The Price of Everything - Eduardo Porter [76]
The United States may rank ninety-two rungs above São Tomé and Príncipe on Transparency International’s corruption perception index. But it is unlikely those surveyed by the corruption watchdog took into account the $3.5 billion spent by industries in 2009 to lobby Congress and the White House to tailor laws more to their liking. They probably rarely think about the 1,447 former federal government employees—including 73 ex-members of Congress—hired by financial institutions to lobby Congress and influence the debate over the reform of financial regulation in 2009 and 2010. The finance, insurance, and real estate industry alone spent $467 million lobbying in 2009. Banks were lavishing so much money on Congress that House leaders started putting vulnerable freshmen on the Financial Services Committee so they could raise enough money to defeat their challengers.
The difference between the tactics used to wield political influence in São Tomé and Príncipe and in the United States has little to do with virtue and much to do with strategy. Indeed, economists have proposed that countries evolved from bribery to lobbying as growing firms reacted to increasing demands for bribes from a growing number of bureaucrats by switching to lobbying, which was more cost-effective because it could be used to change laws rather than just sway those who enforced them.
Businesses practice both, depending on where they are. In 2010 German carmaker Daimler AG was caught spending tens of millions bribing government officials in at least twenty-two countries, including China, Russia, Thailand, and Greece, to win government contracts over the course of a decade. In Turkmenistan, it gave a government official a $300,000 armored Mercedes-Benz S-Class as a birthday present. In the rich world, Daimler behaves differently. From 2001 to 2009 it spent more than €4 million in campaign donations in Germany. In the United States, where until 2007 it owned Chrysler, its Political Action Committee has spent almost $1 million in each of the past few election cycles. In 2007, when it sold Chrysler, it spent $7 million lobbying members of Congress.
Though a politician who demands a bribe is breaking a law while one demanding a campaign contribution is not, to the layman the difference can appear subtle. In fact, campaign contributions can be just as valuable to a politician as cold cash under the table. A study of how members of Congress reacted to campaign-finance legislation in 1989, which barred them from pocketing their leftover campaign funds when they retired, concluded that lawmakers valued their seat at anything from $300,000 to $20 million, depending on their outside wealth, age, tenure, and seniority in Congress.
Reform left 159 lawmakers with a stark choice: to retire before the 1992 election and keep their stash or to run for reelection. Comparing the campaign funds of those who decided to run against those who quit, economists concluded that a fifty-three-year-old lawmaker with $50,000 in the bank would relinquish his or her seat for $800,000. A representative of the same age with savings of $2 million would not give it up for less than $11.8 million.
The object of this comparison is not merely to underscore that political power can be bought and sold in the richest nation on earth just as it can in one of the poorest. The broader point is that the political cultures in rich and poor nations, different as they may be, are the product of similar evolutionary dynamics. The political norms and institutions codify how each society “resolved” the challenge of how to distribute power in the market for influence. The resulting set of written and unwritten rules came out of evaluations of their political efficiency. If a behavior became entrenched in a nation’s political culture, it is because it was deemed to be worth the price.
In Britain, vote buying emerged as a necessary tool for a new moneyed merchant class