The year 2020 has been challenging for many reasons, but the most prominent ones are the increased number of protests that indicate dissatisfaction with the current situation and the nationwide stress from the COVID-19 lockdown. The recent political events in the United States left the nation more divided than in the previous years. With this dramatic change, the country has experienced an increased number of protests and a spike in conflict between inner political forces. During the presidency of Donald Trump, it became even more prominent due to the attempts to stabilize the domestic economy of many policies issued by the former President. However, the roots of the issue lie more profound in the history of political intrigues of the past century. This essay will discuss economic inequality, the effects of the government policies on it, how lawmakers can affect it, and what role lobbying plays in this situation.
History of Lobbying
It is essential to recognize that lobbying has been a part of politics for a long time, although its ethics were questionable in the early days. The situation changed when governments began to outline laws that defined lobbying and separated it from corruption, bribing, or other criminal activities. The first law that regulated lobbying in the United States was issued in 1946 (Paletz et al.). However, according to Robert Reich, many of the current issues can be traced to the end of the Great Prosperity in the 1970s (Reich). Since then, the lobbying regulation acts were issued several times in an attempt to define this notion more strictly.
Conflicts stemming from lobbying continued to happen despite an increase in regulation. The primary issue with these laws came from the fact that it was necessary to distinguish between corruption, bribes, donations, and persuasion. However, new factors continued to be introduced by lawmakers that made it less possible to separate these notions properly. With the help of lobbyists during the 1970s, deregulation, and privatization were put in focus by the U.S. government, which led to a sudden spike in income disparity (Reich). Wealthy people were able to push the U.S. government officials into accepting lower tax rates and restricted the spread of their gains through generous donations (Reich). Reich argues that “big American companies became global companies with no more loyalty to the United States than a GPS satellite.” Without proper tools to control lobbying, neither the government nor society could prevent interest groups from impacting the lives of many to benefit a few.
Effects of Lobbying
First and foremost, it is essential to establish what lobbying is and how it was outlined in politics in the past. Lobbying refers to a set of methods, such as persuasion, donations, or pressure, that aims to influence the decisions of a governmental official in favor of a group that will gain benefit from the outcome (Paletz et al.). Numerous benefits can be derived from having a person who is willing to promote one’s interests in governmental organizations.
Interest groups pursue this activity to avoid having their practices to be interrupted, despite the potential harm they bring. For example, hedge fund organizations successfully prevented government outsight of their actions (Paletz et al.). In the creation of the new banking law, the government agencies were lobbied by 148 representatives of banking firms, which leads to a question of its objectivity (Paletz et al.). Lawmakers tend to favor the interests of a company or a coalition of companies because of lobbying, which can be seen in the example of Toyota’s negotiations with the National Highway Traffic Safety Administration (Paletz et al.). Overall, lobbying can achieve greater success.
Another part of the issue comes from the experience of people whose work is to influence the opinions of the government. Many lobbyists were previously working in governmental organizations and had knowledge and connections that can be useful for their private businesses (Paletz et al.). Paletz et al. state that “Wall Street’s financial firms had more than 125 former members of Congress and congressional aides” who limited or prevented many policies that would adversely affect them during the Obama Administration. While their expertise is critical, it can be used to exploit loopholes in regulations.
It is essential to recognize the primary groups who actively participate in lobbying regularly and the difference in the reasons behind their donations. According to OpenSecrets – a non-profit organization dedicated to analyzing monetary contributions to politicians – they include interest groups, professional advocates, advocacy groups, and political action committees (“Influence & Lobbying”). Political parties, especially during the election periods, receive generous donations from both funds and individuals who gain no straight benefit from this action, but affiliation will potentially be worth it in the future (“Influence & Lobbying”). Not all actors have a malign intent, and it is necessary to recognize that promoting the acceptance of a policy that aims to negate a particularly troublesome societal issue can be beneficial.
Inequality is one of the most critical issues in modern U.S. society. Even without considering the situation of low-income households, the disparity between the wealthiest people and the middle class continues to increase (Reich). Sadly, not many meaningful actions have been taken by the U.S. government to prevent a drastic decrease in the economic power of the middle class in the past 40 years (Reich). As the balance of the economic forces was broken and not established in the following years, inequality continued to grow and became a more prominent issue for society.
In the past fifteen years, the effects of the policies that hinder the spread of wealth led to several adverse events for the United States. The most recent rise of inequality can be pinpointed by the increase in the income of the country’s most wealthy people during the year 2007, directly before the economic crisis in 2008 (Reich). However, due to the spread of communication technologies, this crisis was widely documented, and its effects are easily observable by any person willing to do little research. This crisis led to an increase in public attention, which, in turn, created unrest among the middle- and low-class citizens of the United States.
It is crucial to note that the impact of these measures is limited by the ability of the government to promote the distribution of wealth. As it has been revealed, private organizations continue to focus on the prevention of higher tax rates as a means of redistributing wealth. Moreover, a significant portion of the efforts of lobbyists who work for private companies remains focused on the prevention of the creation of labor unions (Reich). As labor unions play a critical role in negotiations with employers in an attempt to establish a fair deal for workers, the lack of these structures leads to a further balance shift towards companies.
Inequality benefits one group at the cost of many others. The adverse effect of lobbying of interests stems primarily from this situation, as the companies continue to push the government to accept options that are less beneficial or even harmful for a regular worker (Reich). However, it is vital to keep in mind that the effects of policies must also incorporate other factors of inequality, such as technological advancements, education levels, and the impact of globalization (Zeira and Battisti). Government interventions in the economy via policies that take into consideration people before private companies can help society to avoid further increases in inequality.
The Impact of Government Policies on Inequality
It is essential to discuss how income inequality can be addressed by governmental structures. There are numerous safety nets, such as unemployment insurance, job transition assistance, and other similar programs that aim to reduce the impact of a sudden drop in income for an individual or an organization (Reich). However, they rely on support from the government, which serves as a warranter of their efficiency. In the United States, privatization led to the loss of stability of these safety nets, as private organizations are less bound by many legislations that ensure that people will get the help they need.
The U.S. government can revert the adverse impact of the policies that put many of its citizens in a financial hole, sometimes even in danger of bankruptcy. Research by Zeira and Battisti “shows that the effect of public policies is not only statistically significant but is also quite large.” The authors also identify that the most significant expenditures for the government are education, public transportation, and the expansion of the public sector (Zeira and Battisti). Laws that regulate the labor market can also significantly reduce inequality (Zeira and Battisti). However, the implementation of some critical policies can be hindered by opposing interest groups.
With the rise of globalization, the lobbying process took a drastic turn. As it has been described, corporations frequently promote policies that affect the power of labor unions, thus diminishing the impact of the efforts of the government. However, putting the interests of businesses in front is not a valid option during these decisions. Considering that convincing an official to vote in favor of an unpopular option requires a significant amount of influence, it is possible to avoid these incidents by tracking down the sources of such influence.
Many modern companies actively use lobbying to prevent the U.S. government from imposing any unfavorable policies (Reich). These policies often attempt to address the lack of balance between financial organizations, private corporations, and U.S. citizens (Zeira and Battisti). Therefore, the U.S. government has to act as an impartial force and consider all arguments for and against each policy despite how much money did each side donate.
Regulation of lobbying has a meaningful impact on this notion as a means of benefitting oneself. As the line between donations and bribes is relatively thin, the open access to the information related to lobbying organizations, their actions, and the reactions of government officials helps with the prevention of unfair practices (Paletz et al.). The efforts of the past Presidents in lobbying control have shown that it is an efficient way to respond to a crisis (Paletz et al.). The government must act on behalf of all people it represents.
The increase of transparency of the efforts of lobbyists has a positive effect on the amount of influence they gain on officials who receive donations while simultaneously decreasing corruption (Paletz et al.). Records of financial transactions between lobbyists and government representatives allow people to make conscious decisions on the truthfulness of policymaker’s claims. Moreover, by making it mandatory to state one’s affiliations, it is now possible to make clear what the projected course of action stems from a policy that is being pushed by lobbyists.
In conclusion, the crisis of 2008 revealed severe flaws in the U.S. economic policies that were affected over the past four decades by numerous interest groups. Lobbying is one of the primary factors that pushed the economy past the breaking point. It promotes the interests of a specific organization to ensure that policies that benefit them get enacted, which can cause issues for democracy if this practice is left unregulated. In the United States, many lobbyists are known to have a political background that gives them an advantage over regulatory committees. With their help, corporations can push their agenda into governmental structures and successfully prevent policies that would harm them, yet help many others from being accepted by Congress. Therefore, to decrease economic inequality, the government must take strict action against old policies that tipped the balance in favor of the major private actors.
Income inequality can be partially attributed to the actions of lobbyists. The growth of national and average household debt, the decrease in housing values, and a continuously increasing gap in income between top earners and the rest of the population can be negated by proper policies (Reich). Lawmakers who take preference in siding with interest groups caused this situation to worsen throughout the past four decades. While many regulations imposed by the U.S. government regarding lobbying are meant to ensure that this activity remains within the law, it can be difficult to determine the precise intentions of interest groups. The country needs to resolve this issue to improve the financial situation for a vast majority of its population.
“Influence & Lobbying.” OpenSecrets. n.d. Web.
Paletz, David L., et al. 21st Century American Government and Politics. 2012. Web.
Reich, Robert. “Why Inequality is the Real Cause of Our Ongoing Terrible Economy.” 2011. Web.
Zeira, Joseph, and Michele Battisti. “Governments Bear Much of the Responsibility for Rising Inequality—But Also Have the Tools to Reduce It.” ProMarket, 2019. Web.