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You don’t know Jack: Principals, agents and lobbying

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Executive Summary

Most recent work on the politics of interest representation assumes that lobbyists represent their clients’ interests with fidelity. As a check on the validity of this assumption, we examine the potential for principal-agent problems to emerge in the relationship between lobbyists and clients. We first consider the nature of agency problems in lobbying, emphasizing problems of outcomes, interests and monitoring. Next, we examine market, hierarchical and social controls of agency problems in lobbying. We then discuss the implications of our analysis for studies of interest organization mobilization, tactics and strategies, and influence. And finally, we argue that renewed attention must be paid to the internal operation of interest organizations, a subject that has been given scant attention in recent research on interest representation.

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Notes

  1. Abramoff was later sentenced to 6 years of prison time and served 3 years and 6 months before being released to a Baltimore halfway house on 8 June 2010.

  2. Stephenson and Jackson (2009) also develop a number of hypotheses about lobbying, only one of which – discussed later – we find to be especially plausible given numerous unexplicated steps in the rather long causal chains underlying their expectations. Kersh (2000) also gives considerable attention to the links between political officials and lobbyists that lead lobbyists to have their own preferences that are distinct from their clients, an issue that we do not readily address. While it is very likely that this mattered in the Jack Abramoff case given its broader ties to the K-Street project of Republican leaders such as Tom DeLay, we think that this was a more uncommon problem in other venues in which lobbying takes place.

  3. The latter two types of lobbyists are often analyzed together given that they seem to respond to environmental constraints in a similar manner (Gray and Lowery, 1996). However, we will argue below that they may differ in terms of the suitability of various mechanisms that might ameliorate principal-agent problems. And while, as we will see, the contract lobbyists and public affairs officers might seem quite distinctive, Alchian and Demsetz (1972) argued long ago that that the capacity of principals to control agents is conceptually no different when internal employment contracts are used than when recourse is made to contracting with an external agent.

  4. While not always true, there are certainly many cases – for example, the lobbying associated with the Clinton administration's efforts to break-up Microsoft (Hart, 2002), lobbying on the regulation of tobacco (Wright, 2004), or lobbying associated with the Obama administration's bailout of the auto industry – when lobbying outcomes fundamentally reshape the prospects of the lobbying entities.

  5. Although institutions now dominate lobby populations (Salisbury, 1984), very, very few institutions actually lobby. For example, only a tiny proportion of manufacturing firms that could lobby actually do so (Lowery et al, 2004). And they leave lobbying rolls at an alarming rate, going on, however, producing tires or laundry detergent (Gray and Lowery, 1995). In contrast, lobbying is more central to the work of many associations and membership organizations. Indeed, when they stop lobbying, this usually means that the organization has died (Gray and Lowery, 1995).

  6. Or, as in the case of Jack Abramoff and his Indian casino clients (Stone, 2006), the lobbyist may represent neither client's interest, playing them off against either other to provide benefits to only the lobbyist. But this is not a conflict between clients as an example of the next set of adverse selection issues associated with divergence in the interests of a single client and his/her lobbyist.

  7. The problem of multiple principals is, of course, of central concern to the literature on agency problems in controlling bureaucracy (Wood and Waterman, 1991).

  8. There are, of course, other social control mechanisms that are designed to address agency problems more generally. Perhaps the most prominent in human history is patronage. Still, we focus on the three most plausible for the lobbyist–client relationship.

  9. It might, however, still influence whether lobbying is done as this is a cost to the core of the organization, as suggested by Gray and Lowery (1996).

  10. In the medical and legal professions in the United States, these are guidelines set by the American Medical Association and the American Bar Association, respectively.

  11. The very notion of lobbyists' ethics is often viewed as an oxymoron in most public discussions of lobbying, something that is not true (or certainly less true) for physicians and lawyers.

  12. Indeed, Lowery et al (2005) find no differences in the rates of mobilization among interest guilds with more and fewer resources. Still, see Maloney (2008) for a competing argument.

  13. Such a thought should not be strange. We use variations in the skills of participants to explain many outcomes in life, from success in sports to election to office. Therefore, why should be assume that all lobbyists are equally competent or motivated to serve their clients?

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Lowery, D., Marchetti, K. You don’t know Jack: Principals, agents and lobbying. Int Groups Adv 1, 139–170 (2012). https://doi.org/10.1057/iga.2012.15

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