The logic of lobbying

In any capitalist economy, corporate lobbying becomes a natural intersection between the political and economic spheres of the country.

In India, however , because of the perception that lobbyists dictate policy-making, corporate lobbying is looked upon as an evil. But the question is do the lobbyists have enough expertise and cunningness to dictate the policies of the Government?

A recent research paper from the National Bureau of Economic Research in the US, titled, “ Is it whom you know or what you know? An empirical assessment of the lobbying process ” by Marianne Bertrand, Matilde Bombardini and Francesco Trebbi, attempts to break the myths regarding lobbying.

The study tries to answer the question as to what lobbying really is.

It does so by going through public records of registered corporate lobbyists and putting the data in mathematical equations to understand how lobbying functions.

There are two broad views regarding lobbying. A Utopian view is lobbying is a legitimate and necessary part of our democratic and political processes.

To frame policies, the Government needs information about certain topics, some consider that this is where lobbyists step in — with their knowledge they disseminate information to the Government.

However, the more popular view held by many in the media and on the street, that lobbyists' main asset is not what they know, but instead whom they know.

Key data streams

It is important to distinguish these two views and find out which is closer to the truth as it will define how legislature works.

According to the Utopian view where lobbyists' work is defined by their knowledge, lobbyists would have the power to influence the legislature no matter who politician is. The kind of power is similar to that of bureaucrats.

However if the second view is to be believed, lobbyists' power depends only on the kind of politician they know.

The three crucial streams of data are needed to measure the value or power of the lobbyist. The required streams of data are, the policy issue on which the lobbyist is working on, the number of lobbyists in the same sector and the number of years (cumulative time) a lobbyist has worked on the particular issue.

If these data are available, theoretically one can compute for each lobbyist an issue-based Herfindahl Index (HHI) that measures how concentrated this lobbyist's assignments are across all possible issues.

With the use of some clever maths and the available data, the authors of the paper conclude that the share of specialists in registered lobbyists falls drastically.

Thus it points to the fact there is no trend which co-relates the expertise of lobbyists to the work they do.

However, while this proves that expertise and lobbying do not have co-relation, it does not prove that lobbyists depend upon connections.

The power of connections has been well documented via investigative journalism, most recently in the Niira Radia tapes that were released. But there is no mathematical way to prove the power of connections.

Political savvy

However, by going through data on visits by lobbyists to politicians, the authors of the paper find evidence that lobbyists switch issues in a predictable way as the legislators they were previously connected to.

For example, a lobbyist is seen shifting to covering defence-related issues if the legislator concerned handles defence-related matters. In other words, part of what lobbyists do appears to be a function of whom they know and have access to, rather than what they know.

However, there is also some evidence of lobbyists establishing connections to politicians entering a lobbyist's prior area of activity due to a change in committee assignment.

The results of the research prove that lobbyists are not experts, but it would be wrong to jump to the conclusion that they are merely messengers as it does not justify their high fees. So what is it that the lobbyists bring to the table, if it is not expertise?

The price tag attached to lobbyists services suggest that they bring to the table a complementary resource, perhaps reputation, credibility or political savvy, in the transmission of information.

But while the study sheds a lot of light on lobbying, it is important to note that such a study has been possible because lobbying is a legal profession in the US which means that data is collected in an organised manner.

In India, lobbying is not a registered profession and there is no data. Perhaps this is because in India, lobbying requires high people skills, i.e, public relations.

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