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Pay to Play

May 16th, 2013 - 3:32 pm

Pay to Play

This comes from Jim Pethokoukis, who adds:

In 2009, Strategas Group realized there was going to be a lot more government intervention into the economy, and stocks of companies that exhibited “the greatest lobbying intensity” might outperform the broad market. So the firm created a 50-stock “lobbying index.”

As the above chart shows, they have done just that with the index outperforming the S&P 500 by more than eight percentage points over the past five years. “This consistent outperformance suggests that investors do not fully incorporate the value of company lobbying activities,” the firm concludes.

When companies make money by pleasing government instead of their customers, their customers lose. And government, greedy beast that it is, likes it that way.

I remember in the mid-’90s, Microsoft was justifiably proud of the fact that it spent almost nothing, zilch, on Washington lobbying. Was it a coincidence then that the Justice Department came after the company with both barrels blazing?

And is it yet another coincidence that since settling with Justice, Microsoft has become a timid player unable to compete profitably in new markets?

You make the call.

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All Comments   (3)
All Comments   (3)
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No surprise here, sorry to say. Are you ready to propose an overthrow of pay-to-play aka Citizen's United, maybe via constitutional amendment that states that corporations are NOT people, and thus not entitled to the same rights as natural persons?
1 year ago
1 year ago Link To Comment
What do you think corporations would do if that happened? Consider the economic impact of what you think they'll do.
1 year ago
1 year ago Link To Comment
... public companies that did receive the most Obama-Stimulus went belly up the soonest after the cash was delivered... more cash to pay bonuses to management, and easier to stiff the taxpayers, e.g. ultra-rich Kaiser's Solyndra, ultra-rich Buffett's A123 Battery.
1 year ago
1 year ago Link To Comment
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