> Intellectual Ventures spent $310,000 to influence federal policy from July 1 through Sept. 30, up from $165,000 the firm reported spending on lobbying during the previous months, according to a report filed with the U.S. Senate.
What does this mean exactly, and how is this different from bribery and corruption?
Paying a lobbying firm to push a particular policy is quite different than bribing a public official. Lobbying isn't, by and large, an act of "hey here's a $50 why don't you look the other way." It's: "hey, your staff doesn't have time to write a bill so here's some proposed text." Or: "hey, here is this study we commissioned showing that global warming is a sham, so you have something to throw back at people who claim you're being unscientific."
Lobbying involves a ton of leg-work and that's not free.
A substantial amount of what people call "corruption" in American politics is instead two cherished principles of American society being fundamentally at odds as a result of our representative system. We want everyone to have an equal say in government, but we also want people to be able to freely express their political opinions.
Why is it wrong for an environmental group to be able to draft a proposed law to give legislators something concrete to work with? Why is it wrong for an industry organization, which usually knows way more about the specific industry than the lay public, to educate legislators about their industry? Why is it wrong for a rich person to buy media time to convince voters of his views?
These activities aren't inherently wrong. They're not inherently corruption. We might not like the consequences resulting from these activities. Often, we just don't like the people engaging in these activities. But as long as they're directed at convincing people (either voters or politicians), as opposed to giving out personal benefits, these activities aren't corruption.
What can be wrong is someone's selfish interest affecting negatively everyone else. I.e. acting not for the sake of making a useful law for the public, but acting for the sake of making a useful law for someone's particular pocket at the expense of the public. It's very clearly wrong, but how exactly this can be prevented is a good question.
The thorny issue of lobbying vs. democracy shares a lot of overlap with the realities of legal costs and the justice system. On the one hand, it's clearly unjust that the party who can afford more legal fees has a strong advantage, both in and out of the courtroom; on the other hand, it's also unjust to not allow someone to choose their own legal counsel, and how they make their case.
Perhaps those specific examples aren't corruption, but this could also include PAC donations, insider market info and fancy dinners and junkets. I don't see why this be an all or nothing affair. It seems it is only this way because the beneficiaries are the ones who make the rules.
You are not the first to notice this. What's your proposed alternative? Keep in mind that once money is spent, the spender no longer has it. If power is used, the user still has it. So it would be a bad idea to let powerful people have the soapbox instead of people with money.
> Keep in mind that once money is spent, the spender no longer has it.
This would be true if lobbying didn't give such good ROI: a few million for lobbyists can yield hundreds of millions or more in tax breaks, government contracts, or otherwise profitable policy.
A study by the investment-research firm Strategas which was cited in The Economist and the Washington Post compared the 50 firms that spent the most on lobbying relative to their assets, and compared their financial performance against that of the S&P 500 in the stock market; the study concluded that spending on lobbying was a "spectacular investment" yielding "blistering" returns comparable to a high-flying hedge fund, even despite the financial downturn of the past few years. A 2009 study by University of Kansas professor Raquel Meyer Alexander suggested that lobbying brought a substantial return on investment.
From the second article abstract mentioned in that excerpt:
In this paper we use audited corporate tax disclosures relating to a tax holiday on repatriated earnings created by the American Jobs Creation Act of 2004 to examine the return on lobbying. We find firms lobbying for this provision have a return in excess of $220 for every $1 spent on lobbying, or 22,000%.
From articles writing about the first study mentioned in the excerpt:
As the chart on the right shows, the firms that leaned most heavily on lobbyists have outperformed the S&P 500 by a whopping 11 percent per year since 2002.
The outright return on lobbying costs, according to one of the various studies that served as inspiration for the Strategas index, was $220 for each $1 spent.
Looking at one specific lobbying effort totally ignores all the other money that gets spent that yields nothing. The analysis of S&P 500 companies since 2002 also conflates correlation with causation. In the last decade, a disproportionate share of corporate profits have gone to the financial and energy industries, which just happen to be heavily regulated and thus spend a lot of money on lobbying. But lobbying isn't responsible for the boom in those industries, but rather unrelated market factors (namely, the worldwide explosion in energy demand as well as the demand for good investment returns from a generation of westerners nearing retirement).
If lobbying yielded 2,200% returns in a predictable way, the entire industry would be a heck of a lot bigger than the $3.5 billion a year it is today (which sounds like a lot of money, but is a pittance compared to how much money is spent by corporations on things that yield a lot less than quadruple-digit returns!)
While I agree with your criticism it boils down to the fact that measuring the impact of lobbying is difficult. I haven't seen convincing evidence either way as to whether the ROI is high. I suspect it is, at least for sophisticated firms, but is capacity constrained: You can't spend money if there isn't an issue to lobby and any given issue is subject to diminishing returns.
That would be consistent with high-ROI but limited revenue in lobbying.
I wasn't arguing that lobbying is necessarily predictable or consistent, just that it can be very lucrative when successful. It's one thing for Soros or the Kochs to spend millions promoting policies that reflect their view of the world, and another for Monsanto or Lockheed Martin to invest millions in crafting policy which has a non-trivial chance to recoup the costs tenfold or more.
It's vastly overstated how well lobbyists are paid. Jack Abramoff apparently had a $6 million book of business: http://sunlightfoundation.com/blog/2011/03/04/the-rise-and-f.... That's a lot of money, but its roughly commensurate with the revenues per partner in other professional services like law or management consulting. Indeed, I bet a top New York marketing consultant bills out at a higher rate than a top D.C. lobbyist.
Now, I'm obviously not arguing that lobbyists don't get paid enough. Rather, I'm pointing out that you need to use your head before taking Lessig's 600-2200% return on lobbying dollars claims at face value. If lobbying firms offered that kind of return, then lobbying firms would make a lot more money. As it is, a trader or hedge fund professional that makes low-doube digit returns can pull in as much as the total lobbying revenues of a top lobbying firm.
It's an equality vs liberty issue. Either my free speech is violated because you have more money to voice your side, or my speech is violated because the government isn't letting me express my views by buying an advertisement. My point is that there is a tradeoff. Surrounding any different issue you have different people on different sides of the scale. i.e. you don't like the person buying the advertisement so it is undemocratic OR I am very passionate about the issue but the government won't let me spend money to advocate my position.
Man, the worst part is that Intellectual Ventures Lab works on some really cool stuff. Maybe a little impractical, but really cool and innovative nonetheless.
I'd totally go work for them if they weren't backed by one of the worst corporations on the planet.
Do they actually work on really cool stuff though? As far as I can tell, they think up something that could possibly exist and patent it without actually making it, or if they do make it, they only do it halfway (aka not doing the actual difficult parts).
So I went to the IV dog and pony show. There was maybe 1 project that was actually interesting out of ~dozens. They don't have the technological research base to actually finish a project in house, so I think they tend to spin stuff out. Example (with dubious prospects):
http://en.wikipedia.org/wiki/TerraPower
IV hasn't gone after the little guys yet, so I find the Lodsys-type guys a lot scarier.
From what I have read from other hacker news threads, there is no evidence of that (and Lodsys apparently denies it).
Digging around, the only connection I could find was IV selling Lodsys some of its patents. Not much evidence for an actually connection, much less shell game.
Ah, I hadn't even considered that - I just remember reading a few articles about their projects but it didn't occur to me that it might be complete vaporware.
That's the problem indeed. With great intellect and ability comes great responsibility and these very smart guys (hence the lab) have only he intellects, not the depth of intelligence to realise that their own individual corner is not all that matters in the bigger game. They're the tagger that ruins Banksy's artworks, the despot who sends out the first nuke...
You have bought into their marketing. Their main business is not inventing cool stuff: that's just a hobby that looks good. It represents a small fraction of the money.
The sad thing is that they are capitalized by so many public and private pension funds ... pension participants are unwittingly sapping a core engine of growth.
They fear a weakening of the patent system. We fear a strengthening of it. Our goals and fears are at odds. Our interests are misaligned. In a perfect world this company would exist to invent and license new ideas. In our imperfect world they exist to invent licenses for new ideas.
> In a perfect world this company would exist to invent and license new ideas.
No, in a perfect world this company wouldn't exist at all, and its founders would be jailed for racketeering. In our imperfect world these thugs claim they are a "legitimate business".
