Why apply transparency to lobbying?


Multiple stories point to a huge lobbying effort on the part of the financial industry as the Senate debates reform to the financial sector. Banks, hedges funds, derivatives clearinghouses, investment firms and all the major industry trade groups are all on the ground lobbying to try and change, alter and weaken the coming reforms. And that’s pretty much where our knowledge of the efforts to influence our elected representatives ceases. Lobbying disclosures do nothing to provide the public with information regarding who lobbyists meet with and what exactly their lobbying relates to.

This brings up a serious point when we consider the reason for a transparency or disclosure policy. Who benefits from the cursory information released in current lobbying disclosures? What disclosures would better benefit the public? Does the issue that the transparency policy seeks to address require a tougher response?

The Senate is currently debating financial reform, one part of which is the requirement that all derivatives be traded in the open. This is an application of transparency and disclosure to a particular problem: opacity in the derivatives trading market led to a lack of knowledge across the financial world as to the level of risk that many firms were taking on. Another argument, equally as valid, would be that the actual product of over-the-counter derivatives and specific types, i.e. credit default swaps, were so risky that they were one of the direct causes of the economic crisis. You’re likely to support a different response depending on what your narrative of problem is. If these products are viewed as so dangerous as to have been a direct cause of the crisis a considerable option would be to ban them. If the problem is simply under the radar trading and a lack of knowledge among traders, banks and regulators then transparency would seem more appropriate.

One could view lobbying the same way. Did financial sector lobbying lead to a deregulation of the industry, particularly around derivatives? And then wasn’t that lobbying part of the root cause of the current economic crisis? If that is the narrative then stricter regulations on lobbying might be in order. Whenever I read the comment threads of stories or posts about lobbying they are riddled with ordinary people stating that lobbying should be banned. Same thing goes when I talk about politics at the bar. The only issue is that, unlike with credit default swaps or any other dangerous product, lobbying cannot be banned.

The First Amendment provides for the right to petition the federal government. Of course, companies, individuals or organizations with a lot of money can hire a bunch of people to do it for them. Short of a constitutional amendment altering the First Amendment or an amendment ending corporate personhood (I doubt this would matter in terms of lobbying), there is no way to ban lobbying.

Transparency in the lobbying profession, along with regulations governing types of practices (which are often applied to targets of lobbying and not the lobbyists themselves), is likely the sole means to assuage the public’s fears about the profession. Current disclosure policy provides for the following: names of lobbyists, client name, issues lobbying on, amount spent/amount contracted, government entity contacted, some revolving door disclosure and voluntary listing of bill numbers, names and policies. This is all very cursory information that does little to inform the public of how outside interests are attempting to influence government policy.

The one significant change in disclosure that goes to the root of the public fears of lobbying would be immediate disclosure of lobbyist contact with lawmakers, government officials and government offices. When people complain about banks lobbying Congress or health insurers lobbying Congress they are feeling powerless because they have no idea what the level of influence is and where the influence is directed. There an informational valley here that creates extreme distrust and fear.

Representative democracy suffers when people don’t trust their elected representatives when they are in Washington. The best way to alleviate this dilemma is to increase the information flow out of Washington. To paraphrase John Adams, knowledge diffused through the people can provide opportunity to prevent abuses of the system of representative democracy.