The Role of Corporate Lobbyists in American Future | Free Essay Example

The Role of Corporate Lobbyists in American Future

Words: 2868
Topic: Business & Economics
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Abstract

Corporate lobbyists are beneficial for the growth and development of corporate organizations for they ensure that the business environment is free from hindrances of corporate growth. They protect a corporation against legislation that would deter it from maximizing its profits.

Hence, there is an increase in corporate contributions to the growth and development of a country and the creation of more job opportunities for local citizens.

Corporate lobbyists have a great impact in determining the future of the United States depending on the legislation that they advocate for or against for the interest of their clients.

These lobbyists oversee the passage of legislation that enhances economic growth and development especially by easing the entry of new entrants into the industry.

In contrast, economically harmful legislation that hinders new entrants from getting into the industry can be enacted, and hence leading to the collapsing of the American economy.

Keywords: lobbyist, lobby groups, corporate, economic growth, development, opportunities

Introduction

Corporate lobbyists are lobby groups that advocate for corporate organizations and are actively involved in the observation of the decision-making processes of the government that affect corporate and business organizations.

Their role is to foresee the impacts of such decisions to the corporate world and attempt to influence the process in such a way that the final decisions do not have adverse effects to the operations of corporate organizations.

In other words, they are advocates of the corporate in the governments’ decision-making processes that have a direct effect on the businesses. Corporations need lobbyists to oversee the possible impacts of new legislation or laws on the operations of the corporate world.

Also, corporations use lobbyists to propose new legislation that would enhance their efforts towards the achievements of the goals and objectives that they target. Hence, lobbyists are crucial for the general society since what is good for a corporate is generally good for the entire society.

However, sometimes, corporate organizations hire lobbyists for the wrong reasons whereby they advocate for the passage of laws intended to protect the corporations against the passage of laws that are beneficial to consumers.

For instance, corporations have advocated for laws that bar new entrants through the rise in the cost of production. Lobbyists have a great impact on the economy of the United States, and thus responsible for shaping the future of Americans.

Corporate Lobbying

Corporate lobbying refers to advocacy for corporate welfare protection in the making of legislation or decisions that have a direct impact on the operations of corporate in an economy. A corporate lobbyist is an individual who advocates for a corporation in the corporate lobbying process.

Special interest groups, non-profit making organizations, volunteers, business professionals, individuals, and other groups carry out corporate lobbying in the United States. They mainly focus on the legislation billed by the Congress, Supreme Court, and other legislative organs in the state.

In the United States, corporate lobbying is a paid activity whereby a corporate with special interests hires professionals such as economists and lawyers to defend their interests by pushing for legislation in the government, the United States Congress, and other decision-making organs in the country.

According to Mathur, Singh, Thompson, and Nejadmalayeri (2013), corporate lobbying is a controversial affair and often seen in a negative perspective by media and Americans, though business people view such a perception as a misunderstanding.

The courts of the United States interpret corporate lobbying or any other form of lobbying as a free speech that is recognized and protected by the American constitution. Some regulations take lobbying under extensive and complex regulations, which call lobbyists to follow some strict rules.

Failure to adhere to such regulations leads to severe punishments, and in some cases, a jail term for misconduct.

Governments put such regulations in place to promote discipline after noticing that corporate and other special interests groups used lobbyists as a method of avoiding responsibilities, and often advocating for the passage of legislation intended to favor their interests.

Also, lobbying had taken a corruption course whereby corporations gave grants to some legislators in exchange for the favor of tabling or passage of bills meant to benefit the corporations only.

Corporate lobbying has been in existence since the 1970s in the United States. Since its inception, lobbyists have been increasing immensely in terms of population and the size of the group.

Interestingly, some professionals such as lawyers, economists, actuaries, and other business professionals have specialized in corporate lobbying.

Hence, lobbying is a booming business for legislators will always raise some legislation that affects the corporate operations and in some cases, the United States Congress among other decision-making organs in the US will pass them into law.

However, since the inception of the lobbying business in the United States, there have been criticisms about the behaviors and operation of lobby groups by the American public.

They often perceive the corporate lobbyists as dens for corruptions that link the decision-makers and interest groups, thus benefiting from the two sides of concern (Mathur et al., 2013).

A special group hires a lobbyist for advocacy to the decision-maker, and on the other hand, a decision- maker hires a lobbyist to represent his or her issue to the special group. In either way, a lobbyist benefits in the name of protecting the seemingly victimized party.

Hence, Americans and media perceive lobbyists as illegal players that cause financial frauds in the economy, hence leading to the passage of legislation that negatively affects consumers.

Determinants of Corporate Lobbying in the United States

According to Hill, Kelly, and Ness (2009), corporate lobbying depends on various determinants, which include the size of the corporation, investment opportunities, and the nature of the industry.

Hence, corporate lobbying is associated with neither the profitability nor the nature of the corporate cash flow as some past studies concluded. Regardless of the size of profits that a business makes, business survival is a key objective besides profit maximization.

Therefore, a corporation hires lobbyists for its advocacy needs to survive via creating favorable business environmental conditions that are dependent on the nature of legislation that is passed by the decision-makers at the governance levels.

The size of a firm is a crucial element in determining corporate lobbying in the United States. It is dependent on the two sub-elements, which include the cost of lobbying and economic importance.

According to Faccio (2006), looking into the cost of lobbying, lobbying is expensive for it involves the hiring of professionals who research convincing the intended decision-making bodies.

Also, the economic importance of a corporation is also an important element in determining corporate lobbying in the United States. Large sized corporations have much influence on the government than small sized corporations.

For instance, Microsoft and Apple are key elements in the economic growth of the United States. Both are highly profitable, hence bringing revenue to the government through taxes that they pay to revenue authorities.

They also have a large number of employees, hence contributing to the improvement of living standards of families in the country (Mathur et al., 2013). Due to their economic importance, these corporations stand high chances of influencing decision-making that would affect their operations.

Secondly, investment opportunities are also important elements in determining corporate lobbying in the United States. To maximize the shareholder’s wealth, corporations invest their wealth in portfolios that yield high returns.

Investment and financial managers choose investment opportunities that yield consistent returns to have smooth return trends. Corporations carry out lobbying whenever the decision makers come up with decisions that affect their investment portfolios.

However, corporate organizations consider the reasons behind the decisions made against their areas of investments before lobbying. In most cases, business ethics is a great matter of consideration (Yu & Yu, 2011).

For instance, corporate organizations that have invested with profitable firms such as Microsoft and Apple would lobby against the decisions that adversely affect the performance of such companies in trying to protect their investments portfolio.

On the other hand, firms carry out corporate lobbying in the creation of investment opportunities. Normally, big corporations can propose business ideas to the government, which in most cases involves acquaintance of foreign direct investments that they have sizable returns when executed.

In such cases, the government and other decision-makers consider only the viability of the idea for it is sure of the proposers’ ability to carry out the task.

The Americans generally accept such lobbying for it is intended for the creation of job opportunities amongst other economic benefits to the future of the United States (Dittmar & Mahrt-Smith, 2007).

Thirdly, the nature of the industry also matters in the determination of corporate lobbying in the United States. Some industries have more influence over the decision-making processes over others in the United States.

The degree of influence depends on the profitability of the industry amongst other economic benefits to the country (Mathur et al., 2013).

For instance, corporate organizations operating in the transport, computer technology, housing, security, food and beverages, health and environmental industries are more valued by the decision makers than others that are of different industries.

Such corporate organizations boost economic growth and livelihoods of Americans, and thus the government and decision-makers would always be lenient on matters that would have adverse effects against them.

According to De Figueiredo and Silverman (2006), legislative lobbying is a complex task that demands experts; hence it is done by professionals. Successful legislative lobbying is achievable via providing research results of the legislation’s effect on the interest group in addition to meeting the legislators (De Figueiredo & Silverman, 2006).

Research findings must be valid and logically proven with accordance to the lobbying regulations failure to which lobbying attempts fail to change the course taken in the decision-making process.

In the United States, the majority of lobbyists are former politicians who have an added advantage over their counterparts for their retained connections with decision-makers.

This aspect makes it easy for them to present the issues affecting their clients with the confidence to the decision-makers, and thus the majority of corporations prefer them for they stand high chances of succeeding.

However, American politics play a major role in the lobbying especially in situations where former politicians are hired (Faccio, 2006).

In essence, American politics play a crucial role in all economic activities of the United States. It is difficult for a Republican politician to present an opposing idea to a Democrat politician and it succeeds for Democrats are the majority, and thus such an idea stands a high chance of being rejected at the floor of the house.

According to Lux, Crook, and Woehr (2001), a majority of corporations opting to hire former politician lobbyists put into considerations the political party that has a bigger influence in the house and which the lobbyist belongs.

Effects of Corporate Lobbying on the Future of the United States

Corporate lobbying has major effects on the future of the United States in both economic and social perspectives.

Corporate lobbying is carried out for two main purposes, which include proposing legislation that creates an economically viable opportunity or airing grievances against adverse economic effects of legislation.

However, the above two reasons have a great social impact on American society. They can either create more job opportunities in the country or reduce the available job opportunities, the latter being a negative social effect.

For positive economic effects, corporate lobbying is intended to improve the operational environment of an organization for an organization to maximize the shareholders’ wealth.

One way of ensuring a good environment for corporate operations is by reducing the rate of cash expenditures while increasing the revenues.

Expenditure is a liability to a business, and thus rational financial managers and controllers push for investment in ways that increase the revenue to a corporation and reducing ways that increase expenditures (Dittmar & Mahrt-Smith, 2007).

However, corporate organizations do not carry the entire liability, but instead, they transfer a larger portion to the consumers (Fama & French, 1999). Hence, corporate lobbying against an increase in expenditures intended to protect consumers against high prices of commodities.

On the other hand, the government and decision-makers such as the United States House of Congress, make legislation that is intended to attract other players in the industry.

For instance, the government proposes legislation on lowering of tax for imported information and communication products to create internal competition and encourage innovation.

Market competition is good for technology products for it enhances product innovation and the production of high-quality products. However, influential technological companies cannot welcome such an idea, and thus lobbies against its implementation.

Such a move indicates abuse of corporate lobbying by corporate organizations for the sake of their benefits thus leaving consumers without other alternative producers. Historically, leading corporate organizations to fight against policies that would ease the entry of new businesses in an industry.

Their efforts have succeeded in some instances depending on the nature of the idea behind the acceptance of the lobbying, but have created unhealthy competition in the country (Brown et al., 2006).

Competition leads to the creation of job opportunities in the country as well as the availability of cheaper products in the market. Therefore, corporate lobbying denies Americans job opportunities and varieties of cheap products in the market.

Corporate lobbying creates loopholes for frauds in different industries. Corporate lobbyists are in most cases used by corporate organizations to lobby for ideas that would benefit specific organizations thus leaving out others.

In such cases, the deal is done between the lobbyist and the corporate managers who offer personal gains to the lobbyists (Yu & Yu, 2011). In such cases, corruption takes place resulting in frauds of corporate finances and breaking of a nation’s law.

However, with less or no personal interests, corporate lobbying could lead to a brighter future of Americans. Politics do not add long-term value to the business world for the future of politics beyond the next general election is very uncertain.

Therefore, corporate lobbyists that are strongly affiliated to politics cannot be trusted as long-term corporate associates.

Going by the current conditions, the future of Americans is at stake for personal interests define the current corporate lobbyists as opposed to the needs of Americans as required by law.

On the other hand, it is easy for the U.S. government and regulatory authorities to control lobbying activities in the country. This goal is achievable via amending the lobbying act of 1997 by adding severe punishments to the lobbyist who are caught violating it.

Free speech is good for the benefit of society, but it is harmful to the same society if abused by a few. Corporate lobbying ought to protect the corporations with the interest of Americans preceding all other interests exhibited in the current form of lobbying (Fama & French, 1997).

Through effective corporate lobbying, the future of Americans seems brighter than the current condition.

Americans would get more job opportunities for there will be no lobbying intended to bar new entrants from getting into the industry as it currently happens in the competitive industries.

Consequently, Americans would be in a position to acquire higher quality products at lower prices due to competition in the market.

Also, there will be higher economic growth and development in the United States as compared to the current state. This aspect would result from entry of new firms in the industries, hence creating competition in the production of higher quality products for local and international markets.

The presence of many producers in the industry illustrates the presence of many job opportunities, and thus the creation of many job opportunities hence improving the living standards of the American people.

The government’s sources of revenue will also increase due to the entry of many firms in the market, which implies that the government will lower the cost of basic human services such as health for the benefit of Americans.

Hence, effective corporate lobbying will lead to the realization of the American dream of equal opportunities for all.

Conclusion

Corporate lobbying is good for the operations of a corporate organization, and it is recognized by the American constitution as a free speech according to the interpretation of the American courts. Corporate lobbying challenges or proposes legislation for the benefit of corporate organizations.

However, they do not act with accordance to the corporate lobbying activities, which requires them not to act in favor of specific organizations, but the interest of the entire industry for this move would promote corruption in the lobby groups.

This realization indicates that corporate lobbying should be done with the interest in the industry, but not with the interest of specific organizations as seen today.

The future of Americans is at stake if corporate lobbying is something to go by for corporate lobbyists have turned it into a profit making industry as opposed to a protection group.

Professionals have shifted into lobbyists due to corporate legislation made and passed by the United States House of Congress, which implies a great deal of personal interest leading the industry rather than the general interests of the American people.

Hence, many corporate organizations have succeeded in their efforts to bar new entrants from getting into the industry thus denying Americans new job opportunities and availability of high-quality products at affordable prices.

Reference List

Brown, W., Helland, E., & Kiholm, S. (2006). Corporate Philanthropic Practices. Journal of Corporate Finance 12(9), 855-877.

De Figueiredo, J., & Silverman, B. (2006). Academic Earmarks and the Returns to Lobbying. Journal of Law and Economics, 49(7), 597-625.

Dittmar, A., & Mahrt-Smith, J. (2007). Corporate Governance and the Value of Cash Holdings. Journal of Financial Economics, 83(6), 599-634.

Faccio, M. (2006). Politically Connected Firms. American Economic Review 96(4), 369-385.

Fama, E., & French, K. (1997). Industry Costs of Equity. Journal of Financial Economics 43(7), 153-193.

Fama, E., & French, K. (1999). The Corporate Cost of Capital and the Return on Corporate Investment. Journal of Finance, 8(8), 1939-1967.

Hill, M., Kelly, W., & Ness, R. (2009). Determinants and effects of Corporate Lobbying. Journal of corporate management, 23(1), 90-97.

Lux, S., Crook, T., & Woehr, D. (2011). Mixing Business with Politics: A Meta-Analysis of the Antecedents and Outcomes of Corporate Political Activity. Journal of Management, 37(1), 223-247.

Mathur, I., Singh, M., Thompson, F., & Nejadmalayeri, A. (2013). Corporate Governance and Lobbying Strategies. Journal of Business Research, 66(4), 547-553.

Yu, F., & Yu, X. (2011). Corporate Lobbying and Fraud Detection. Journal of Financial and Quantitative Analysis, 46(6), 1865-1891.