties could collect money for party building activities and for voter registration drives as long as their efforts did not support any particular candidate. Contributions for such purposes are called soft money and do not have to be reported. In addition, the amount that can be contributed this way is unlimited. The political party gets this money and they can use it to advertise for Democrats, Republicans, or third party candidates in general. The ads can not focus on a particular candidate. Nevertheless, many of these party activists do support specific candidates, but are couched in general terms. Using this so-called soft money provision is a way contribution limitations have been made ineffective.
Another important way that the law is gotten around is a mechanism called independent expenditures. An independent expenditure is made by an individual or organization that is not connected with a candidate's campaign, but favors that particular candidate. For example, when Weicker was running as a third party candidate for governor against both the Republican and Democratic candidates, William F. Buckley did not like Weicker. So he placed ads on television against Weicker. They were not for the Democratic or Republican candidate, but they were against Weicker. Buckley could spend an unlimited amount of money on these ads because they were independent of the political campaign of any specific candidate.
Recently, some of these independent expenditures have become very suspicious. Many obviously support a particular candidate. And they come just at election time. The difficulty here is that the issue involves freedom of speech. People or organizations must be allowed to express their views freely. We do not want to limit freedom of speech. Yet independent expenditures can be used in ways to get around the election laws. Therefore have a real dilemma on our hands of trying to balance the requirements of freedom of speech with those of fair democratic procedures in a number of important aspects of election campaigns. These requirements often pull in opposite directions.
This brings up a fourth mechanism which has been used recently to get around election laws. This device is called issue ads, and independent expenditures by political parties. Political parties can run ads that don't mention a particular candidate by name, but support issues that the candidate is known to stress. These are issue ads. You also have corporations, labor unions, and others coming in with these issue ads. They are obviously supporting a particular candidate, but they don't mention the candidate by name. Moreover, they are not coordinated with the individual candidate's campaign, so they are completely unregulated. Again, we have the problem of the needs of freedom of speech conflicting with those of fair election procedures.
In the 1996 Presidential election, Robert Dole had to spend a lot of the money he had to fight in the primary races. As you recall, there were a lot of primary battles going on in the Republican Party. Bill Clinton, on the other hand, was unopposed for the Democratic nomination. When it came to the general election, Bob Dole had very little money left that he could legitimately spend. He was limited in how much he could spend, because he had accepted public money. Clinton, for his part, still had a lot of money left. So because there were limits on how much Dole could spend, the Republican Party itself collected money and ran issue ads supposedly independent of the Dole campaign. They even ran an ad containing the biography of Robert Dole. It did not say: Vote for Robert Dole; it just presented his life story in a very positive light. The Republicans claimed this was not a campaign ad for Robert Dole; it was an informational ad. And the Republican Party, not the Dole campaign, was running it. Of course it sure seemed like a campaign ad. So you see, it's a matter of definition. Thus, if the Republican or Democratic candidate's campaign, it doesn't matter which, can't collect any more money because it has reached its limit, then there are other mechanisms through which to put ads on television. These are not officially campaign ads, but they very much seem like them--and have the same effect. Because you can always find a loophole and tweak it a little, you can say that what you see is not what you see. It's all done with smoke and mirrors--and expensive lawyers.
One way to counter some of these tactics would be the public financing of congressional and senatorial elections: having the money come out of the U.S. Treasury to support these election campaigns at taxpayers' expense. We already do this for presidential races.
The cost in a congressional election to achieve name recognition is about $200,000. If a candidate who obtains a certain number of signatures is able to get that amount of money from public sources, at least he or she can run a viable campaign. Moreover once you accept public financing, the amount you spend on your campaign can supposedly be limited, so public financing is a possible solution to some of the problems we have been discussing. It might cost taxpayers a billion dollars every two years for election campaigns. Those who are opposed to such spending have dismissed the idea with a very slick phrase. They call public financing, "Food stamps for politicians." They ask: Why should the public pay for these campaigns?
Others suggest the answer to the question is quite simple: He who pays the piper, calls the tune. If the public spends a billion dollars on campaigns every two years and no outside contributions are allowed, your representatives and senators would always be working for you, the public, and not some special economic interests. This could save the public tens of billions of dollars in tax exemptions and government contracts.
As we have seen, there are many substantial problems with campaign financing today. There are so many ways that have been invented to get around the 1974 law that it almost seems that its limitations have ceased to exist. It looks like any limitation on the books can be circumvented. And so it would seem impossible to pass a law that is foolproof.
Another problem is: How do you get a law on campaign finance reform passed if the very people who would have to pass the law are dependent upon these contributions? Unless the public wakes up and says we have to put a stop to this situation, it is going to continue: Our government will continue to be for sale. As Americans, we have a long-standing concept of separate branches of government. This is a basic American principle. However, if the president receives funds from the same sources that senators and representatives do, then you may have separate branches, but the roots are the same. And that destroys the concept of separate branches. It destroys some of our fundamental principles of democracy.
Thus far we have discussed PACs, soft money, independent expenditures, and issue ads. These are mechanisms which allow corporations and others to indirectly or directly support political campaigns. What do corporations, wealthy individuals, or other groups get in return? Some say they are buying votes. Others would deny that. What everyone does agree on is that they are buying access. If you are a major contributor and go to Washington, you might have a chance to have lunch with a senator or representative; or if you are a really big contributor, you might even end up at the White House. The closest chance you or I have at having lunch at the White House is buying a hot dog from the vendor on Pennsylvania Avenue in front of the building. When David Rockefeller was chair of Chase Manhattan Bank, he would go to Washington to meet with three or four representatives and several senators. The nearest we come to that is when we go to our representative's office, he or she might pop in for a minute, get a photograph taken with us, and--if we are lucky--suggest we speak to an aide. Access can be important. It is not necessarily that the representative, senator or staff member will do what you are asking them to do. However, at least they have heard your side of the issue; they may not hear the other side.
A corporation will usually give money to those representatives or senators who are on the specific committees or subcommittees that make decisions which affect their industry. It is not so important what state or congressional district a business is in. For example, if I am a banker I'm going to contribute to the chair of the Senate Banking Committee--no matter what state he or she may represent.
It is very difficult to determine the effect of access or campaign contributions. One of the reasons for this is that many times what a company wants is that a new law not be passed or that new regulations not be adopted. It wants to maintain the status quo. If it doesn't want a new bill passed, it might like the bill killed in subcommittee where the public's eyes or C-SPAN's cameras might not be focused. Who knows what influences are operating in the decision to kill a bill? And how do you know when a bill is killed if it just does not come up? It may not be that there was a vote against it. What happens if it is simply not put on the agenda? What we are talking about are non-decisions: things which don't happen. It's very difficult to study non-decisions: things which should happen, but don't. How can you measure them? You do not know what the reasons were that it was not discussed, and you do not even know when the bill or regulation died. It just did not get discussed, or it was not given a full hearing. You can't prove anything.
Furthermore, many times what a company wants is a little change in the law which doesn't seem to mean very much. However, this small modification can produce millions for that company, while costing consumers or taxpayers a great deal more. But, if the consumer or taxpayer is not aware of the facts, no one raises the issue.
On key issues senators or representatives are likely to vote in the public interest as they conceive of it; but on these small points, they may vote with the special economic interests that support their campaigns. They give one industry a tax break here, and another industry a tax break there. It doesn't seem to hurt anyone, and besides it's buried in the details--so no one notices. However, these little tax breaks add up to a great deal of money the federal government does not have which it could use for programs that serve the people.
Direct lobbying involves meeting with representatives, senators, or their staffs--or with members of the executive branch, and trying to inform them of your point of view and hopefully getting them to act in a way you would like. In the case of representatives and senators, this usually means getting a bill passed or amended, or getting a bill killed so it does not become a law. With members of the executive branch, it usually means getting regulations written the way you would prefer, or seeing to it that new regulations are not adopted. Lobbying is protected under the First Amendment in the right "to petition the government for redress of grievances" clause.
Anyone can lobby, but usually corporations, labor unions, and public interest groups are among the most active doing so. Usually corporations and trade associations have the most money by far to put into lobbying efforts. Groups that wish to lobby either hire their own people to do so, or use the services of special lobbying firms--often Washington law firms serve a primary lobbying function.
In lobbying, it is important to be in contact with the legislators and executive branch members you wish to lobby on a long-term basis. This pays off in developing a personal relationship with those you wish to lobby. Lobbying on an ad hoc, issue-by-issue basis is far less effective. One advantage that corporations have in lobbying over public interest groups is that they can hide many of their lobbying activities as ordinary business expenses, while public interest groups usually must report all their lobbying activities.
There are basically three functions served by a lobbyist:
Some see lobbying as playing an important informational and communications role. Others suggest that, because of their great resources, corporations are so much better equipped to lobby than are other groups and so the balance is always very much in favor of large corporations.
In addition to direct lobbying, there is indirect lobbying, or grassroots lobbying. Grass roots lobbying involves trying to convince the public of your point of view, and then having the public put pressure on their representatives and senators to vote your way.
In 1981, Ronald Reagan began his first term as president. One of his highest priorities was to pass new tax legislation. Many Democrats felt that the tax program Reagan was pushing was heavily weighted in favor of the rich, and the Democrats had control of both houses of Congress. Because of this Reagan addressed a joint session of Congress, using the occasion to announce his tax proposals. However, the audience at which he was aiming his remarks was not the legislators present, but rather the national audience watching the address at home. After Reagan's rather effective speech, many voters put pressure on their senators and representatives to pass his tax proposals. In the end, despite their misgivings, many Democrats voted for Reagan's tax proposals which passed a Congress controlled by the Democrats. This is an example of grass roots lobbying. Another example involves advertising by the tobacco industry to convince voters in California not to vote for a referendum that would limit smoking in public places.
Over the years there has been some attempt to pass legislation affecting lobbying, mostly in an effort to counteract the influence of money in politics. The first such legislation was the Foreign Agents Legislation Act passed in 1938. This was adopted not so much to affect commercial lobbying, but rather in an effort to deal with Nazi propaganda. The first Act dealing with commercial lobbying itself was the Lobbying Registration Act of 1946. This was part of the more sweeping Legislative Reorganization Act of that year. Unfortunately, this legislation contained many loopholes and groups were able to use the term "public education" to conceal money spent on lobbying.
The idea of this and subsequent acts was not to restrict lobbying, but to make these activities more public and therefore to focus voters' attention on these activities. Some of the major problems with the 1946 Act were that it very narrowly defined lobbyists and lobbying activities. According to the Act, to be considered a lobbyist you had to spend a majority of your time on lobbying activities. Moreover, the Act only applied to the direct lobbying of senators and representatives. It did not cover lobbying activities directed at legislative staff members, or members of the executive branch. In 1954 the Supreme Court further narrowed the definition of lobbyists in U.S. v. Harris, deciding that the 1946 law only applied to private lobbying firms and contract lobbyists. This decision left totally uncovered the activities of organizations that hired people within their own corporation or group to lobby. It also limited the definition of lobbying in the Lobbying Registration Act to direct lobbying and left grassroots lobbying uncovered.
In the succeeding decades, there have been several attempts to strengthen the lobbying laws. Some of these failed efforts include bills introduced in 1976, 1977, and 1993. In the election of 1994, the Republicans gained a majority in both the House and the Senate. As a result of the reform efforts that were heralded by that election, incumbent, reform-minded Democrats joined forces with the large 1994 Republican freshman class to pass the Lobbyist Disclosure Act of 1995, as well as resolutions in both chambers restricting gifts to congressional members. The Lobbyist Disclosure Act of 1995 defined a lobbyist as someone who spends 20 percent or more of their time lobbying congressional members, their staffs, and top executive branch members. It requires these lobbyists to report twice a year on who pays them, how much they are paid, and what issues they work on. The Senate also passed a resolution restricting the value of a single gift to a senator to no more than $50 in value, and the total gifts that a senator could receive annually from any one source to no more than $100. For its part, the House passed a resolution banning representatives from accepting any gifts or meals and banned congressional members and their aides from accepting free travel to recreational events in which lobbyists participate.
Captured Regulatory Agencies
Chapter 4 discusses captured regulatory agencies. One thing to remember is that as people work together, they begin to think similarly. Many of these regulatory agencies work very closely with the industry they regulate. So, after a while they think very much like that industry. It is not that anyone does anything corrupt per se; it is just a natural human behavior: you get to know these people and you want to protect them.
Furthermore, the regulatory agencies are always the targets of corporate influence. In each area of policy, a triangular relationship exists. The players are the lobbyists and corporations and other private organizations in that area, the congressional committees and subcommittees who make decisions about that subject area, and the executive agencies and regulatory commissions that operate in that field. The connections between these players are as follows: Corporations for whom the lobbyists work give campaign contributions to members of the congressional committees that make decisions about that field. These committees and subcommittees in turn determine the jurisdictions, and sometimes the budgets, of the executive agencies and regulatory commissions that work in the field. Finally, the executive agencies give out government contracts, which can be very lucrative to the industry; while the regulatory commissions adopt regulations, which can be beneficial or restrictive to the industry at hand. If everyone in the triangle cooperates, as they usually do, everyone benefits--that is, everyone except the general public.
These triangles are called Iron Triangles or Washington Triangles. These symbiotic relationships, which exist in every policy area, are also known as subgovernments.
Let us take the Federal Aeronautics Administration (FAA) as an example. The FAA usually seems to make decisions in favor of the airline industry, and not in the public interest.
The DC-10 presents a fine case in point. When the DC-10 first came out there was a problem in its design. It was a minor problem, but it caused major disasters. The latch bolt in the cargo-hold door was designed incorrectly. When the door to the cargo bay was closed, it didn't close tightly enough. So when the plane was in the air, the cargo bay door had a tendency to pop open. That would depressurize the cargo-hold and would cause the ceiling on the cargo-hold to collapse. The cargo hold ceiling is also the floor of the passenger cabin. Unfortunately, the hydraulic connections for the steering mechanism of the plane went through that floor. So when the cargo door opened and the partition between the cargo bay and passenger cabin collapsed, you could no longer steer the plane. That caused a major crash of a DC-10 and the loss of a lot of lives in Windsor, Ontario.
After that, the Canadians wanted the FAA to ground the planes until their cargo bay door bolts were replaced. However, since McDonald Douglas was trying to sell these planes abroad, the FAA was hesitant to do this. Instead, it simply issued an advisory warning. A year later, some 80 percent of the DC-10s in service had not had the problem corrected. Then, there was a crash of an Air India DC-10 leaving Orly Airport in France which was caused by the cargo bay door bolt problem. The plane spewed jet fuel all over Paris, just at dinnertime when all the chimneys were hot. This was a major disaster, but still the FAA would not issue a directive to ground the planes until they were repaired.
About a decade later, a DC-10 was involved in another crash. It seems the plane took off from Chicago, but forgot something: one of its engines. It turned out that the engine mounts on some of the DC-10s in service were not being maintained properly, and cracks were developing. This problem caused the engine on the Chicago plane to fall off. They inspected other DC-10s and found cracks on the engine mounts of a number of them. Some wanted all DC-10s grounded until each plane could be inspected to see if it had this problem. The FAA felt that would cause too many problems for the airline industry, so they refused to ground the planes. The Airlines Passengers' Association then went to court and sought an injunction that did finally ground all the DC-10s until the planes were inspected and the problem corrected. It took court action to do this; the FAA itself would not issue the order. In this case, it turned out that McDonald Douglas was not at fault; the people who had been servicing the planes had caused the problem.
More recently, we have the matter of TWA Flight 800. That was the Paris-bound plane that crashed off Long Island. After a long investigation, it was determined that the cause of the crash was a spark that caused the empty central fuel tanks to explode. Vietnam fighter planes had had a similar problem with empty fuel tanks. What they did in Vietnam was to fill the empty tanks with an inert gas so they would not explode. The National Transportation Safety Board said this solution should be applied to all 747s in service to prevent sparking creating an explosion. They issued this recommendation in their report on the crash. However, the FAA said: No! It would cost the airline industry too much. It would have to study the matter further. So repeatedly, we encounter decisions by the FAA that are made not for the safety of the general public, but for the sake of the airline industry.
Another matter involving the FAA is that of life rafts. When a plane crashes over water, most people do not die from the crash itself. What they die from is exposure. When they hit the water, they leave the plane and enter the water in life vests or other flotation devices, such as their seat cushions. They then often catch chill and die of hypothermia. The way to remedy this is to have enough life rafts aboard these planes--in addition to life vests and other flotation devices--so the people would not have to enter the water. It's so simple: store rafts so people do not go directly into the water. That would save lives if there were a crash over water.
It is true that air travel is one of the safest means of
transportation. You are much safer flying than you are in a car, for example. However, the
point is that air travelcould be made even safer. An air accident can cost the lives of
300 people--and on the newer planes even more. So it should be made safer. But the
industry doesn't want to spend the money. And government agencies, especially FAA, do not
insist on such measures by issuing the necessary regulations.
The Federal Communications Commission (FCC) is another regulatory commission that often makes decisions in favor of the industries--local telephone companies, broadcasters, cable companies, etc.--it is supposed to regulate and more examples can be given. The point is that often these regulatory commissions become captured by the industry they are supposed to regulate. Instead of the regulatory commission regulating business for the benefit of the general public, they tend to regulate the economy in favor of big business. Often they adopt regulations that will help big business and hurt small business.
A major problem with this situation is that the unregulated decisions of large companies can often have very disastrous effects for whole ecosystems. For example, General Electric dumped such a large quantity of PCBs into the Hudson River that it made the fish in the Hudson River inedible. The fish contained too high a level of PCBs, and PCBs are a carcinogen. This wiped out the whole fishing industry on the Hudson River. People who for generations had made their livelihood by fishing could no longer do so because the fish they caught could no longer be used for commercial trade. So, sometimes the unregulated decisions of large corporations not only hurt the general public; they also hurt the small businessperson.
The Washington Connection
By way of summary at the end of Chapter 3, the author talks about a number of avenues of influence or what he calls The Washington Connection: ways in which corporations influence the government. Let us take specific note of seven ways.
The first one he notes is access. Through campaign contributions and other methods, corporations are able to gain access to public officials more often than the average citizen. This means that corporations at least have a better chance of having their case heard.
Secondly, there are advisory committees to government agencies. The fact is that the government does not have fact gathering apparati in a number of fields. And so, government agencies appoint committees to provide information and advice. Often, these committees contain many people from the industry involved. The information they provide are used in making public policy. Now, obviously, if the information that government agencies are getting is from the industry involved, then the perspective from which they get the information is likely to be one-sided. For example, if the government needs information on nuclear power, it most likely will call upon nuclear engineers for advice. However, these engineers come from the industry involved. The government does not usually consider the opinion of the private citizen, although the concerns that pregnant women have who live near Three Mile Island or other nuclear power facilities might well need to be taken into account. So the advice the government gets is often stacked in favor of the corporation.
A third avenue that Nadel mentions is one he calls musical chairs or the revolving door effect. Many times individuals are employed in an industry, then get called upon to work as the head of an agency or on a regulatory commission, and then return to the industry in question. These people are going to be returning to work in the same industry they may be regulating. How independent can the thinking of these people be? Are they going to make a decision against the interest of that industry if they are eventually going to have to get another job in that industry? So this musical chairs or revolving door effect is a two-way traffic pattern between industry and government in which people go from working in the industry to working in the government, and back to working for the industry again.
An example of this is the personal interchange program that some corporations have had. Sometimes a corporation may lend personnel to the government and the corporation may even pay them while they hold that government position. The corporation might say: "Look, we're being very patriotic. We're paying people to work for the government." However, others would suggest that these people have the interests of the corporation in mind. Often, such a bias may not be that obvious. It's simply that these people share the culture of the corporation as to what sort of decisions should be made. Many times they may just have a way of thinking that doesn't take the public interest into account.
Fourthly, he talks about the high demand that exists for former members of the House or Senate to serve as lobbyists. Many times, when people retire from the House or Senate, they become lobbyists for major corporations. Now, first of all, these people know a great deal about the laws that have been passed relating to their new employer's industry, and they know the inside dealings that went into making these laws. What's more, former representatives and senators maintain the privilege of going on to the floor of their old chambers. That means that during a vote on a bill, they can go on the floor and lobby current senators or representatives as the case may be. No other lobbyists can do this. So these former legislators have a greater ability to influence the process than someone who doesn't have the privilege of the floor, or the other connections they do. Thus ex-senators and ex-representatives are often valued as lobbyists.
The fifth avenue of Washington influence is lobbying itself, and especially grassroots lobbying. This is something we have already discussed at some length.
Sixth of all there is the symbiotic relationship between lobbyists, members of congressional committees and executive agency personnel. In other words, the Washington triangles or iron triangles.
The seventh avenue of the Washington connection is court action. The fact is that corporations can pay a lot more for legal work than the government. Many times corporate lawyers don not aim at winning a case, but simply at delaying government action. Let's say a corporation has an advertisement on television that the Federal Trade Commission feels is misleading to the general public. The FTC may issue a ruling for the corporation to withdraw that advertisement from the air. The corporation then gets its lawyers to seek a temporary injunction against that ruling until a hearing on the ruling can be held. In the meantime, the advertisement remains on television. Then, the corporation's lawyers use various legal tactics to keep delaying the date of the hearing. There are lots of ways lawyers can do this. Let's say the hearing finally comes up a year later. Before the hearing actually begins, the corporate lawyers announce that they are going to withdraw their objections and that the corporation will follow the FTC's ruling and withdraw the ad. They know they don't have a leg to stand on in court. Has the corporation lost? No. While all this has been going on, the advertisement has been on television for a whole extra year. So even though the corporation is eventually going to lose the case, it winds up winning by delaying things.
Delays can be helpful to the corporations in other areas as well. Let's say there has been an accident in the company's plant and the corporation has control of its workers' compensation payments for the accident. The corporation's lawyers may keep delaying the payment of these compensation benefits. What you may have in this case is working class families that can't afford these delays. They have to live with large medical expenses, and they have a hard time keeping things together. The corporation then offers them a much lower settlement. And because they need the money so desperately, the families are willing to take something now, rather than wait for the larger payment to which they are entitled.
Another use of the high paid lawyers employed by large-scale corporations is in patent cases. Let's say a small company has a patent on something and a large company decides to use that technology without paying the small company for its use. The small company may have the patent, but may not have the money to hire high paid patent lawyers to pursue the case--especially if the large company's lawyers delay things and make the legal proceedings very expensive. In this way, the large corporation wins-even though it is in the wrong.
The problem is that many of these large companies can hire very good lawyers who can argue very persuasively. These lawyers are people who are paid hundreds of thousands of dollars a year because they have these skills. The corporations have the money to hire better lawyers than the government or smaller businesses, and that's a real problem. Furthermore, the job of the corporate lawyer seems not to be to inform their employer of what is legal and what is not; often their job is to tell them how to best bend the law--and they can attract the brightest lawyers to do that.
Every once in a while you run into a lawyer working for the government
a judge who does not fit this pattern and will stand up for what is right. For example, in
the 1950s the Justice Department filed an antitrust action against AT&T, but the
Justice Department eventually caved in. When the Justice Department brought another suit
against AT&T in the 1970s, however, there was a judge by the name of Harold Green who
turned out to be a very staunch consumer advocate. He ordered the breakup of AT&T into
the regional telephone companies we have today. AT&T never expected that.