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Why businesses want the ear of government and are willing to pay for it

George Rennie writes in The Conversation (1.2.18) that federal politicians are finally moving against political donations after repeated scandals, but the author contends that economics shows lobbying should be ended regardless.

'Political donations and lobbying are a significant drain on the economy as it can damage competition, create monopolies and divert resources to unproductive uses.

'Every February, the Australian Electoral Commission releases data on political donations for the previous financial year. The data routinely show that among the biggest corporate political donors are mining, infrastructure and defence companies and groups.

'These are also those with the most to gain from government contracts, and the most to lose from increased regulation or taxation.

'Corporations donate to politicians because of the access that it brings. Some economists have argued lobbying is actually good for society, as it allows smaller businesses to “free ride” on the political spending of larger businesses.

'But this is predicated on the idea that whatever the big businesses want (whether this be tax cuts or reduced regulations) can benefit all companies.

'... If corporations are incentivised to try to exploit governments, and governments are both the rule maker and breaker, then relying on the electorate to police its worst excesses is naive. Instead, we need highly specialised and independent bodies to tackle the problem.'

 

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