As the United States elections draw near, everyone is wondering who will take control of Washington next. In this week’s Capitalisn’t episode, Pulitzer Prize-winning reporter Brody Mullins reveals how the real winner will be neither Democrats nor Republicans. Rather, it will be the lobbyists. Mullins is the co-author (along with his brother Luke, also an investigative reporter) of The Wolves of K Street: The Secret History of How Big Money Took Over Big Government. Brody joins Bethany and Luigi to discuss how corporations ranging from Genentech to Google participate in the invisible but massively influential lobbying industry to bend government policy toward their favor. Together, the three trace the roots and evolution of political lobbying from the 1970s to now and explore how it penetrates and leverages other spheres of society to abet its operations. How are academia and the media complicit in this ecosystem of influence operations? How has lobbying adapted to the changing attitudes of Americans towards Big Business? How might it change under either a Harris or Trump administration and beyond?
As the United States elections draw near, everyone is wondering who will take control of Washington next. In this week’s Capitalisn’t episode, Pulitzer Prize-winning reporter Brody Mullins reveals how the real winner will be neither Democrats nor Republicans. Rather, it will be the lobbyists.
Mullins is the co-author (along with his brother Luke, also an investigative reporter) of The Wolves of K Street: The Secret History of How Big Money Took Over Big Government. Brody joins Bethany and Luigi to discuss how corporations ranging from Genentech to Google participate in the invisible but massively influential lobbying industry to bend government policy toward their favor. Together, the three trace the roots and evolution of political lobbying from the 1970s to now and explore how it penetrates and leverages other spheres of society to abet its operations. How are academia and the media complicit in this ecosystem of influence operations? How has lobbying adapted to the changing attitudes of Americans towards Big Business? How might it change under either a Harris or Trump administration and beyond?
Episode Notes: Luigi mentions the transformational work of one figure in American politics who fought back against lobbyists’ substantial influence: consumer advocate Ralph Nader. Revisit our prior conversation and episode with Mr. Nader.
From 2007 to now, there are roughly the same number of registered lobbyists. There
are 11 or 12 ,000 back then, and there's 12 or 13 ,000 registered lobbyists now. And
that's in part because people are not registering, but it also is that lobbying has
changed.
I'm Bethany McLean. Did you ever have a moment of doubt about capitalism and whether
greed's a good idea? And I'm Luigi Zingales. We have capitalism for the very rich
rugged individualism for the poor. And Mrs. Capital isn't a podcast about what is
working in capitalism. First of all, tell me, is there some society you know that
doesn't run on greed? And most importantly, what isn't? We ought to do better by
the people that get left behind. I don't think we should have killed the capitalist
system in the process. As the elections approach, everybody's thinking about who's
going to govern us next January. We at Capitalism already know the answer.
Now, we're not psychic, but we do know that corporate lobbyists will take over.
Democrats or Republicans, the ultimate decision, are not made by the elected
representative, but by the enormous infrastructure machine that operates in Washington.
To explain how Washington really works, to guide us in understanding what has become
a gigantic and incredibly influential, although all too often invisible,
industry. We decided to ask Brody Mullins, an investigative reporter, a Pulitzer Prize
winner, and the co -author with his brother, and as an aside, writing a book with
one sibling, Omai, of the wolves of K Street, the secret history of how big money
took over big government. The Mullins started the analysis in the 1970s, when
Washington's center of power began to shift away from elected officials to a handful
on handsomely paid operators. As they write, they follow three lobbying dynasties,
one Republican, two Democrat, over the critical period from the 1970s to today,
when the modern lobbying industry was created, copper interests came to power in
Washington, and the nature of our economy was fundamentally changed. Under the new
rules introduced in 2007, more than 3 ,200 lobbyists simply stopped reporting any
efforts to influence Congress or the administration. No, these influenced peddlers
hadn't retired from the profession. They'd simply stopped registering as lobbyists. As
it so often turns out, new rules simply created loopholes. In a telling example that
the Mullins Brothers highlight, Genentech's advocacy that ballooned to $50 million,
yet only $5 million was spent on traditional lobbying activities. The remaining $45
million was for public affairs, grassroots, polling, data analytics, and other tactics
that fell outside the technical definition of lobbying. And on account of the gaps
in the regulation of K Street, none of this $45 million shadow lobbying budget had
to be disclosed to the public. But the game changed again in 2011, when traditional
business sponsors the Stopline PRC Act, also known as SOPA, targeting Americans who
use the internet to illegally download or share music. That would have been
devastated to platforms like Google and Facebook, which would be accountable for what
their users did. A broad coalition of politically connected corporations, who were
losing out due to online piracy, spent an outstanding 90 million into lobbying on
behalf of the Beals. And by the summer of 2011, passage seemed old but assured.
But they played the old inside game. Then Adam Kovacovic,
a senior member of Google's Washington office, figured out to play the new outside
game. Think local seminars helping to create website for small businesses,
which of course has also helped Google carry favor with politicians in those areas.
He changed Google's opposition to the anti -parasite legislation from a DC -focused
lobbying push into a course to cause political influence effort that had a simple
slogan "Don't kill the internet" and was like a presidential campaign.
It was a stunning success and lobbying started to be done like political campaigns.
Then arrived Donald Trump, who arguably was elected in part due to the success of
the lobbyists, the Mullen's Chronicle, in undermining protections for workers and
creating a sense that the corporate elite were out for themselves. But of course,
the advent of Donald Trump made lobbying change once again. But we're getting ahead
of ourselves. We need to bring our guest. Brody, welcome to the show.
- When you begin talking about the history of lobbying, you talk about the Powell
Memorandum, and you and Luigi are agreed on the importance of the Powell Memorandum.
But it struck me in reading about the Powell Memorandum that it was ideological. It
wasn't so much cynical. It really was a genuine belief that this was what was in
the best interests of the country. And so how do you think about how law being
gripped to what it is today is that blend of idealism and cynicism? I do believe
that Lewis Powell and companies and corporate executives in the 1970s felt like they
were getting their butts kicked. And they were. Companies at the time didn't feel
like Washington and the making of laws and regulations was something that they were
supposed to be involved in. They thought that's something that the government does
and their job is to run their businesses. And Louis Powell, among others, you know,
told people, "You're getting your butt kicked. You're losing money. You're spending
too much money on compliance costs. Too much of your money is going to Washington
because you're not representing your own cause in Washington. And therefore, you need
to, like any business, invest in your problem." And they saw the government and the
growth of government as a problem, as something that was impacting their industries.
You know, I think This is sort of interesting as someone who's covered lobbying for
20 years. At first, these companies were trying to beat back new regulations or
change regulations subtly so they weren't as harmful to industry or businesses as
they were first intended. Companies didn't realize, "Hey, I don't need to sit back
and just battle new regulations that are coming. I can proactively go on offense,
hire lobbyists, make friends in Washington, and create rules and regulations that harm
my competitors." companies now are increasingly coming to Washington to create rules
and regulations to screw their competitors. And that I think is sort of going over
the line. I think any free market capitalist, any free market Republican would say,
that's a problem, that's wrong. And in fact, we've seen this increasing populism in
the Republican Party. And my theory is that it kind of stems from this, that real
conservative free market I think the company should battle it out in the marketplace
and let the best product or the best technology win. They don't think it's right to
spend millions of dollars on lobbying campaign donations to change the rules of the
game to get an advantage. And that's what a lot of companies are doing right now.
And that's why I think we see a lot of Republicans fighting against corporate
America and battling even the U .S. Chamber of Commerce, who they see as sort of
the epitome of using Washington to gain an unfair advantage in the marketplace. Do
you think there are any genuine free market capitalists left or has the rise of
lobbying completely corrupted that on both sides such that all we have is crony
capitalism? And if there are any left, where are they? Yeah, that's a terrific
question. I feel like, unfortunately, in the corporate lobbying world, I mean, the
way the game is played is use Washington to gain favor in the marketplace. And I
can only think of one company that is successful, that has not gotten involved in
that type of lobbying, and that's Apple. What's so strange to me is that so many
companies, you know, Google, Amazon, Facebook, Microsoft, in the tech space, spend so
much money on lobbying and influence, more than any other industry, by the way. But
Apple, the biggest company in the US, most successful, all these employees, they have
a tiny, tiny operation in Washington, and maybe that's worth a second book. I don't
know Why it is that Apple is able to get away with it when everyone else is. But
anyway, back to the question. Companies feel like in order to be successful in the
marketplace, you have to be successful in Washington. We have a couple of chapters
in our book on the rise of Google and how Google went from having no lobbying
operation in DC to having the most powerful in Washington. Washington is an important
part of profits and an important part of business growth. So what out of all the
stories, the wonderful stories that you chronicle in the book, what was what was the
most shocking one to you? Or after all these years of covering this, is there
nothing that shocks you? Yeah, you know, the story I liked the best or maybe the
story I liked the least is a story of Evan Morris, the lobbyist for Genentech,
who he was a young up and coming lobbyist who was in his late 20s is running this
huge lobbying campaign for actually genetics predecessor Roche Pharmaceuticals,
the Swiss pharmaceutical company. And this is the mid 2000s. And there were stories
in the media about the avian bird flu killing some people overseas. This is before
the real pandemic hit the US. And Evan Moore sort of saw an opportunity to make
money for his company by promoting Fears that the avian bird flu was going to come
to the United States and kill thousands or you know millions of people So we
started paying Conservative bloggers and conservative media and liberal bloggers to
write stories sort of stoked Americans fears about the avian bird flu Come in the
US and we all remember like a you know We sort of remember that there were some
stories about that back in the media You know in the mid -2000s. Anyway, he turned
out he was behind that those stories, worried regular Americans who wrote letters to
their members of Congress in the fall of 2007, I believe, maybe 2006, 32 Senate
Republicans and Democrats wrote a letter to the Bush administration saying, hey, you
know, this avian bird flu could be a big problem. Let's create a stockpile of
remedies or treatments for the avian bird flu. The Bush administration agreed created
a $2 billion stockpile of remedies for the avian bird flu. Then it turned out that
Roche, who had funded the whole campaign, were the only makers of a remedy to the
avian bird flu. They make tamiflu. So the government turns around and buys two
billion dollars worth of tamiflu, all because Evan Morris, their top lobbyist,
promoted this sort of fake pandemic. And what does Evan Morris get out of it? Well,
he obviously got a huge bonus and a raise and he's driving Porsches around and
becomes a big star. But the whole thing was fake. Just astonishing. And somewhere in
in Washington, we go find a closet that's stuffed with $2 billion worth of Tamiflu.
Unfortunately, it was not working for COVID. Otherwise, we could have recycled it. So
I heard you criticize the academic literature on lobbying. Now, I've not written on
lobbying, so you're not criticizing me, so it's not a personal defense yet. After
your book came out, you wrote a series of articles in the Wall Street Journal about
Joshua Wright. Can you sort of tell a bit like our listeners, if they're not aware,
what is contained in those articles and what you learn about the role of academia
in lobby? One of the leading Google and tech -funded academics, his name is Joshua
Wright. He is a leading proponent in Washington of a less vigorous enforcement of
antitrust laws. He's a former federal trade commissioner, but he's really best known
as a or a law professor at George Mason University. And he gained a favor in
Washington over 10 or 15 years as a real champion of getting the Federal Trade
Commission and getting the Justice Department to not enforce antitrust laws. And it
turned out he was funded by the tech industry for that time and really by Google
for much of that time. And Google would fund some of the academic institutions that
he was a part of and he ran. And they also hired him as an attorney on the side.
Some companies would hire him to do academic research as well as write sort of
economic briefs on matters. So here's a guy who sort of walked around, you know,
wearing the hat of I'm a professor at George Mason University. And these are my
opinions. And as an academic, members of Congress and people at the Federal Trade
Commission really valued his opinion. They thought he who's a pretty smart guy who
brought a good viewpoint to the antitrust policy fights. But in fact, he was paid
by the tech companies to support those positions. He made $400 ,000 a year working
for George Mason University, which I think is a pretty good salary for an academic,
but he was making $2 million on top of that from tech companies. At the end of
the day, he was really more of a tech advocate than a law professor, but he sort
of used his credentials as a law professor to advocate for his companies,
his corporate clients, companies use academia and more that the tech industry uses
law schools to sort of shape the intellectual debate on important issues like
copyright and online privacy and antitrust and in order to do that they sort of
fund research that amplifies their points of view which is the same thing that the
pharmaceutical industry did years before at medical schools. And, you know, what the
tobacco companies did funding medical research that supports their point of view, you
know, this is just an arm of lobbying. So one of the few academic studies you seem
to like, and correct me if I'm wrong, shows that the most likely opponent of every
lobbying effort by business is lobbying by another business. Absolutely. So the old
Washington saying goes, if you're not at the table, you are on the menu. Does this
mean that consumers are always the ones on the menu? You know, unfortunately, you're
exactly right. Big lobbying fights are not company against environmental group or
company against consumer groups, although those happened once in a while. The lobbying
fights that I cover are company against company. Look at Google. Google is not out
there operating on its own. There's a whole handful of companies, big U .S.
companies, Microsoft, Oracle, you know, who are using the government to battle Google.
Wall Street companies fight each other, it's the big banks versus the medium -sized
banks, the community banks versus the larger banks. In every industry, it's company
against company. We quote a professor that he did his own study where he
interviewed, I think it was 70 top corporate lobbyists in DC and said, "Hey, in
your day -to -day life, when you're out there working for your company, who is your
opponent? Who are you fighting against?" And not one of them said a labor union,
which is really really just, you know, companies are the only people at the table
and consumers are the ones being served. I think that lobbying is a much broader
game that we often describe in academia. And always thought that you look at the
numbers that Google report to spend in lobbying, what it is, $30 million a year, in
the grand scheme of things for Google, they probably spend more in free food at the
cafeteria than in lobbying. So it's rounding error for Google. But you are saying
this is really nothing by comparison to the entire sort of ecosystem of influence
activity. So you present this example in which Genentech advocacy budget was 50
million, but only five, so one -tenth was spent on traditional lobby activities.
The remaining 45 were public affairs, grassroots polling, data analytics,
all the other stuff that is really, really important to lobbying, but it doesn't
show up in lobbying statistics. So how pervasive this phenomenon is? Is it just
Genentech or is everybody? - Great question. You've passed the test of whether you
read the book or not, if you're able to find that stat. And that's one of my
favorite stats 'cause one of the few rules we have is under the Loving Disclosure
Act. It says that if you are a lobbyist, that you need to disclose your activities,
you need to register as a lobbyist. And the problem is legally to be considered a
lobbyist, you need to spend 20 % of your time or more actively talking to members
of Congress, their staff or agency officials in order to influence public policy. So
what has happened as the term lobbyist gets a bad name is that lots of people who
are lobbyists don't want to be known as lobbyists, so they simply don't register.
They say that they're spending less than 20 % of their time trying to influence
legislation. And that's a pretty easy thing to do because lots of lobbying is
preparing letters, you know, sending emails, going to lunch with people, getting new
clients, going to fundraising events, lots of things that are not lobbying. From 2007
to now, there are roughly the same number of registered lobbyists. There are 11 or
12 ,000 back then, and there's 12 or 13 ,000 registered lobbyists now. And that's in
part because people are not registering, but it also is that lobbying has changed.
Lots of successful lobbying campaigns are not about talking to a member of Congress
and trying to get them to do a favor for you or add some sneaky provision into
the law, but rather going out and talking to constituents, and talking to business
groups, and talking to civic organizations, and getting regular constituents and voters
to support an issue that a company supports. Members of Congress will do anything
they can to get reelected. And that's where that great Genentech stat comes from.
This guy, Evan Morris, the head of Genentech's Washington office, had a $45 million
total budget. Only $5 million of that was spent on what we consider to be lobbying.
And $45 million was spent on the other topics that you just mentioned, which are
all geared toward getting constituents to put pressure on members of Congress to
support legislation backed by Genentech. So speaking of influence, one of the stories
you tell in the book, which I, of course, found very jarring, is the role that the
Washington Post played with that editorial, a binding that attempts to limit the
amount of sugar Americans could eat, which, of course, in retrospect, especially was
exactly right, was basically the imposition of the nanny state. So how do you think
broadly about the role that journalists play in this ecosystem? You know, you sit in
an interesting place because you write about the lobbyists themselves, but most of us
are the targets of lobbyists. Do we even know that we're being used when we're
being used? Are we complicit in it and cynical about it? In my day -to -day life, I
want to say that at least half of the stories that I get are generated by
companies or lobbyists who have an interest in the stories that I'm writing. Now, I
have to go and make sure the information they're giving me is correct. Stories
written in the inside Washington the, the politicos and the roll calls and the Hill
newspapers, Axios, I mean, the list goes on, those publications are read religiously
by members of Congress and their staff. And those reporters need to write articles
once a day, twice a day, three times a day. And so if they know a lobbyist or
someone working for a company who's giving them, you know, tips on stories about
legislation that's going to pass or allegedly is going to fail or fail or this
industry's up or this industry's down, those are stories that they're going to want
to write because they can do them pretty quickly. The media, especially the inside,
the Bellway media, it really is used every day by lobbyists to advance their own
agenda. That is very rarely written about, and we devoted a couple of chapters in
our book to try to show that side of it. It's not saying the reports are doing
anything wrong. None of the reports were intentionally trying to write a story that
helps a company. But a good story is a good story. And sometimes, you know, good
story hurts a company. And oftentimes what we found is that, you know, those stories
are generated or produced or kind of planted by the opponent of those companies.
So one of the ways I read your book is this Every Good Intention Backfires. And
lobbyists are sort of like kudzu. They just spread and grow stronger and grow more
powerful no matter how we try to chop them And so you show how the post -Watergate
reform backfired and similarly how the passage of McCain Feingold in 2002 made
lobbyists more rather than less important. And you quote Tony Podesta saying money
will always find a way around. So do you think there's hope or is there no hope?
And if you were king for a day and could do one thing to blunt the impact of
lobbyists, what would you do? I think that there's no way to limit money in
politics, money is protected by the First Amendment now and speech is protected by
the First Amendment. So I don't think you can reign in the influence of companies,
but maybe we can figure out a way to make it a fair fight to give consumer groups
more influence. And I think one of the things that regular Americans, consumers need
to do is they need to come together and talk to their member of Congress. Because
right now, companies have all the money and they have all the influence and they're
talking to members of Congress. But at the end of the day, if a member of Congress
wants to get reelected and therefore needs the support of 51 % of their constituents,
they need to hear from constituents. They will do what a majority of their
constituents want, and more regular Americans need to contact their members of
Congress. In the McCain -Feingold 2002 campaign finance reform,
the law always changed and said that companies can't give unlimited sums of money to
political parties prior laws under Watergate have limited the amount of money that an
individual can give directly to a candidate. And that means that you or I or anyone
listening can only write a check of a couple thousand dollars to a member of
Congress. What lobbyists do though is that they know hundreds if not thousands of
business executives who can write those checks for a thousand or two thousand or
three thousand dollars. So what they do is they go to their friends or their
colleagues or their clients and say, say, hey, if 100 people can give me $1 ,000
each, then I, the lobbyist, can go to a member of Congress with a big check, $100
,000, to help that member get reelected. And you're exactly right, that gives the
lobbyist influence with that member of Congress forever, because they're a major donor
to their campaign. So that's a way that another unintended consequence of the law, I
don't think it would be fair or right to say that individuals can give an unlimited
amount of money directly to a candidate. But what we have right now is the system
we have now is the political parties, which should be the dominant force in
elections, are limited in how much money they can raise from corporate PACs or from
labor unions or individuals. But billionaires are not limited in how much money they
can give to what are called super PACs or outside campaign groups that run sort of
shadow campaigns on behalf of candidates. - One of the things that has struck me is
that it can be awfully hard to figure out who's behind certain groups. I wrote
about, for instance, the battle to try to ban surprise billing. And one of the big
groups that managed for a while to turn back the tide on that was funded by
private equity firms. And it took a lot of investigative reporting to figure out
that it was the private equity firms behind that group. Why is it just not all
more transparent? Why are you allowed to have a code name as a group. Why isn't
there just a law that says if this is Blackstone lobbying, it has to be Blackstone?
There should be a law. The problem is that there isn't. Our tax laws are set up
in a way that anyone can start a 501 (c)(3) or 501 (c)(4). Those groups don't need
to disclose who their donors are. You can give it a great sounding name, Americans
for a better America. Every big tech company can fund it with donations you'll never
be able to find, and that shadow group can go out and spend millions of dollars to
elect candidates that they want to. If we're saying anyone under the First Amendment
is allowed to petition the government and our lobbying disclosure law says, "Hey, if
you're going to petition the government, let's just disclose who you are," then let's
make these rules fair so that it's not just people who spend 20 % of their time
talking directly to a member of Congress, but people who spend 20 % of their time
trying to influence legislation or trying to influence an election, it seems like
that's a pretty fair thing to do. And we're not saying you can't do it. We're just
saying, say who you are, so that Americans can decide whether they want this group,
this interest group or that interest group, putting their thumb on the scale. It
seems like a pretty fair and American thing to do. So in your book, you suggest
that with the election of Trump in 2016, things have changed. Can you explain how
and why? There's been a shift in both political parties in the last few years away
from support of big companies. More and more Americans, Republicans and Democrats,
more and more members of Congress are saying some of these companies, particularly
the tech companies, have gotten too big and too powerful. This antitrust lawsuit that
came out ruling that Google is a monopoly. That's a case that began in 2009 and 10
that Google beat back for a long time. But finally, the tide has turned against
Google. And we'll see if other lawsuits come from that. What's most fascinating
actually is that change among Republicans. For my entire life, Republicans were the
champions of big business, the champions of industry. They were against government.
The government was the problem and the free markets were the And that's just
starting to change a little bit. I had a talk for our book with JD Vance, and JD
Vance said concentrated economic power is as bad or worse than government power. So
there really is a sea change going on right now. Now I still think, to be sure,
companies are still the most influential force in Washington, but their influence is
definitely on the decline. And we'll see if there's another force, maybe consumer
groups, maybe labor unions, who are gonna take their place. That is yet to be
determined. Is this cynical? It could be in that Republicans are against tech because
they think tech is against them. Tech billionaires are giving all their money to
liberal causes and to Democrats. But it's also that Republicans say that they feel
like their voices are being stifled and blocked and censored by technology platforms.
It's really fascinating to see in the next five or 10 years if the Republican Party
keeps changing. Does the Republican Party become the party of the poor? Is the
Democratic Party becoming the party of the rich? Are the far right and the far left
going to meet up on economic issues? They could. You know, the Chamber of Commerce
represents big business, represents industry, has been very closely aligned with
Republicans for the last 20, 30, 40 years. Right now, we have a bunch of Republican
members of Congress who have been attacking the Chamber of Commerce. You know,
Speaker McCarthy is no longer Speaker and out of Congress. But when he was the
Speaker, he would not let members of the Chamber of Commerce even visit him in his
office. And years ago, was covering Capitol Hill, then Speaker John Boehner had a
regular, I think it was every Tuesday meeting in a luncheon meeting with the US
Chamber of Commerce, with the Business Roundtable, with other top industry lobbyists
with a literally plotted strategy on how to pass pro business policies. And now to
see Republicans attacking the Chamber of Commerce is incredible. What we have going
on right now is the Republican Chairman of the Ways and Means Committee, the Tax
Writing Committee, has started an investigation into the tax status of the Chamber of
Commerce, you know, which is stunning. And it's something you'd expect that Elizabeth
Warren to do, not, you know, the Republican chief tax writer. But that's sort of a
reflection of what we've been talking about is that the increasing populist bent of
the Republican Party, that they seem to be intent on attacking big businesses and
the organization that represents big business, which is the US Chamber of Commerce.
So President Biden used to say, if you want to know my values, don't look at my
or don't listen to my words, look at my budget. So if you look at the budgets of
companies these days, What do corporations support in these elections? Companies are
wimps. They just want to be with the winner. They don't care who the winner is.
They want certainty. They want to have friends who's in power. And one of the most
fascinating statistics we came across in looking at corporate campaign contributions is
that you would think in the last 50 years, if companies would benefit by Republicans
and conservatives being in power, then companies would give all their money to
Republicans and none to Democrats. But what be found is that when Republicans are in
charge, when Republicans have the House, when they control the Senate, and they have
the presidency, companies give about 60 % of their money to Republicans, and they
give about 40 % of their money to Democrats. What's fascinating is that when
Democrats are in power, companies give about 60 % of their money to Democrats and 40
% of their money to Republicans. So they basically just want to give the money to
whoever is in power. It's the last question. We don't expect you to predict the
result of the elections, but we ask you to predict the results conditional on the
administration. And it says, how do you expect lobbying to be transformed under a
Harris administration or under a Trump administration? You know, that lobbying actually
would be very different under either administration. I think under the Harris
administration, things would be similar to the way they are now. The lobbying
industry would continue to grow. Lobbyists would continue to try to influence people
outside of in and interest groups and regular Americans to get to members of
Congress. Trump changes everything. Trump represents a new way of lobbying in D .C.
because Trump doesn't act through Congress. He doesn't even act through his
administration. He tries to do things on his own. He governs by executive order,
with the exception of that big 2017 corporate tax cut. And when he does it himself,
it means that companies don't need to lobby Congress because Congress is useless And
they don't need a lobby to EPA because Trump does things by executive order in the
White House So what we'll see if Trump has elected is a consolidation of of the
lobbying industry as in there'll be a handful of Lobbyists who have personal
relationships with Donald Trump people like Paul Manafort who will Advertise will
start lobbying operations and advertise their services on based on their connections
to Trump and those few people will be incredibly successfully and wealthy. If Trump
is elected, you know, he will eventually leave office. And at that point, I expect
the lobbying should go back to sort of normal, which is a much more broad based
lobbying operation. So I'm not sure whether to feel more optimistic or less
optimistic after talking to you, but it was really interesting. And thank you for
making the time and congratulations again on a great book. Thanks so much for having
me.
If you're enjoying the discussions we're having on this program. There's another
University of Chicago podcast network show you should check out. It's called The Pi.
Economists are always talking about The Pi, how it grows and shrinks, how it's
sliced, and who gets the biggest share. Join veteran NPR host Tess Vigland as she
talks with leading economists about their cutting -edge research and the key events of
the day. Here, how the economic pie is at the heart of issues like the aftermath
of a global pandemic, jobs, energy policy, and so much more.
It's Bethany from Capital Isn't. Luigi and I have something really exciting coming
up. On October 30th, we're sitting down for a live conversation with world -renowned
historian Sir Neil Ferguson. It'll be right before the US election. We'll talk about
the future of global politics and global population declines in the next century. You
can catch it all in an upcoming episode of Capital Isn't. But if you want to join
us for the live recording, be sure to register. Head to our website, capitalisnt
.com, subscribe to Capital Isn't, and mark your calendars, October 30th,
11 a .m. Central, for our live recording with Sir Neil Ferguson. See you there.
I found this a fascinating conversation. I thought it was a fascinating book, and it
gets at this very deep and very fundamental corruption that I think is core to what
we talk about on capitalism, because it's undermining capitalism as we know it. I
think a lot of people have a sense that what exists now is crony capitalism, and
that's what these lobbyists have so effectively created. And I don't think I really
understood the history and the depth of it until I read this book. How about you?
I completely agree. I think that this book is really a fascinating history of the
lobbying industry and how much has changed and how it continues changing. They're
very good to add sex, lies and art and cigars to make it very interesting.
To some extent, I would like a stripped down version of this without the sex to be
part of the standard education of people in academia because lobbying is an industry
like many others, but is a particular important one. I think we understand it very
little. - Why do you have to remove the sex to make it palatable to academics?
- Because otherwise they're only with the sex.
- I thought it might defend their tender sensibilities, and therefore, it had to be
made G -rated. My biggest problem is, to what extent this control of Congress by
industry is a more modern phenomenon or not? Because there is no doubt that modern
lobbying started in the 1970s when he starts, and in part as a reaction to the
NATO phenomenon and the power that nadir was able to assemble. The fact that a
single individual could change regulation in the auto industry was pretty stunning. So
my question is, do you think that before lobbying was taking place in a calls your
way that you don't see it? And at the end of the day, remember who was Secretary
of Defense Wilson under Eisenhower that said that the interest of GM and interest of
the country is one are the same. So when you have people like this, why do you
need lobbying? Because you have perfectly vertical integration of the interests of GM
into the interest of Congress. And it's only when you start to have some opposition
with Nader that you have a more active lobbying. But is the outcome much worse than
it was in the 50s or not? The modern lobbying industry might be also a reaction to
the world simply getting bigger. And maybe nostalgia for the good old days is
misplaced. In other words, when the country was much, much, much smaller, the
industrialists were members of Congress. You didn't need the middlemen of lobbyists
because they could go to Congress and lobby and do exactly what they wanted to do.
And so it was as America became so much bigger and so much less connected that you
needed this middle layer or business felt you needed this middle layer of lobbyists.
It's a really interesting question. Did the good old days exist? The 1970s was
clearly the rise of the modern lobbying industry, but were there good old days? I
suspect that in the period immediately after World War II, the industry was less
powerful because at the end of the day, there were two important characteristics.
First of all, the politicians had a much higher standing with the population, the
combination of the new deal that was successful, the victory over World War II,
politicians carry much more weight than they carry today, in terms of respect. And
also, they had pretty privileged access to numbers of means,
like radio and TV, that was not that easy for people to fight them back. So That's
number one. Number two, at the time, the Republican Party was the clearly pro
-business party, but the Democratic Party was kind of the anti -business party,
was really in the hands of unions, and as such, I think was keeping Republicans in
check. My conjecture is that this equilibrium broke down starting in the '70s,
but really reaching the peak in the 90s when the Democrats were as part of the
lobby machine as the Republican and so there was no difference between the two. And
it's yet another example of how neoliberalism and the embrace of it by both parties
was whether you think it was right or not it was it was dangerous to have
everybody singing the same tune. Yeah absolutely but but in addition I think one of
the thing I learned is that that lobbying not only has become more influential but
much more pervasive has become a global game. In the old days you think about
lobbying as simply somebody that is peddling something with their congressman. No,
it start from a business strategy very often sort of you think about how can I
think about regulation that helps my business strategy and damage my opponent.
And then it goes through political activism, to academia,
to journalists. Everybody is, to some extent, a voluntary or involuntary peon in this
gigantic strategic game to influence in the direction of public policy.
One of the anecdotes that I found the most upsetting was this was this little story
about how Google, in an effort to stop the Stop on Piracy Act,
had figured out that they could throw these local seminars, helping to create
websites for small businesses. But they were always in a place where Google needed
the support of the politician whose home turf that was. And so it was very, very
strategic. And there's just something about that that I guess I think How do you
possibly know what the truth is, or why somebody is doing something? And then I
suppose you could ask, "Well, why do you care if they're doing something that's good
in order to help build support for themselves?" Do the reasons matter? But there's
just something about intent that I would like to understand,
and knowing how little in the modern world you can understand about what the true
intent of something is is very disturbing to me. I think it's very safe to assume
that they always do that for a purpose. The most reassuring thing is when they do
that for a business purpose, because if they do it for profit, maybe there is not
an ulterior motive, but every time they don't do something for profit, then you have
to worry about the ulterior motive. Maybe there is some sort of tie in the
outgrowth of lobbying to Milton Friedman's famous manifesto about the bottom line
mattering, because if you make that argument that the bottom line is what you should
be focused on, then you can make a pretty profound as the leader of a business,
you can make a pretty profound argument that you should do everything possible to
curry favor in Washington and to get legislation passed that benefits your business.
Suddenly there's no moral code barring you from doing that, even if it's not in the
interest of the country or in the interest of your consumers, because it is in the
interest of your bottom line. So, to be fair to Milton Friedman, he has two
qualifiers. Every time he's, say, the only social responsibility is to maximize
profits. He qualifies that. In one time, he qualifies that within the rules of the
game, both those imposed by the law and those imposed by social customs or something
like that. And the second, say, within a framework of fair competition and blah,
blah, blah, blah. You know, There is a funny omission in the Mullins Brothers book,
and that's Fannie Mae. Fannie really was the first company to begin using this
incredibly powerful form of grassroots lobbying. And it was the brainchild of the
former CEO of Fannie Mae, Jim Johnson, who was himself very politically connected and
very connected in DC. And he recognized that if you used housing policy and Fannie
Mae's largesse to do good things for members of Congress on their home turf and to
give members of Congress an opportunity to shine on their on their home turf that
it would be very hard for that member of Congress then to do anything that wasn't
in Fannie's interests and they built this incredibly powerful lobbying machine.
So the other the other interesting question is where of course all of this all of
this leaves us now if it seems to me as we concluded our interview with Brody on
the note that it's not clear whether to be more or less optimistic. I mean,
President Trump did blow into office promising to famously drain the swamp, but it's
just a different swamp, right? He may have drained the old swamp, but the new one
filled up pretty quickly. And I think he seemed pretty clear that if there is
another Trump administration, lobbying may work differently, but it'll just revert to
what it was when the Trump administration leaves, and it's not even really clear
that what it would be under Trump would be any better. I agree, but I think there
is a little bit of hope in the fact that we see some populist pressure to actually
change things. This is if my story that in the 50s and 60s things were different
because one party was anti -business is right, And what we need is we need a party
that is more openly anti -business and doesn't really matter whether this is the
Democrats or Republicans, as long as there is one, we'll keep the other in place.
JD Van seems to push in the direction of a Republican party, which is more anti
-business. I think we'll be a long way, and it's not like tomorrow this is going to
be the case, but I think it would be interesting to see what happens in the
future. I'm a little wary of giving Vance too much credit, given that some of his
big backers are the technology billionaires. I don't know how that would play out
over the course of time, because people have a way of delivering rhetoric that is
one thing, but then when it comes to actually offending the people who pay the
bills, doing something very different. And it depends when you're anti -business,
which business you're anti. And so people with some anti -business credentials,
I mean, you could almost argue in some ways that the Democrats became very anti
sort of old white guy business, but they became very pro, new, exciting technology
business at the same time. - Yeah, I'm not trying to give him credit. I'm trying to
say that there is clearly a demand for an anti Communist Party.
And both sides, both the Democrats and the Republicans, are flirting with this side.
And they both are afraid. But I suspect, I did not do a proper poll,
but I suspect that if you go around and say, do you support Lina Kahn's action at
the FTC, a vast majority of the American people will be in favor. What is
interesting is, in this moment, Neither of the two presidential candidates seemed to
support her. I mean, I knew she was controversial in the business world, but I was
not aware of the depths of the pushback, particularly among, I think, Silicon Valley
venture capitalists and private equity people, both of whom have the ear of a lot
of politicians, thanks to the money that they have back to the theme of our
podcast. Both groups blame Lena Kahn for their inability to exit their investments
because they say she slow down the deal machine. And because they can't sell an
investment to another company, because they're worried the FTC will come in, they're
really, really angry because that's a primary exit for venture capitalists and for
private equity firms. So I think that there is this groundswell of anger against
Lina Khan that is very much private equity and venture capital driven. I could see
a populist branch that say we want tougher antitrust, we want less subsidy and we
want less easy money. - Oh, that would be my party. I think I should be the
president of that made -up party, which does not exist and probably will never exist.
(upbeat music) - Capitalism is a podcast from the University of Chicago podcast
network and the Stiegler Center in collaboration with the Chicago Booth Review. The
show is produced by me, Matt Hodepp and Leah C. Zreen with production assistance
from Utsof Gandhi, Sodom Kim, Sebastian Berke, Andy Shee, and Brooke Fox.
Don't forget to subscribe and leave a review wherever you get your podcasts. If
you'd like to take our conversation further, also check out promarket .org, a
publication of the Stiegler Center, and subscribe to our newsletter. Sign up at
chicagobooth .edu /stiegler to discover exciting new content,
events, and insights. We hope you'll join our community today, again at chicagobooth
.edu /steagler.