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: During a recession or its aftermath, for instance, workers are unemployed and significant capital remains on the sidelines. Indeed, some argue that the 2008 financial crisis—the effects of which we are still suffering from—was fueled by rent-seeking behavior. A paper on tariffs and monopolies by Gordon Tullock of George Mason University emphasized this idea—that both the ends and means of rent-seeking can waste resources—nearly 50 years ago. Originally, only the increased cost on consumers was recognized as a domestic economic effect of tariffs and monopolies, as they allowed domestic firms to charge a higher price than they could with unrestrained competition. This zero-sum transfer, however, looks worse when other factors are introduced. First, the government must incur administrative costs to assure compliance. In the case of tariffs, customs agents need to be hired to administer the tariff and the U.S. Coast Guard must protect against smuggling. Furthermore, tariffs do not come about without significant pressure from U.S. businesses, and they must also account for the expenditures that they make to bring about policy change. In the end, a zero-sum transfer from consumers to businesses becomes a negative-sum transfer after both the government and U.S. business spend a considerable amount of resources advocating for and imposing the policy. A modern example: