The Influence of Corporations on Government Provision of Private Goods

The Public Provision of Private Goods

Private vs. public goods • Private goods: benefit just one entity (one person, one corporation) • Collective goods: benefit every entity in a community (every firm in an industry, every person in the country)

What private goods does the government provide? • Contracts (Buying stuff) • Cell phones, computers, airplanes, missile systems • Tax breaks • Regulatory decisions for or against a business

How does the government provide private goods? • Contracts • Departments and agencies contract with firms to purchase goods and services • Earmarks

Earmarks • Congressional appropriations committees write the must-pass bills that keep the government running • 13 bills written by 13 Appropriations committee subcommittees • Bills decide how much will be spent by each agency (NASA, FBI, Homeland Security dept. overall, etc.) • Earmarks are when the appropriations subcommittee/committee writes into the bill that the agency it is funding must spend money for a very specific purpose

How does the government provide private goods? • Contracts • Departments and agencies contract with firms to purchase goods and services • Earmarks • Regulatory agency decisions • Tax code

Why might corporations have a lot of influence over the provision of private goods?

Godwin and Seldon’s hypotheses • Lobbyists lobby when Probability of getting benefit x Benefit > Cost • Legislator will make effort to provide a good when (it is efficient to do so) Efficiency = Votes / Resources • Both will be more likely to act when winners know they won, and losers don’t know they lost

Godwin and Seldon’s hypotheses • Corporations should spend a lot on lobbying if they rely on the government • Heavily regulated industry • Industry relies on government contracts • Lobby legislators who can produce private goods efficiently • Home state members • Members on relevant committees/subcomms

Research design • 3 industries • 19 companies • Data from interviews

Conclusions • PAC contributions go to home district, subcomm members • More communications between lobbyist for regulated industries and member staff • Corporations do most of their lobbying for private goods alone

How could we continue to test this hypothesis? Opensecrets.org

Potential for abuse?

The Influence of Corporations on Government Provision of Private Goods

The Influence of Corporations on Government Provision of Private Goods

Presentation Transcript

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