Lobbyists Must Go

One of the most harmful transitions in the history of the U.S. was the emergence of lobbyists. Private industries waste millions of dollars trying to pull strings in Washington in order to get politicians to steer markets in their favor. As a result, a huge amount of wealth is destroyed and the market is left imbalanced.

It's farily simple economics. People or companies are willing to pay up to $100 in order to get for themselves $100 of someone else's money. If they pay $99 for it, they turn a $1 profit. Therefore, many companies send their crony capitalists into Washington to work their way into good favor, cut deals, etc. in order to get legislation, or an earmark in unrelated legislation, that would either shift the market in their favor, or simply give taxpayer money to them for no service of such value as they receive (for value is what people are willing to pay for something in order to obtain it).

Therefore, we get Company A shelling out $80 to try to convince politicians to steer the markets $100 in their favor, Company B spends $50 as well, and Company C spends another $40 to try to defend themselves from the legislation taking away their market share. That's a total of $170 being spent over $100, a net loss of $70. But consider also that if legislation is passed, the market is forced out of its natural balance, and is steered in favor of Company A. That $100 is steered from Companies B and C, the profits they would have made, into Company A. Thus the overall net gain is 0. So really that net loss is the full $170, wealth just destroyed on lobbying services that are worth nothing to the American economy. This, of course doesn't include the wealth that will be lost due to the market imbalance the legislation caused.

Or consider if Company A spends $80 and gets an earmark for taxpayer money worth $100. They make a profit of $20, but the economy is out $100, a net loss of $80. If the company gets the earmarked funds as payment for their service, than subtract the actual value of the service from the net as well. But bear in mind that the service is almost always less than the allocated amount, else the taxpayers would be willing to pay for the service themselves. Except for rare cases where the government actually invests its money wisely (badly needed roads, properly paid law enforcement, etc.) wealth is destroyed in any such legislation and the economy is hurt.

It's difficult to imagine how wealthy a nation we would be if it weren't for the corrupt and idiotic policies of the government destroying our wealth. We create so much wealth as a nation to overcome this destruction and still produce a small surplus. But were we to stop destroying our wealth, what a surplus that would be!

It's time to get rid of lobbyists. "Crony Capitalism" is destroying us one earmark at a time.

Take a quick look at these posts over at Carpe Diem. Very interesing indeed:
http://mjperry.blogspot.com/2010/01/top-industries-giving-to-members-of_24.html
http://mjperry.blogspot.com/2010/01/top-industries-giving-to-members-of.html
http://mjperry.blogspot.com/2010/01/influence-and-lobbying-heavy-hitters.html