Title: How Campaign Contributions and Lobbying Can Lead to Inefficient Economic Policy - Center for American Progress
Headings: How Campaign Contributions and Lobbying Can Lead to Inefficient Economic Policy
How Campaign Contributions and Lobbying Can Lead to Inefficient Economic Policy
Rent-seeking
A modern example: Tesla Motors
Campaign finance, lobbying, and influence
Campaign contributions lead to policy outcomes
Lobbying leads to policy outcomes
Conclusion

Content: How Campaign Contributions and Lobbying Can Lead to Inefficient Economic Policy - Center for American Progress
Economy
How Campaign Contributions and Lobbying Can Lead to Inefficient Economic Policy
By John Craig and David Madland May 2, 2014, 8:37 am
AP/Charles Dharapak Pigeons fly over the intersection of 17th and K streets in Washington, D.C. K Street has long been invoked as shorthand for moneyed lobbyists who ply influence in the city. Endnotes and citations are available in the PDF and Scribd versions. The U.S. Supreme Court struck down two campaign finance provisions in the past few years that limited independent political expenditures by corporations and other organizations and placed aggregate limits on individual donations. The Court found that the provisions infringe on the right of free speech and that the aggregate limits do not prevent a narrowly defined version of corruption. Since then, federal courts have begun overturning state lobbying regulations under the logic used by the Supreme Court. While there is considerable disagreement about whether the Court was correct in finding that those campaign finance rules failed to prevent corruption, imposing limits on campaign financing and lobbying may be justified for another reason—promoting productive economic activity. The primary way that campaign contributions and lobbying may dampen economic growth is via a practice known as rent-seeking—the process of seeking income through special government favors rather than through productive economic activity. When firms and individuals engage in rent-seeking behavior, it has several negative effects on economic growth. Not only do people spend more time and money trying to get a bigger piece of the economic pie for themselves rather than trying to enlarge the pie, but the policies they seek are often wasteful, inefficient, or even harmful. If rent-seeking is a successful strategy for businesses or individuals, it can impose great harm on society by slowing or even stopping economic growth.