December 19, 2013

CATHY REISENWITZ ON THE REALITY OF “DARK MONEY:”

The left’s preferred narrative is simple, easy-to-understand and has a ring of truth. It goes like this: Regulation helps consumers but hurts business’ profitability. Individuals give money to big-government organizations to promote regulation. Corporations donate to small-government organizations like Americans for Prosperity, the American Enterprise Institute and the Competitive Enterprise Institute to fight regulation.

But the fact that corporations also fund big-government organizations raises questions about this narrative. If regulation hurts corporations, why are they funding think tanks which promote it?

The truth is that most regulation is written by and for incumbent businesses to erect barriers to entry and to buy advantages over their competitors. That’s why corporations fund groups like the Center for American Progress.

Earlier this year, Center for American Progress donor Citibank hired lobbyists to literally write 70 out of 85 lines of a bill regulating derivatives trading which passed the House. If this regulation was meant to hurt Citibank’s profitability while defending their customers it’s unlikely to have done so.

There are three main reasons corporations like Citibank write their own legislation. First, lawmakers feel pressure from constituents to regulate industries about which their staffs know nothing; corporate lobbyists and lawyers provide much-needed information. Second, it’s much easier and faster for a company to understand and comply with a regulation it wrote. Third, and most important, companies write regulation that is easier and cheaper to comply for them than for their competitors.

And outfits like the Podesta-linked Center for American Progress are there to help. All in service of the .0001 percent. To the pitchforks!