Corporate Lobbying and Research Methods

I’m a big fan of NPR’s Planet Money blog, but this recent post on the rate of return from corporate lobbying is pretty indefensible.

The author, Alex Blumberg, cites a 2009 study from the University of Kansas, which found that corporate lobbying for the American Jobs Creation Act (AJCA) yielded a return on investment of approximately 22,000 percent. Among other things, the AJCA allowed companies to bring back profits from offshore divisions at a one-time reduced tax rate.

Naturally, many multinational corporations found AJCA exceedingly lucrative, but the important question is whether their lobbying efforts were actually successful. Is the fact that the law was passed evidence enough?

The key challenge in studying the impact of lobbying is trying to figure out what would’ve happened in the absence of these efforts. Would the outcome have been the same, or would lawmakers have come to a different conclusion?

Research methodologists call this kind of thinking “counterfactual causal analysis” because it first considers what would’ve happened without the intervention (no lobbying) and then compares this hypothetical to the present condition (lobbying). It’s complicated stuff, and it’s the kind of thing that makes real-world analysis so difficult.

So, how did University of Kansas researchers derive their counterfactual scenario? Well, they didn’t.

As Blumberg explains:

Raquel Alexander and Susan Scholz calculated the total amount the corporations saved from the lower tax rate. They compared the taxes saved to the amount the firms spent lobbying for the law. Their research showed the return on lobbying for those multinational corporations was 22,000 percent. That means for every dollar spent on lobbying, the companies got $220 in tax benefits.

The implicit assumption in Alexander and Scholz’s research is that the money spent on lobbying had a decisive impact on the ultimate passage of AJCA. In other words, the money was not squandered courting legislators who were already inclined to support the AJCA, or who failed to support the legislation in spite of lobbying efforts.

It’s certainly possible that this is true. Lobbying efforts from large corporations with deep pockets are likely to have some influence over lawmakers, given the nature of American electoral politics. And if these efforts were decisive in the case of AJCA, then the 22,000 percent return on investment is pretty astounding. That magnitude is worth considering as a pure thought experiment, if nothing else.

But whatever value the 22,000 percent figure may have in informing the debate over corporate lobbying, there’s an obvious problem with any research design that presumes what it’s trying to prove. As I’ve written before, not all research is good research. Well-respected news organizations like NPR should do a better job explaining the potential shortcomings of different research methodologies rather than simply regurgitating findings.

The bigger issue, of course, is that researchers must be more willing to acknowledge possible flaws in their methodology. While reporters may lack expertise in research design, there’s really no excuse for academics attempting to pass off weak studies as providing definitive results.

And, unfortunately, that is exactly what seems to be happening in this instance.

Free Speech, Elections, and the Left

With the Occupy Movement’s renewed commitment to “getting the money out of politics,” the idea of restricting wealthy Americans' freedom of speech appears to be gaining traction on the political left. 

Of course, most people who champion spending limits on “electioneering communications” would frame the issue quite differently. The standard premise is that money is not speech, and corporations are not people. Thus, many progressives argue, portraying the Supreme Court’s decision in Citizens United v. Federal Election Commission as a defense of civil liberties is simply a category error.

Those on the left who support repeal of Citizens United argue that the Court’s ruling implies wealthy corporations are entitled to “more speech” than the average American. And given the level of influence that money has in our political system, this strikes many progressives as an incredibly dangerous principle to adopt.

However, despite what some activists seem to believe, the notion that spending on electioneering communications represents a form of protected speech has been around for quite a long time. In fact, the Supreme Court first articulated this view decades ago in the case of Buckley v. Valeo (1976). Though justices in this case upheld provisions in the Federal Election Campaign Act limiting individual contributions to candidates for federal office, they struck down all restrictions on independent electioneering expenditures. The logic of the Court was fairly straightforward, but it’s worth reading through the relevant passage in this ruling:

A restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached. This is because virtually every means of communicating ideas in today's mass society requires the expenditure of money. . . . By contrast with a limitation upon expenditures for political expression, a limitation upon the amount that any one person or group may contribute to a candidate or political committee entails only a marginal restriction upon the contributor's ability to engage in free communication. A contribution serves as a general expression of support for the candidate and his views, but does not communicate the underlying basis for the support. At most, the size of the contribution provides a very rough index of the intensity of the contributor's support for the candidate. . . . While contributions may result in political expression if spent by a candidate or an association to present views to the voters, the transformation of contributions into political debate involves speech by someone other than the contributor.    

Some may argue that this decision validates the underlying point that more money implies a greater capacity for free speech, allowing the wealthy to exercise outsized influence over the political system. But if having more money gives certain individuals an unfair speech advantage, doesn’t celebrity provide the same advantage? What about rhetorical skill, personal charisma, or the sheer volume of a person’s voice? Status and ability certainly enhance a person’s capacity to disseminate ideas, but no one seems to be suggesting that we restrict famous or dynamic speakers from engaging in electioneering communications.

While more money may provide certain individuals with a greater capacity to communicate political messages, there’s no principled reason to single out this advantage over any other kind of advantage. Keep in mind that the Court deals in rule-based distinctions, not pragmatic quibbles over which form of advantage may be most dangerous.

As Eugene Volokh explained in a 2010 blog post:

People continue to characterize the Court’s campaign finance decisions as resting on the theory that money is speech. And of course money isn’t speech.

But, as I wrote a few years ago, money isn’t abortion, either. Nonetheless, a law that banned the spending of money on abortion would surely be a serious restriction on abortion rights (whether or not you think that the Court was right to recognize such rights). A law that capped the spending of money for abortions at a small amount, far smaller than abortions often cost, would likewise be a burden on abortion rights, and dismissing this argument as “it is quite wrong to equate money and abortion” would be unsound.

It goes without saying that the concept of “corporate personhood” is largely disconnected from the idea of spending as speech. But once you accept the notion that spending on independent electioneering communications is a form of protected speech, it’s easy to see why corporations should be entitled to the same liberties as other associations of people. In the same way that a group of private citizens may come together and pool money to pay for an independent political advertisement, a collection of shareholders may choose to use corporate funds—owned by each shareholder relative to her percentage of stock—to pay for an independent political advertisement. To restrict the latter and not the former is to draw an arbitrary division between business associations and other kinds of associations. Why should associations of people lose their constitutionally protected freedoms simply because of the legal structure of the organization?

The fact that most major media outlets are set up as corporate entities only reinforces this point. Are news corporations entitled to freedom of the press, but not freedom of speech? Why wouldn’t other kinds of corporations be entitled to freedom of the press? By what logic should only a single clause in the First Amendment be applied selectively to certain kinds of corporate entities?

Freedom of the press does not simply mean freedom to publish the news. Ever since Lovell V. City of Griffin (1938), the Court has held that this constitutionally protected liberty is “not confined to newspapers and periodicals. It necessarily embraces pamphlets and leaflets. These indeed have been historic weapons in the defense of liberty, as the pamphlets of Thomas Paine and others in our own history abundantly attest. The press, in its historic connotation, comprehends every sort of publication which affords a vehicle of information and opinion.”

To add a bit of irony, it seems that the majority of Americans—particularly well-educated people—dramatically overestimate the amount of corporate money in political campaigns, in part because media outlets present a distorted picture of reality. In a sense, opponents of corporate electioneering communications seem to be heavily influenced by misleading corporate media communications.

The truth is that money doesn’t have as much of an influence over our politics as people seem to believe. While this subject is difficult to study empirically, political scientists who are familiar with the literature tend to believe that spending is a relevant but less important factor in campaign outcomes. Most campaign ads have a minimal impact on the results of an election, even when they’re coming directly from the candidate. Indeed, voter perceptions and media narratives are far more likely to influence the results of an election than any electioneering communications.

As my undergraduate political science professor once put it: “shelves of academic research suggest that individual political ads have only marginal power to swing races, which depend instead on fundamentals like people’s perception of the economy.” The same can be said of lobbying, which appears to have a little overall impact on policy changes, given the general inertia of our political system.

Instead of trying to restrict freedom of speech, perhaps a better goal of the Occupy Movement and the political left would be to focus on problems like the advantage of incumbency or the general lack of engagement and understanding throughout the electorate on basic policy issues. At this point, it’s just strange to see a movement that was founded on constitutionally protected rights to freedom of speech and association so eager to take these rights away from other Americans.