Warning to Corporations: Bribing Politicians May Be Hazardous to Your Financial Health
It’s too bad the Supreme Court prostitutes justices have opened the floodgates to unlimited corporate donations, thereby selling America to the highest bidder. But just maybe, that legendary elusive Invisible Hand Of The Marketplace will balance things out a little.
An extensive study by Rice University and Long Island University has found an inverse ratio between the amount of money a company spends on political activity and the market performance of that company. No doubt there are exceptions; I haven’t seen any reports of Exxon or Koch Industries going bankrupt (damn it!).
The study was based on 943 companies in the S&P 1500. Over an eleven-year period, they measured each company’s end-of-year stock value and return on assets against the amount of money that company spent on lobbyists and campaign contributions.
The results of this study will be published later this year.
A few years before her death, Molly Ivins wrote that buying a congressman is by far the most lucrative investment anyone can make. She said it’s so far ahead of every other type of investment, it doesn’t even matter what comes in second.
So which is it? Personally I like the Rice/Long Island University results better. A co-author of the study said:
“If you look at most of the literature on business management and strategy, the implication is that these investments really pay off. But we found a really persistent negative relationship.”
This study should give a lot more momentum to shareholders who are pushing for the right to vote on their companies’ (i.e. the companies that THEY OWN) political expenditures. This movement is growing and strengthening as we speak.
So go ahead, skanks. John Roberts, Samuel Alito, Antonin Scalia, Clarence Thomas and Anthony Kennedy can go ahead and bend over for their corporate owners ‘til their ears are touching their heels. Go ahead and put a giant For Sale sign across the whole country.
At some point there’ll be an equal and opposite reaction. I hope.
Labels: corporate spending inverse ratio, Long Island University, Rice University
posted by Tom Harper @ 1:47 PM
5 Comments:
"The only instance of benefit was over time in those industries researchers found substantially regulated, such as oil, telecommunications, insurance or utilities - representing about 10 percent of the companies they considered."
Ah so, just what I suspected in reading your post, Tom. Sure enough, J.C. Penney or such stands to gain but little through heavy lobbying and campaign donations. But when you look into the many and varied ways an Exxon or Abbott Labs interacts with the government, and vice versa, it's a whole different ball game.
Just remember, so many companies and industries are linked or are conglomerates, the study findings get blurry quickly in the real world. I can see how the study people would find so so results for GE just looking on the surface, at the corporation as a whole. But take into account the company's defense contracts, FAA dealings, and so on, and its profitability undoubtedly benefits much more from greasing palms than that surface look would indicate.
Great topic, though. Maybe the U.S. Chamber crowd will have to gobble some Tums and rethink their strategy.
S.W. is dead on. If you want to really see the system in operation, don't look on the national level, it's far to complex and muddy. For the truth, look no further than your local city council. See who gets the big contracts and who's contributing to who. Much easier to scope out and simply a microcosm of the big picture. BTW, also much easier to have influence on as an individual citizen. Neither you nor I can influence on the national level one whit. But we can influence on the local level. That's where we should be focusing our attention.
People have been destroying themselves over greed forever now. How many have fried in the electric chair because they got greedy? Bankrupting your company seems minor in comparison.
"The study also found little financial benefit in putting former federal or state officials, such as ambassadors or secretaries, on corporate boards of directors"
I'm sure Halliburton/Kellog,Brown, and Root would disagree with that
Erik
SW: I do hope this causes Tums usage to skyrocket among Chamber of Commerce and Club for Growth types. I'm sure there are loopholes like the ones you pointed out, but this study is still a lot more encouraging than the conventional wisdom that purchasing a politician is the ultimate ticket to wealth and power.
Mr. C: Good point about local politics. My other blog is a forum on local issues. I've lived here almost 8 years (a remote town of about 20,000 people), and the more I learn about the local players and levers of power, the more confusing and complicated everything gets. It's every bit as intricate and convoluted as the national current events I've been following all my life.
JR: Maybe the wrong people have been frying in the electric chair.
Erik: If there's an exception to their findings, it would be Halliburton and all of its twisted offspring.
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